In a move to align interest rates with market dynamics, Bangladesh’s central bank, the Bangladesh Bank has implemented adjustments to the interest rates associated with loans obtained through the Export Facilitation Pre-finance Fund (EFPF) and the refinance scheme for pre-shipment credit.
According to a recent announcement made by Bangladesh Bank, customers seeking loans from the EFPF will now encounter an interest rate of 5 per cent, a rise from the previous rate of 4 per cent.
Simultaneously, banking institutions will now be subject to a 2 per cent interest rate when borrowing funds from the central bank, a shift from the earlier 1.5 per cent rate.
Earlier this year in January, the Bangladesh Bank introduced the EFPF, which is a fund amounting to Taka 10,000 crore, designed to assist exporters in revitalizing their businesses.
Notably, these funds are intended for the procurement of raw materials.
In a separate notice, the central bank indicated that the interest rate for pre-shipment credit has been elevated from 3.5 per cent to 5 per cent for end-borrowers. Furthermore, banking institutions will now have access to these funds at a 2 per cent interest rate, an increase from the previous rate of 0.5 per cent.
Pre-shipment credit pertains to a type of loan provided to exporters to finance activities like purchasing, processing, manufacturing, or packing goods before they are shipped.
In a more recent development, the Bangladesh Bank introduced a market-driven lending rate in June, replacing the previous lending rate cap of 9 per cent that had been in effect since April 2020, which aims to better reflect the prevailing market conditions in lending practices for both banking and non-banking financial institutions.
