Refinancing of Tk 15,000 crore for industrial and service sector

Bangladesh Bank has set up a refinancing fund of Tk 15,000 crore for the industry and services sector to implement the incentive package announced by the Prime Minister. Half of the loans disbursed under the incentive package will be refinanced by the banks at an interest rate of only 4 per cent.

An initiative has also been taken to set up a separate fund of Tk 10,000 crore for the SME sector soon. It is learned that these initiatives are being taken to provide liquidity assistance to the banks.

Prime Minister Sheikh Hasina has announced several incentive packages to combat the effects of coronavirus. Of this, an incentive package of Tk 30,000 crore for industries and services and Tk 20,000 crore for cottage, micro, small and medium industries has been announced. In both cases, the banks will get 9 percent interest. However, the government will provide 4 percent subsidy in the industrial and service sectors. And 4 and a half percent will be taken from the customer. And out of 9 percent of SME sector, the government will give 5 percent. At first the banks were asked to disburse these loans from their own sources. But now in both cases it has been decided to refinance half of the size of the fund from Bangladesh Bank.

According to a circular issued by Bangladesh Bank, a circular has already been issued regarding the Tk 30,000 crore fund announced by the Prime Minister for the industries and services sector affected by the coronavirus. As per the instructions of the circular, banks and financial institutions will provide working capital loans from their own funds to the affected industrial and service sector institutions on the basis of banker-customer relationship. To ensure liquidity of the said financial assistance package, a revolving refinancing scheme of Taka 15,000 crore has been set up at Bangladesh Bank’s own source. From this scheme, 50 percent refinancing facility of distribution to banks and financial institutions will be provided. The term of this scheme will be three years.

According to the directive, banks and financial institutions will get refinancing from this scheme at only 4 percent interest. March, June, September and December will also have to be repaid with interest on quarterly basis from one year after refinancing. Up to 50 per cent of the loans disbursed by banks and financial institutions will be refinanced under this scheme. Banks and financial institutions will have to enter into a partnership agreement with Bangladesh Bank before refinancing. If you take a loan from here and use it in any other sector, you will have to repay the existing interest with additional 2 percent interest.

It further said that the banks will apply to Bangladesh Bank for 50 per cent of the total disbursement in the previous month by the 10th of the next month. Thus, banks and financial institutions will be able to avail refinancing facility within their own limits for up to 3 years. Refinancing will have to be paid to Bangladesh Bank with interest for the last quarter from one year onwards. At the customer level, all the responsibilities of loan disbursement or collection will be vested in the concerned bank.

The global economy has slowed down due to the coronavirus, officials said. During this time various initiatives have been taken to raise money in the hands of people through banks. The cash reserve rate (CRR) of banks has been reduced from 5.5 per cent to 4.5 per cent. As a result, the banks have accumulated a loan of Tk 19,000 crore. The size of the Export Development Fund (EDF) has been increased from কোটি 350 million to কোটি 500 million.

A refinancing fund of Tk 5,000 crore has been set up for disbursement of loans at only 4 per cent interest in other sectors of agriculture except cereals and crops such as seasonal flower and fruit cultivation, fisheries, poultry, dairy and livestock. A fund of Rs 3,000 crore has been set up for non-governmental organizations (NGOs) or microfinance institutions. A refinancing fund of Tk 5,000 crore has been set up for pre-shipment loans in the export sector.