Close on heels of Bangladesh’s central bank-Bangladesh Bank announcing a new initiative of payment guarantee for exporters, which according to experts is a potent mode of accelerating the country’s exports and reduce exporters’ risk of collecting their products’ worth more so in the light of recent reports of many global buyers demanding extended payment terms or withholding payments, City Bank recently launched a Fintech-based export factoring solution, which will ensure that exporters get paid once goods are shipped.
Earlier, just a day after Bangladesh Bank issued guidelines on international factoring, the
Eastern Bank Limited (EBL) rolled out a novel export factoring solution as part of its efforts to reduce the risks that Bangladeshi exporters face when it comes to collecting their goods’ worth, as part of which EBL signed a letter of intent with trade finance provider Tradewind GmbH to make the service available to garment exporters, thereby becoming the first bank in the country to introduce this facility.
“Factoring exists in Bangladesh unofficially for sometime now. But it is good that that it has been officially recognised by the central bank,” said Fazlul Hoque, MD of Plummy Fashions Limited and ex-President of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) speaking to Apparel Resources.
Meanwhile, City Bank has reportedly signed an MoU with UK-based global trade financer PrimaDollar, to facilitate customers of the bank who are involved in foreign trade on deferred sales contract terms.
Now exporters will be able to ensure that 90 per cent payment is made on submission of shipment papers to the bank, underlined Additional Managing Director of City Bank, Sheikh Mohammad Maroof.
It may be mentioned here that businesses are now forced to go for exports on sales contracts without payment guarantees where some risks remain on getting their earnings, but the factoring will now cover that risk and the importer’s bank will provide the payment in case of failure of the importer to make the payment on time.
