SFD Circular No. 01: Refinance Scheme for Pre-Shipment Credit to Mitigate the Crisis due to Novel Corona Virus

Sustainable Finance Department Bangladesh Bank Website: www.bb.org.bd Chief Executive Dhaka April 22, 2020 SFD Circular No.-01 Date: ----------------- Baishakh 09, 1427 Managing Director/Chief Executive Officer All Scheduled Banks operating in Bangladesh. Refinance Scheme for Pre-Shipment Credit to Mitigate the Crisis due to Novel Corona Virus.

1. Attention is drawn to BRPD Circular No. 09 dated April 13, 2020 issued by the Banking Regulation and Policy Department.

2. Under the said circular, interested banks are invited to enter into an 'Participation Agreement' (Appendix-A) with the Sustainable Finance Department of Bangladesh Bank on a first-come-first-served basis under the BDT 5,000 (Five Thousand) Crore Refinance Scheme.

3. Banks entering into the Participation Agreement must submit an application for refinance (Appendix-G) to this department on a weekly basis in the week following the shipment of relevant exported goods. Claims for the aforementioned refinance facility shall be eligible only after the relevant goods have been shipped.

4. In accordance with the instructions of BRPD Circular 09/2020 and the contract concluded with this department, banks seeking refinance facility against loans distributed under the aforementioned refinance scheme must submit the following documents/information along with the application letter signed by the Managing Director/Chief Executive Officer of the bank: (a) Required information according to the prescribed format (Appendix-E, F); (b) Loan distribution certificate/letter; (c) Consolidated statement of distribution under the pre-shipment export credit sector; (d) Letter of Undertaking (Appendix-D) and Letter of Continuity (Appendix-B); (e) Copy of relevant export order/export letter of credit; (f) Copy of Inspection Certificate and Report of the relevant Independent Surveyor; (g) EBC Form (E/B)/Alternate EBC/EEZ (Export Enhancement Zone); (h) Copy of EBC UDI; (i) Certification of completion of production of exported goods; and (j) Audit report of the credit submitted by a internationally recognized agency, etc.

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5. The Managing Director/Chief Executive Officer of the participating bank in the refinance scheme must submit quarterly information on loan distribution and collection according to Appendix-K to the Deputy Governor, Sustainable Finance Department, Bangladesh Bank within 15 (fifteen) days from the end of each quarter, i.e., March, June, September, and December, specifically by April 15, July 15, October 15, and January 15 respectively. If required information/statements regarding the refinanced loans are not submitted to Bangladesh Bank within the specified time, appropriate action will be taken in accordance with the relevant laws and regulations.

6. The Sustainable Finance Department, Bangladesh Bank reserves the right to add, subtract, and amend any percentage/regulations regarding this refinance facility.

7. The appendices to this circular (Appendix A, E, F, D, B, K, G) shall be considered an integral part of the circular. Furthermore, all other instructions of BRPD Circular No. 09/2020 shall be complied with.

These instructions are issued under the authority granted by Section 45 of the Bank Company Act, 1991, and shall take immediate effect.

Yours faithfully, (Khandkar Morshed Milon) Deputy Governor Phone: 9530320 Bcc: sustainablefinance@bb.org.bd ms.sfd@bb.org.bd

Appendix-G Subject: Refund of Interest Rate Difference between Exporters and Banks Reference: BRPD Circular No. 09 dated April 13, 2020 and SFD Circular No. 01 dated April 22, 2020

To, The Chief Executive Officer/Managing Director All Scheduled Banks Sub: Refund of Interest Rate Difference between Exporters and Banks

Dear Sir,

With reference to the above subject, you are requested to refund the difference in interest rate between exporters and banks as per the details below:

1. The Sustainable Finance Department has established a BDT 5,000 Crore Refinance Scheme for Pre-Shipment Export Credit to mitigate the impact of the Novel Coronavirus outbreak. Under this scheme, banks can obtain refinance from the Sustainable Finance Department at an interest rate of 3% per annum.

2. Accordingly, banks are instructed to distribute pre-shipment export credit to exporters at an interest rate of 6% per annum. However, considering the hardship faced by exporters due to the pandemic, the Sustainable Finance Department has decided to bear the interest rate difference between the banks and the exporters.

3. Therefore, banks are directed to refund the interest rate difference (3% per annum) to the exporters immediately upon receipt of refinance from the Sustainable Finance Department. The refunded amount should be credited to the exporter's account.

4. The interest rate difference refund process should be completed within 7 days of receiving the refinance from the Sustainable Finance Department.

5. Banks must maintain proper records of the interest rate difference refunds and submit them to the Sustainable Finance Department upon request.

