SFD Circular No. 02: Export Diversification Refinance Scheme

Reference: www.bb.org.bd Monetary Policy Department Bangladesh Bank Primary Department Circular 07 June 2026 SFD Circular No. 02 Dated ------------ 24 Joishtho 1433 To the Head of the Monetary Policy/Primary Department To the Chief Executive Officer of the Primary Banks in Bangladesh Subject, Establishment of the Export Diversification Refinance Scheme It has been observed that the export basket of Bangladesh is highly concentrated in a few sectors. This leads to Market Concentration and Product Concentration Risk. To mitigate the risk of export concentration and to facilitate financing for new and emerging sectors, the Bangladesh Bank has decided to encourage banks to diversify their export financing portfolio by providing incentives for financing new products, small & medium enterprises, agro-based exports, cottage & small industries, export-oriented services, export credit insurance, export market development, and other export-related activities. Therefore, it is mandatory to give priority to financing for new sectors (such as IT, pharmaceuticals, etc.). Accordingly, if the export diversification scheme is implemented, these sectors will receive priority and preferential treatment. Given the limited export potential and the inability of many export-oriented sectors to meet the required export potential, the Bangladesh Bank has decided to establish the Export Diversification Refinance Scheme with a fund of 3,000 (three thousand) crore taka. The main features of this scheme are as follows:

1. Name: Export Diversification Refinance Scheme
2. Objective of the Fund: Export Diversification.
3. Fund Size: 3,000 (three thousand) crore taka (non-refundable).
4. Fund Source: Through the refinancing facility of Primary Banks.
5. Eligible Sectors: Sectors with a minimum export potential of 5% in the 6th Five-Year Plan (2024-27) and newly emerging sectors. Priority will be given to financing for new sectors with high export potential.
6. Participating Financial Institution (PFI): To avail financing under this scheme, all banks must sign a Participation Agreement (PA) with the Bangladesh Bank (Primary, Monetary Policy Department, Bangladesh Bank, Primary Department, Circular). Under this Participation Agreement, other banks will be referred to as Participating Financial Institution or PFI.
7. Interest Rate Structure: 8.1) Interest rate to PFI from Bangladesh Bank: 4% 8.2) Interest rate to borrowers from PFI: Maximum 7%
8. Interest Calculation Method: 9.1) Interest calculation: Reducing Balance Method. 9.2) Term Loan/Investment Ratio: To facilitate financing under this scheme, the equity contribution of borrowers will be properly regulated. Accordingly, PFIs will determine the term loan/investment ratio for their borrowers in accordance with their respective investment/credit norms. The term loan/investment ratio should be 70:30.
9. Tenure of the Scheme: 03 (three) years.
10. Purpose of the Scheme: Term loan/investment.
11. Minimum Tenure: As determined by the PFI and borrower, but minimum 06 months.
12. Conditions for Financing to Borrowers under the Scheme: 13.1) Financing under this scheme will be provided as term loan/investment to borrowers for export diversification activities. 13.2) Financing will not be provided for working capital term loans. PFIs must ensure that borrowers and their associated companies submit a proper business plan and that the term loan is not used for working capital. 13.3) If a PFI finds that the interest rate on a term loan is below the market rate or if the borrower's term loan repayment capacity is insufficient, it will not be eligible for financing under the scheme, and 13.4) Financing will not be provided under this scheme for export bill discounting.
13. For individual borrowers or groups, the maximum exposure limit for term loan financing must be strictly regulated in accordance with the Bangladesh Bank's Master Circular.
14. The Bangladesh Bank will periodically update and regulate the main investment norms through circulars.
15. Hidden Charges: In accordance with the Bangladesh Bank's guidelines on hidden charges (Circular 8), banks must strictly comply with the relevant circulars and guidelines. No hidden expenses or any other charges/fees/interest should be charged. Accordingly, borrowers must be informed in advance about any additional charges/fees.
16. Disbursement Conditions: 17.1) PFIs must submit the disbursement list approved by the Head of the Monetary Policy/Primary Department and the documents specified in Annex 19.2 to the Head of the Primary, Monetary Policy Department, Bangladesh Bank, Primary Department, Circular. 17.2) PFIs must disburse to the Bangladesh Bank within 90 (ninety) days of the disbursement of term loans to borrowers under the scheme. 17.3) Approved disbursement and supporting documents, along with the required application form, must be submitted to the Bangladesh Bank within the stipulated time frame.
