Regulatory Alerts2010-09-29
Added · Updated
FEPD Circular No. 19: Interest rate on Export Development Fund (EDF) loans
EDF loans to a single manufacturer-exporter up to USD 1.50 million are charged interest at six-month LIBOR plus 1 percent per annum, while loans exceeding this amount remain at six-month LIBOR plus 2.5 percent per annum. Manufacturer-exporters drawing from multiple Authorized Dealers must disclose drawings from other banks to ensure correct rate application, with non-compliance resulting in the higher rate being charged on excess borrowings. Bangladesh Bank realizes interest from Authorized Dealers at six-month LIBOR for the first USD 1.50 million of EDF loans. These revised rates are effective from January 1, 2010, and remain valid until June 30, 2011.
Foreign Exchange Policy Department Bangladesh Bank Head Office Dhaka. Web site: www.bangladeshbank.org.bd FE Circular No. 19 Date: September 29, 2010 All Authorized Dealers of Foreign Exchange in Bangladesh Dear Sirs, Interest rate on Export Development Fund (EDF) loans In terms of paragraph 2 of operational procedure for EDF loan disbursements circulated vide FE Circular No. 25, dated December 22, 2009, EDF loans in US Dollar to manufacturer-exporters are charged interest @ six-month LIBOR +2.5 percent pa. It has been decided that EDF loans to a single manufacturer-exporter up to USD 1.50 million will be charged interest @ six-month LIBOR +1 percent pa. For EDF loans in excess of USD 1.50 million (from the same AD or from up to two other AD banks), the interest rate will be as before, ie. six-month LIBOR +2.5 percent pa. Manufacturerexporters drawing EDF loans from more than one AD bank will be required to furnish information of EDF loan drawings from the other AD banks to enable the ADs to apply the appropriate interest rates. If in any case it is detected later that the lower interest rate has been applied on EDF borrowing in excess of USD 1.50 million, the manufacturerexporter will be charged the higher applicable interest rate on the borrowings beyond USD 1.50 million. As for other bank loans, the loan facility from EDF will be admissible only to manufacturer-exporters who are not loan defaulters, including those whose loan accounts have been rescheduled. On the said first USD 1.50 million of EDF, Bangladesh Bank will realize interest from ADs @ six-month LIBOR. The revised interest rates will be effective from 1st January, 2010 and will remain valid till June 30, 2011. Other instructions of FE Circular No. 25/2009 will remain unchanged. Please acknowledge receipt and bring the contents of this circular to the notice of all concerned. Yours faithfully, (Khandaker Abdus Salim) Deputy General Manager Phone: 7120375
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