Bangladesh Bank has increased the size of the Export Development Fund (EDF) by 16.7 per cent.
The fund was increased to boost exports and reduce the liquidity crisis in the banks, as a result of which exporters will get more loan facilities now.
The fund was introduced in 1988. It enables exporters to get foreign currency loans at reduced interest rates.
Currently the EDF interest rate is fixed at 2.5 per cent, plus Libor (London Interbank Offered Rate). Businesses from various sectors, including garments, can take loans up to 25 million dollars for a maximum of 180 days.
Under the existing provision, EDF financing is allowed for input procurements against back-to-back import letters of credit or inland back-to-back letters of credit in foreign exchange by manufacturers producing the final output for direct export.
EDF loans from the central bank are payable by the banks upon receipt of export proceeds within 180 days from the date of disbursement. The time frame is extendable by the central bank up to 270 days in case of a longer period taken for repatriation of export proceeds.
Authorized Dealer banks can borrow dollar funds from the EDF against their foreign currency loans to manufacturer-exporters for input procurements.