BB slashes interest rate on exporters’ borrowing from EDF

Published: November 19, 2019 18:04:40 | Updated: November 20, 2019 10:17:09

The central bank has slashed the interest rate on loans from its Export Development Fund (EDF) by 1.0 percentage point to boost exports.

From now, the EDF interest rate would be the six-month dollar Libor plus 1.5 per cent, said Bangladesh Bank (BB) issuing a notice on Tuesday.

The rate was previously 2.5 per cent more than the Libor, according to a report on bdnews24.com.

The Libor or the London interbank offered rate is what the banks charge each other for short-term loans in the London Interbank Market. It serves as a global benchmark for the banks for short-term interest rates.

The latest interest rate on EDF will remain effective until June 30, according to the circular.

Banks will get funds from the central bank at the six-month dollar Libor + 0.5 per cent, compared to 1.0 per cent earlier, to disburse among manufacturers

On Feb 27, the BB increased the size of the fund to $3.5 billion from $3.0 billion to help exporters.

The EDF was introduced by the central bank in 1988 with a capacity of $30 million, which was increased in phases.

Members of Bangladesh Garment Manufacturers and Exporters Association and Bangladesh Textile Mills Association can take loans up to $25 million.

The loan window is also available for several other sectors, such as leather and leather products, ceramics and pharmaceuticals.