Export Development Fund loan interest, increased repayment period

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The Bangladesh Bank has increased the interest on loans taken from the Export Development Fund (EDF) from 2% to 3% and the repayment period from 180 days to 360 days.

The Bangladesh Bank’s Foreign Exchange Policy Department issued two separate circulars in this regard on Wednesday.

One of the circulars states that the interest rate on EDF loans to banks will be charged by Bangladesh Bank at 1.5%, while banks will charge manufacturer-exporters interest at 3% for disbursements up to at further order.

Previously, interest on EDF loan disbursements to banks was charged by the Bangladesh Bank at 1%, with banks charging 2% on their loan disbursements to manufacturer-exporters.

In March 2022, EDF’s size was increased from $6 billion to $7 billion to meet growing demand from exporters. In June 2021, the EDF increased from $5.5 billion to $6 billion while the fund grew to $5.5 billion from $5 billion in March of the year. It rose to $5 billion from $3.5 billion in April 2020.

In another circular, the EDF loan repayment period was extended from 180 days to 360 days.

The extended use period will be effective until December 31 this year and will not apply to imports under EDF loans, the circular said.

The period of use is the period of time allowed between the date of the export invoice and its payment.

Earlier, in a circular issued in January this year, the loan repayment period was extended to 270 days, which was usually 180 days. This facility expired on June 30 of this year. The deadline was again extended thanks to new instructions on Tuesday.

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