The central bank on Wednesday eased the loan terms of pre-shipment credit refinancing for all exporting companies affected by the Covid-19 pandemic.
Now, banks will be able to disburse up to 50% loan for Packing Credit, a loan given to exporters or sellers to finance the purchase of goods before shipment, under the Preshipment Credit Refinancing Program, Bangladesh Bank said in a new statement. circular published on Sunday. Previously, there was no loan facility for packaging credit under the incentive scheme.
The easing was done to facilitate refinancing facilities at bank and customer level, the Bangladesh Bank said.
According to the circular, any customer who has received the refinance facility and has more than three outstanding export invoices will no longer be eligible for the fund. Previously, customers with more than two outstanding export invoices were considered ineligible.
Furthermore, under the previous terms, the interest rate for these loans at the customer level was 5%, of which the banks would receive 1%. The new terms lowered the interest rate to 3% at the customer level, from which banks will get 0.5%.
The new circular indicates that all scheduled banks will be able to benefit from the advantages of the refinancing fund provided that they have to sign a participation agreement with the central bank. However, banks that have already signed such agreements will not need to renew them.
Speaking about the easing, a senior Bangladesh Bank official said refinancing facilities under the pre-shipment credit refinancing program have been well below target for the current fiscal year. Therefore, in a bid to achieve the target and increase exports, exporters have been given more opportunities under the new conditions.
On April 26 last year, the central bank set up a special Tk 5,000 crore fund called the Pre-Shipment Credit Refinance Scheme.
According to a Bangladesh Bank report, only Tk 651 crore from the fund has been disbursed till April 13 since July of the current financial year, which is only 13% of the target. Only 67 companies took advantage of the benefits.