BB launches Tk5,000cr pre-shipment refinance scheme for exporters

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Loan defaulters barred

Bangladesh Bank (BB) yesterday launched a Tk5,000crore pre-shipment refinance scheme with reduced interest rate for the exporter-oriented industries, making loan defaulters ineligible to get access to the fund.

The interest rate under the scheme was 6% for borrowers, while banks would get the fund from the BB at the rate of 3% , said a BB circular issued on the day.

Prime Minister Sheikh Hasina on April 5 announced an incentive package of Tk72,750 crore including the Tk 5,000 crore for exporters to overcome the economic impact caused  by the outbreak of the novel coronavirus. 

Under the fourth package, the central bank would introduce a new credit facility of Tk5,000 crore as “Pre-shipment Credit Refinance Scheme” and its interest would be 7%, Hasina announced in her speech on April 5.

The BB circular said the global economy had been observing unprecedented stagnancy due to the epidemic coronavirus. As like other countries, Bangladesh’s exporters were also facing production fall and cancellation of export orders, hampering the export earnings, the BB added.

Prompted by the situation, the BB formed the Tk5,000-crore refinance fund to support the export oriented industries by the way of pre-shipment financing to expedite the country’s economy and export earnings, a senior BB official said.

BB formed the fund on its own and the industries will get credit from the fund for bearing the pre-shipment costs only.

Any export-oriented sector would be considered as illegible for the fund but, the sanctioning loans would depend completely on the jurisdiction of the bank based on bank-customer relationship.

The tenure of the fund would be three-years and would be revolved during the period while the locally produced export-oriented industries would get fund for more than once for maximum 1 year period.

Besides the defaulters, entities having overdue export proceeds repatriation would not be considered illegible to get the fund.

Banks would be allowed to apply for fund from the scheme against each confirmed export order or export letter of credit and the issuable credit would be determined after the exclusion of back-to-back LC value, financing for accessories and other relevant costs.

While issuing credit for pre-shipment, the banks will have to follow the single borrower exposure limit, said BB, adding that the bank would be fully liable for the repayment.

Amid the outbreak of coronavirus, the central bank has taken a number of measures to support the exporters as well as the small and medium entrepreneurs by the way of enhancing banks’ lending capacity.