Textile millers on Monday urged the Bangladesh Bank to extend the repayment tenure of loans from the Export Development Fund (EDF) up to 270 days as they often do not get payment from the exporters in time.
"In some cases, the mills cannot pay back the EDF loan timely as they don't get payment from exporters in time," Bangladesh Textile Mills Association (BTMA) President Mohammad Ali Khokon told a press briefing at the trade body's office in the city.
Presently, the repayment tenure is generally 180 days and an additional 90 days are allowed subject to approval by the central bank. There is an allegation that many banks are unwilling to give the additional time.
The EDF was set up with only US$ 300 million in 1988 and by now it stood at $7.0 billion.
"The EDF contributed a lot to achieve the present export performance … it would not have been possible to sustain the export growth by importing raw materials at a high interest rate," said Mr Khokon.
The export-oriented sectors, especially the members of BTMA, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), are the beneficiaries of the special loan facility.
The current limit of the fund for textile millers is US$25 million.
"The local textile and RMG sector is passing through an unusual situation now due to the high prices of raw materials, energy and dollar amid the Russia-Ukraine war and a declining trend in remittance inflow," said the BTMA president.
While the millers were trying to overcome the challenges by making some adjustments, "a vested quarter is making a negative propaganda" to close the fund, he alleged.
No individual or organisation gets a loan from the fund as it is only dedicated to the export-oriented manufacturing mills or factories, he said, claiming that there is no scope to misuse the fund.
The BTMA member mills are one of the EDF clients and they usually import raw materials using the fund and make deemed exports of yarn and fabric to RMG exporters through back-to-back letter of credit, he explained.
He added that the RMG exporters pay for yarn and fabric at US dollar after receiving the export proceeds and textile millers repay the EDF loan accordingly.
The textile millers also sought continuation of the foreign currency support to the export-oriented manufacturing sectors, especially textile and apparel exporters, as they import raw materials like raw cotton, synthetic fibre and dyeing chemicals.
