Regulatory Alerts2024-09-01
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BRPD Circular Letter No. 40: Loan facility for payment of salaries and allowances to workers of active export-oriented industries
Scheduled banks are authorized to provide term loans outside the working capital limit to active export-oriented industries to pay August 2024 salaries and allowances, with the loan amount capped at the average salary paid over the preceding three months. Eligibility requires the industry to export at least 80% of total production and have paid salaries from May to July 2024, supported by a certificate from a recognized trade association. The loans are subject to market interest rates, must be paid directly to workers' accounts, and cannot cause the borrower's total debt to exceed the single customer credit limit, with a maximum tenure of one year including a three-month grace period and no additional charges permitted.
Bangladesh Bank Chief Controller Motijheel, Dhaka-1000 Bangladesh. Ref No.: BRPD/Policy-2/Banking Regulations and Policy Division 01 September 2024 BRPD Circular Letter No. 40 Date: ------------------- 17 Bhadra 1431 Managing Directors / Chief Executive Officers All Scheduled Banks Operating in Bangladesh Dear Sir,
Regarding the loan facility for payment of salaries and allowances to workers and employees of active export-oriented industries:
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In the recent domestic political and global economic context, the business environment has been disrupted, causing delays in the production activities and export value repatriation processes of export-oriented industries. Consequently, the ability of these industries to pay salaries and allowances to their workers and employees has decreased. It is now necessary to provide financial assistance to export-oriented industries to maintain production capacity and continue the momentum of exports.
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In this context, the following instructions are to be followed to maintain the export capacity of these industries and the country's economic growth by ensuring the timely payment of salaries and allowances to workers and employees of active export-oriented industries:
a) Term loan facilities may be provided based on the customer's capacity assessment through the banker-customer relationship, outside the applicable working capital limit, for the payment of salaries and allowances for August 2024 to workers and employees of active export-oriented industries;
b) The amount of the loan facility shall not exceed the average salary/allowance paid by the borrowing industrial establishment over the past three months;
c) Industrial establishments that export at least 80% of total production are considered export-oriented industries, and establishments that have paid salaries to their workers and employees from May 2024 to July 2024 are considered active. The status of being active and export-oriented must be supported by a certificate from the relevant representative trade organization (BGMEA, BKMEA, etc.).
d) The prevailing market-based interest rate shall apply against such loans;
e) Scheduled banks shall directly pay the salary/allowance for August 2024 to the bank account (including General Salary Account) of the concerned worker/employee;
f) The total loan of the customer, including the aforementioned loan, must remain within the Single Customer Credit Limit;
g) The funds for the aforementioned loan may be repaid in equal installments (monthly/quarterly) within a maximum period of 1 year, including a 3-month grace period, in the form of a term loan; and
h) No additional interest/profit/fee/charge (however named) shall be collected/levied on such loans in addition to regular interest.
- These instructions are issued under the powers conferred by Section 45 of the Bank Company Act, 1991.
Yours faithfully, (Mohammad Shahriar Siddique) Director (BRPD) Phone: 9530252