17. Repayment Conditions: 18.1) PFIs must ensure that borrowers repay the scheme loan in installments according to the approved repayment schedule. 18.2) The repayment schedule for the scheme loan to borrowers must be approved by the Bangladesh Bank. PFIs must verify the repayment schedule according to the bank's credit policy and submit it to the Bangladesh Bank. 18.3) Once the repayment schedule is approved, the borrower must pay the installment amount to the Bangladesh Bank through the PFI's account. 18.4) If a borrower closes a term loan before the approved tenure, and the borrower has taken another term loan for the same purpose, the scheme loan will also be subject to the same condition. Accordingly, the participating bank may close the scheme loan before the stipulated period. In that case, the PFI must provide the borrower's Loan/Investment Account Statement and details of the term loan closure to the Bangladesh Bank. No additional charges/fees should be charged to the borrower for early closure of the term loan. 18.5) Once the repayment schedule is approved, the PFI must ensure that the borrower pays the installment amount to the Bangladesh Bank. If the PFI fails to ensure the timely payment of installments by the borrower, the participating bank will be charged an additional interest of 5% per annum on the overdue amount.
18. Required Documents: 19.1) PFIs must execute a Demand Promissory Note, Letter of Continuity, and Letter of Debit Authority for the scheme loan. 19.2) The Bangladesh Bank will execute the following documents with the bank/institution for disbursing the scheme loan: K) Business plan of the borrower; L) Details of the borrower for term loan disbursement under the scheme; M) Disbursement details of the borrower for the term loan; N) List of directors; O) Agreement for the term loan; P) Repayment schedule for the term loan; Q) Business certificate of the borrower for the term loan; R) Trade license and other documents; S) List of borrowers and institutions.
19. Eligible Sectors: Sectors with a minimum export potential of 5% in the 6th Five-Year Plan (2024-27) and newly emerging sectors. Priority will be given to financing for new sectors with high export potential.
20. In accordance with the Bangladesh Bank's guidelines on refinancing facilities for primary banks and other banks, banks will provide financing to borrowers under this scheme without considering the refinancing facility guidelines.
21. Monitoring and Evaluation: 22.1) PFIs must submit a monthly progress report (in the prescribed format and approved by the Head of the Monetary Policy/Primary Department or their authorized representative) to the Head of the Primary, Monetary Policy Department, Bangladesh Bank, Primary Department, Circular within 15 (fifteen) days of the following month. All PFIs must execute the necessary documents themselves. 22.2) The Bangladesh Bank will execute the necessary documents for monitoring and evaluation of the scheme. Additionally, random checks and inspections will be conducted. Accordingly, the scheme documents will be updated periodically by the Primary Department and concerned branches. 22.3) The Bangladesh Bank will strictly monitor the progress of the scheme through regular reports and documents. The Bangladesh Bank will periodically review the scheme. If the PFI and borrower fail to submit the required documents on time, the Bangladesh Bank may cancel the scheme loan. 22.4) If a PFI fraudulently disburses a scheme loan, even if the term loan is not actually disbursed, and if the PFI fails to inform the Bangladesh Bank after the borrower defaults, the participating bank will be charged an additional interest of 5% per annum on the overdue amount as per the Participation Agreement. 22.5) If a borrower defaults on the scheme loan installment, the concerned PFI must inform the Bangladesh Bank within the stipulated time. Accordingly, the Bangladesh Bank will take necessary action to recover the overdue amount.
22. Other Guidelines: Term loan sanction, term loan borrower profile and credit, term loan supporting documents submission, debt-equity ratio, term loan repayment and term loan credit-recovery recovery process, banks and financial institutions must strictly follow the Bangladesh Bank's circulars and guidelines. Banks and financial institutions must ensure that term loans are provided to borrowers in accordance with the credit policy. Borrowers must not be charged any additional fees for term loans.
23. In case of any ambiguity, doubt or dispute regarding the scheme, the Monetary Policy Department, Bangladesh Bank will decide.
24. If the provisions of Section 45 of the Bangladesh Bank Order, 1991 (amended in 2023) are violated, the offender will be punished accordingly. Head of Department, (Md. Ali Chowdhury) Chief Manager Phone: 9530320 Email: chowdhury.ali@bb.org.bd Page 3/3