Six banks sign deals with BB in refinance scheme

Six banks have signed separate agreements with Bangladesh Bank to disburse low-cost, long-term foreign currency loans among manufacturers.

The banks will get the funds from the central bank under the World Bank-funded Financial Sector Support Project or FSSP.

The banks are Dutch Bangla, IFIC, South East, Standard Bank, Trust Bank and Standard Chartered. Ten other banks also signed the deals with the BB earlier.

While the size of the fund is $300 million, banks can lend money for ventures in the productive industrial sectors for three to ten years under the project.

Banks will have to pay an interest rate between 3.25 percent and 4.25 percent to the BB to use the refinancing fund. The interest rate will be set by considering the respective banks' CAMELS rating.

The banks will impose a maximum of a 3 percent spread to disburse the loans to entrepreneurs, meaning that the banks cannot charge more than 6.25 percent from the borrowers.

The fund will play a pivotal role in meeting the growing demand for long-term financing for productive sectors in Bangladesh, said Nazneen Sultana, deputy governor of BB. “The fund will enable the manufacturing sector to remain competitive and grab business opportunities,” she said.

Sultana also said the prevailing dearth of investment will diminish and many entrepreneurs will come forward to take the opportunity. Md Ahsan Ullah, project director of FSSP, signed the agreements on behalf of the central bank with the managing directors of the banks.