UNREST IMPACT ON RMG SECTOR
BB cuts interest on export dev fund loan
Bangladesh Bank on Sunday cut interest on loans taken from export development fund by one percentage point to 1.50 per cent in a bid to give incentive to the exporters as ongoing political unrest is hindering their business severely. The BB took the decisions in a meeting with the business leaders of the FBCCI, BGMEA, BKMEA, BPGMEA and BTMA at the central bank headquarters in the capital. BB governor Atiur Rahman presided over the meeting.
Bangladesh Garment Manufacturers and Exporters Association president Md Atiqul Islam told reporters after the meeting that the BB had assured them that it would give all kinds of support to save their industries from the ongoing political unrest.
The BB cut the rate of interest on its EDF fund as a first initiative to implement the demands of the business people, he said.
Currently, the commercial banks take loans from the central bank under the EDF scheme at the London Inter-Bank Offered Rate (LIBOR) plus 1.0 per cent interest, and they are extending credit to exporters at LIBOR plus 2.50 per cent interest.
Under the upcoming rules, the commercial banks will take from the EDF scheme at LIBOR plus 0.50 per cent and the banks will cut 0.50 per cent interest rate.
For this reasons, the exporters will get loans from the EDF scheme at LIBOR plus 1.50 per cent interest.
The central bank increased the allocation of the EDF by 25 per cent to $1 billion from the previous $800 million in November to meet the growing demand of the country’s exporters.
As per the BB provisions, the EDF financing is allowed for input procurements against back-to-back import letters of credit or back-to-back inland LCs in foreign exchange, by manufacturers producing final output for direct export and also by producers of local deliveries to manufacturers of the final export.
The central bank has also taken into consideration their demands which were placed before the finance minister on December 11, the BGMEA president said.
‘The BB has assured us that it will organise a meeting with the ministry of finance to discuss our demands’, he said.
Ready-made garments exporters demanded the ministry of finance should arrange a special loan package including low-interest credit for paying workers’ wages and blocking of term loans without any interest for next two years.
The readymade garment exporters wanted relax of rules of loan classification for two years and waiving of additional charges at Chittagong port.
Federation of Bangladesh Chambers of Commerce and Industry president Kazi Akram Uddin Ahmed said that the commercial banks were concerned to meet the business people’s demand, but the banks were also facing crisis due to the political unrest.
Kazi Akram, also chairman of Standard Bank, said that the government should cut the corporate tax on the commercial banks as their (banks’) business was now passing a stagnant situation.
He said, ‘We have demanded the government to cut the banks’ corporate tax to 40 per cent from the existing 42.50 per cent.’
The BB should take initiative in this regard as a regulator of the banking sector, he said.
BB deputy governor SK Sur Chowdhury told reporters that the business people had requested the BB to take initiative to block their loan accounts but the commercial banks were able to take decision in this connection.
Sur said it was not possible to relax the rules of loan classification and rescheduling.
He, however, said the BB would take decision on one-to-one case basis if the banks apply to the central bank about the matter.
Former FBCCI president Annisul Haque, Bangladesh Textile Mills Association president Jahangir Alamin, Exporters Association of Bangladesh president Abdus Salam Murshedy, Bangladesh Plastic Goods Manufacturers and Exporters Association president Md Jasim Uddin, among others, attended the meeting.
-With New Age input
