BRPD Circular No. 10: Refinance Scheme for Providing Working Capital Loan/Investment Facilities in Large Industrial and Service Sector

Ref. No.: BRPD-Circular-10
Banking Regulation and Policy Department
Bangladesh Bank
Head Office
Dhaka.
April 23, 2020

BRPD Circular No.-10 Date: ---------------
10 Baisakh 1427

Managing Director / Chief Executive Officer
All Scheduled Banks and Financial Institutions operating in Bangladesh.

Dear Sir,

Regarding the Refinance Scheme for providing working capital loan/investment facilities to large industrial and service sectors affected by the Novel Corona Virus.

We draw your attention to BRPD Circular No. 08 issued on April 12, 2020, regarding the subject matter mentioned above.

2. In order to address the potential economic impact in Bangladesh due to the outbreak of the Novel Corona Virus (COVID-19), instructions were issued through the aforementioned circular regarding the provision/granting of loan/investment facilities amounting to Tk 30,000 Crore under the financial assistance package announced by the Honorable Prime Minister for institutions in the affected industrial and service sectors (excluding SMEs). According to the instructions in the said circular, scheduled banks/financial institutions will provide working capital loan/investment facilities from their own funds to institutions in the industrial and service sectors affected by the coronavirus outbreak based on banker-customer relationships. To ensure liquidity supply under this financial assistance package, Bangladesh Bank has established a Revolving Refinance Scheme (RRS) of Tk 15,000 Crore. Under this scheme, 50% of the funds allocated to banks/financial institutions under BRPD Circular No. 08/2020 will be provided as refinance facilities against the loans/investments distributed by them. The following instructions shall be followed in operating the said scheme:

1) Name of the Scheme: The name of this scheme shall be "Revolving Refinance Scheme for Providing Working Capital Loan/Investment Facilities in Large Industrial and Service Sector".

2) Source of Fund: Own funds of Bangladesh Bank.

3) Amount of Fund: Tk 15,000 Crore.

4) Tenure: The tenure of this scheme shall be 03 (three) years.

5) Interest/Musharaka Rate: The interest/musharaka rate shall be 4.00% (four percent), which will be charged on a quarterly basis (based on March, June, September, and December).

6) Bank-wise Fund Allocation: Up to 50% of the funds distributed by banks/financial institutions against the funds allocated to each bank/financial institution under BRPD Circular No. 08/2020 will be eligible for refinance under this scheme. However, loans/investments taken under this scheme shall not be used for any other purpose/sector outside the scope of BRPD Circular No. 08/2020 in any way.

7) Participating Institutions: Banks/financial institutions interested in availing refinance under this scheme must sign a Participation Agreement with Bangladesh Bank. Through the signed Participation Agreement with Bangladesh Bank, banks/financial institutions providing working capital loan/investment facilities to the large industrial and service sector under BRPD Circular No. 08/2020 can avail refinance facilities within their own limits under this scheme.

8) Fund Management: All operational activities under this scheme will be carried out by the Department of Off-Site Supervision.

9) Application and Refinance Process under the Scheme:
a) After the distribution of loans/investments under BRPD Circular No. 08/2020, an application must be made to Bangladesh Bank for refinance of 50% of the total funds distributed in the previous month by the 10th of the following month. b) To receive refinance, the lending bank/financial institution will apply to the Chief General Manager, Department of Off-Site Supervision, according to Annex-K and Annex-L. c) The amount up to 50% of the outstanding balance of loans/investments distributed by the respective bank/financial institution on the date of application for refinance will be refinanced from this scheme. d) If a lending bank/financial institution provides loan/investment facilities to new borrowers under BRPD Circular No. 08/2020 after any part of the refinance loan/investment limit of that bank/financial institution is repaid, the lending bank/financial institution can avail refinance facilities from this scheme. In this manner, a bank/financial institution can avail refinance facilities within its own limit for a total of 3 (three) years.

