The central bank yesterday increased the size of Export Development Fund (EDF) by 20 percent to make it $1.2 billion to meet exporters' demands.
The demands from various sectors have increased recently and that is why the central bank added $200 million to the EDF, said a high official of Bangladesh Bank.
The EDF began with an initial amount of $100 million in 2005, which gradually increased to $1 billion last year.
A single party can receive a maximum loan of $12 million under the fund, the official added.
The loans are payable by the banks upon receipt of export proceeds within 180 days of the date of disbursement.
The time period may be extended by the central bank by up to 270 days in case of a longer period for repatriation of export proceeds.
Under the EDF, commercial banks will charge exporters the LIBOR (London Interbank Offered Rate) plus 1.5 percent, meaning, the cost of loans will remain within 2 percent as the six-month LIBOR rate is 0.35 percent at present.
LIBOR is the rate banks charge each other for short-term loans in the London interbank market. It also serves as a global benchmark for short-term interest rates.
BB will follow the LIBOR because the loans will be given in foreign currencies.