BB cuts interest rate of refinance funds

Bangladesh Bank yesterday cut the interest rate on refinance funds for pre-shipment credit aiming at helping local exporters continue shipping products amid the coronavirus outbreak.

From now on, businesses will be allowed to avail funds from the scheme at 5 per cent interest rate instead of a previous 6 per cent, according to a central bank notice.

Banks will borrow money from the fund at 2 per cent interest instead of 3 per cent from the central bank and can charge exporters a maximum of 5 per cent.

On April 5, Prime Minister Sheikh Hasina announced that the Bangladesh Bank will introduce a new loan facility titled pre-shipment credit refinance scheme involving Tk 5,000 crore for local exporters.

The revolving fund will have a tenure of three years.

But, borrowers have been showing reluctance to avail loans from the fund considering the high interest rate.

As of March 24, borrowers took Tk 224 crore in loans from the refinance scheme, showed data from the central bank.

A maximum of 10 per cent of the commercial invoice value of exported consignments are eligible for the scheme.