The central bank has enhanced the loan ceiling for the members of textiles and clothing exporters under its export development fund or EDF scheme to help boost proceeds from overseas sales, officials say. “It has now been decided to enhance the limit of US$ 25 million to $30 million for member of the BGMEA and BTMA,” the Bangladesh Bank said in a notice on Sunday. Earlier, an authorised dealer or AD bank could borrow a maximum of $25 million from the fund against its foreign currency financing of input procurement for member mills of the Bangladesh Garment Manufacturers and Exporters Association and the Bangladesh Textile Mills Association or BTMA. The notice said, “The enhanced portion shall, effective for the disbursement until December 31, 2020, be considered by ADs on case to case basis, depending on the actual needs of the mills concerned.” Mohammad Ali Khokon, president of the BTMA, welcomed the central bank’s initiative, saying it will help encourage exporters to strengthen their efforts to boost the country’s overall export earnings. Mr Khokon, managing director of the Metro Spinning Limited, urged the banking regulator to enhance such limit further to increase the inflow of foreign exchange in the local market. Talking to the FE, a senior BB official said the central bank has increased the loan ceiling for the apparel and clothing exporters to meet their growing demand for the foreign currency. “We expect it to help revamp the country’s export sector in the near future,” the central banker noted. The BB’s latest move came against the backdrop of falling trend in export earnings in recent months mainly due to the global economic slowdown caused by the coronavirus outbreak. Bangladesh’s export earnings dropped by nearly 83 per cent to US$520.01 million in April from $3.03 billion in the same month of 2019 due to the spread of coronavirus globally. Meanwhile, the central bank has increased the allocation of EDF scheme by nearly 43 per cent or US$1.50 billion to $5.0 billion from $3.50 billion earlier to support the country’s exporters. The BB has already slashed interest rates on loans under the EDF scheme significantly to help exporters tide over pandemic-related disruptions. Under the revised interest rates, exporters will be able to borrow from the low-cost scheme at an interest rate of 2.0 per cent instead of six-month US Dollar London Inter-bank Offered Rate (LIBOR) plus 1.50 per cent, which equated to nearly 3.0 per cent interest rate. The EDF financing allows manufacturers to procure inputs or raw materials against back-to-back import letters of credit (LCs) or inland back-to-back LCs in foreign exchange to produce final output for direct export and local deliveries to the manufacturers of the final export.
