The interest rate has been reduced to 1.75% and will remain effective till 31 March next year
The Bangladesh Bank has reduced the interest rate on loans taken from the Export Development Fund (EDF) to help exporters facing the fallout of the Covid-19 pandemic.
Previously, the interest rate was 2%; it has been reduced to 1.75%.
The new interest rate will remain effective till 31 March next year.
The central bank's Foreign Exchange Policy Department issued a circular in this regard on Wednesday.
According to the new circular, the Bangladesh Bank will have to be paid 0.75% of the interest on the loan taken from the EDF while the remaining 1% will go to the bank disbursing the loan.
On 6 April, as per the prime minister's directive, the amount of the EDF has been increased to $5 billion from $3.5 billion to meet increasing demand. The fund has been increased under the incentives package announced during the novel coronavirus pandemic.
Then on 17 May, the loan limit from the EDF was increased to $30 million. Earlier, the limit was $25 million.
Since the lion's share of export earnings comes from the ready-made garment sector, those in the sector borrow the most from the EDF.
Earlier on 26 August, the Bangladesh Bank relaxed the conditions for getting loan from the EDF.
In order for exporters to get the EDF's loans, the time limit for repatriation has been extended to 720 days or about two years.
This facility has also been extended till 31 March next year.
Earlier, if an exporter did not bring the export money back to the country within four months or 120 days, repatriation would not get a loan from the EDF.
Of the EDF's $5 billion, $4.8 billion has been disbursed as credit so far.