10) Repayment Process of Refinanced Funds:
a) Against the refinance provided under this scheme, interest/musharaka must be paid to Bangladesh Bank on a quarterly basis (for the first three quarters) by the 10th of the following month at the end of each quarter. b) When loans/investments distributed under BRPD Circular No. 08/2020 are recovered/coordinated, or when 1 (one) year of tenure elapses (whichever happens first), all funds released to the bank/financial institution along with the interest of the last quarter must be repaid to Bangladesh Bank. c) If the refinanced funds along with interest/musharaka are not repaid to Bangladesh Bank within the stipulated time, the current account of the respective bank/financial institution kept with Bangladesh Bank will be debited and recovered/coordinated. d) All responsibilities for recovering loans/investments distributed to customers lie with the bank/financial institution distributing the loans/investments. Bangladesh Bank's claim cannot be linked with the recovery of such loans/investments from customers.

11) Other Instructions:
a) If the refinanced funds under this scheme are used for any purpose outside the scope of BRPD Circular No. 08/2020, an lump-sum recovery of interest/musharaka at an additional rate of 2% over the stipulated interest/musharaka rate will be made from the respective bank/financial institution. b) All procedures specified in BRPD Circular No. 08/2020 must be duly complied with regarding the distribution of loans/investments to customers under this scheme. c) Information regarding refinance under this scheme must be sent monthly to the Department of Off-Site Supervision according to Annex-M by the 10th of the following month.

These instructions are issued under the powers conferred by Section 45 of the Bank Company Act, 1991. These instructions shall come into force immediately.

Yours faithfully,

Enclosures: As per list.

(Md. Mokbul Hossain)
Chief General Manager (In Charge)
Phone: 9530268

Annex-K
Sample Application for Refinance by Lending Bank/Financial Institution

Reference: ----------------- Date:-------------

Chief General Manager
Department of Off-Site Supervision
Bangladesh Bank
Head Office, Dhaka.

Dear Sir,

Application for receipt of refinance under BRPD Circular No. 10/2020.

With reference to the subject matter, we inform you that under BRPD Circular No. 08/2020 issued on April 12, 2020, our bank has sanctioned a total of ----------- Taka against ---- loans/investments in --/20 (Name of Month), against which we received your consent letter (Letter No. ----) on --- date. All instructions mentioned in the said circular have been duly followed in the distribution of loans/investments. Along with this, information on distributed loans/investments (Annex-L) is submitted for the purpose of receiving refinance from the scheme described in BRPD Circular No. 10/2020 issued on April 23, 2020, against the said sanction.

Therefore, we request you to provide refinance of a total of ------------------- Taka (in words ---------------------------) mentioned in Annex-L to this bank/financial institution from the refinance scheme described in BRPD Circular No. 10/2020.

Yours faithfully,

(---------------------------)
Managing Director / Managing Director / Chief Executive Officer / Head of Bangladesh Operations for Foreign Banks Phone No:

Annex-L

1) Name of Lending Bank/Financial Institution:
2) Maximum Limit Allocated to this Bank/Financial Institution under BRPD Circular No. 08/2020 (in Taka):
3) Maximum Limit Allocated for Refinance to this Bank/Financial Institution under BRPD Circular No. 10/2020 (in Taka):
4) Total Amount of Refinance Provided so far by Bangladesh Bank to this Bank/Financial Institution under BRPD Circular No. 10/2020 (in Taka):
5) Total Amount of Funds Repaid so far by this Bank/Financial Institution against Refinance (in Taka):
6) 50% of Total Loans/Investments Distributed till /20: ------- (Detailed Table-L(1))

Table-L(1)

S.No	Name of Loan/Investment Recipient Institution	Date and Reference of Consent Provided by Bangladesh Bank	Date of Distribution of Loan/Investment	Amount of Distributed Loan/Investment (in Taka)	Outstanding Balance of Distributed Loan/Investment on Date of Application (in Taka)	50% of Distributed Loan/Investment (in Taka)
(1)	(2)	(3)	(4)	(5)	(6)	(7) = {(6) x 50%}
			......
		......
		......