An applicant factory will also have to submit its last three months’ transactions or salary payment status with the bank
Export-oriented factories have to apply for stimulus funds before April 20, according to a circular issued by the Bangladesh Bank on Thursday.
An applicant factory will also have to submit its last three months' transactions or salary payment status with the bank.
The Bangladesh Bank issued the circular in line with the finance ministry's instructions, which issued an order in this regard on Wednesday.
Md Serajul Islam, spokesperson and executive director of the Bangladesh Bank told The Business Standard, "We have worked out the mechanism to provide the soft loan by discussing with the parties concerned. We hope that the incentive will help exporters turn around."
As per the central bank, the loan can only be used for salary payments of factories that export at least 80 percent of its products.
Every factory has to collect an authentication certificate from their respective professional associations such as the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) or Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).
The government will provide the central bank Tk5,000 crore from its budget allocation to distribute the funds to the banks based on demand from the affected industries, said the BB circular.
The BB will not charge any interest against the loan, but commercial banks can take a maximum 2 percent service charge for the lending.
The incentive will go directly to employees' bank accounts, including mobile banking accounts. If any employee does not have an account, respective banks can open a new account for payments.
Borrowing factory can pay three months' salaries (April, May and June) with the loan.
The loan repayment period is two years, including a six-month grace period – from July to December 2020. From January 2021 to June 2022, borrowers will have to pay the loan in 18 equal instalments.
If any borrower fails to repay the loan, banks can charge an additional 2 percent interest as penalty and the borrower can be treated as a defaulter.
The central bank has suggested banks to take measures to check every factory's salary sheet from December to February before lending. From the loan, no employee can get a month's salary higher than the average monthly salary of his or her last three months.