6. Any violation of these instructions will be viewed seriously and necessary action will be taken accordingly.

Thanking you,

Deputy Governor Sustainable Finance Department Bangladesh Bank

Appendix-A Agreement for Participation in the Refinance Scheme for Pre-Shipment Export Credit

This Agreement is made on [Date] between

The Sustainable Finance Department, Bangladesh Bank (hereinafter referred to as 'the Department'), represented by its Deputy Governor, and

[Name of the Bank] (hereinafter referred to as 'the Bank'), represented by its Managing Director/Chief Executive Officer.

WHEREAS the Department has established a Refinance Scheme for Pre-Shipment Export Credit to mitigate the impact of the Novel Coronavirus outbreak;

AND WHEREAS the Bank has applied for participation in the said Scheme;

NOW THIS AGREEMENT WITNESSETH AS FOLLOWS:

1. The Bank agrees to participate in the Refinance Scheme for Pre-Shipment Export Credit established by the Department under the terms and conditions set forth herein.

2. The Bank agrees to distribute pre-shipment export credit to eligible exporters in accordance with the guidelines issued by the Department and the Banking Regulation and Policy Department.

3. The Bank agrees to submit applications for refinance to the Department on a weekly basis after the shipment of goods, along with all required documents.

4. The Bank agrees to refund the interest rate difference of 3% per annum to the exporters from the refinance amount received from the Department.

5. The Bank agrees to submit quarterly reports on loan distribution and collection to the Department as per the prescribed format.

6. The Bank agrees to comply with all other instructions issued by the Department and the Banking Regulation and Policy Department regarding this Scheme.

7. The Department reserves the right to modify, amend, or terminate this Agreement and the Scheme at any time without prior notice.

8. This Agreement shall be governed by and construed in accordance with the laws of Bangladesh.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.

For and on behalf of The Sustainable Finance Department, Bangladesh Bank

Signature: ____________________ Name: ____________________ Title: Deputy Governor

For and on behalf of [Name of the Bank]

Signature: ____________________ Name: ____________________ Title: Managing Director/Chief Executive Officer

Appendix-B Letter of Continuity

To, The Deputy Governor Sustainable Finance Department Bangladesh Bank

Sub: Letter of Continuity for Pre-Shipment Export Credit Refinance Scheme

Dear Sir,

We, [Name of the Bank], hereby confirm our continued participation in the Pre-Shipment Export Credit Refinance Scheme established by the Sustainable Finance Department, Bangladesh Bank, under Circular No. 01 dated April 22, 2020.

We assure you that we will continue to distribute pre-shipment export credit to eligible exporters in accordance with the guidelines issued by the Department and the Banking Regulation and Policy Department.

We also assure you that we will refund the interest rate difference of 3% per annum to the exporters from the refinance amount received from the Department.

We further assure you that we will submit all required documents and reports to the Department as per the prescribed format and timeline.

Thanking you,

Yours faithfully,

Signature: ____________________ Name: ____________________ Title: Managing Director/Chief Executive Officer

Appendix-C List of Definitions

In this Agreement, unless the context otherwise requires: (a) 'Act' means the Bank Company Act, 1991 (Act No. 12 of 1992). (b) 'Bank' means [Name of the Bank]. (c) 'Department' means the Sustainable Finance Department, Bangladesh Bank. (d) 'Exporter' means a person engaged in the export of goods. (e) 'Pre-Shipment Export Credit' means credit extended by the Bank to an exporter for the purpose of manufacturing, processing, packing, and forwarding export goods. (f) 'Refinance' means the financial assistance provided by the Department to the Bank under the Scheme. (g) 'Scheme' means the Refinance Scheme for Pre-Shipment Export Credit to Mitigate the Crisis due to Novel Corona Virus. (h) 'Shipment' means the actual loading of goods onto a vessel, aircraft, or other mode of transport for export.

Appendix-D Letter of Undertaking

To, The Deputy Governor Sustainable Finance Department Bangladesh Bank

Sub: Letter of Undertaking for Pre-Shipment Export Credit Refinance Scheme

Dear Sir,

We, [Name of the Bank], hereby undertake the following:

1. We will distribute pre-shipment export credit to eligible exporters in accordance with the guidelines issued by the Department and the Banking Regulation and Policy Department.

2. We will refund the interest rate difference of 3% per annum to the exporters from the refinance amount received from the Department within 7 days of receiving the refinance.

3. We will submit applications for refinance to the Department on a weekly basis after the shipment of goods, along with all required documents.

4. We will submit quarterly reports on loan distribution and collection to the Department as per the prescribed format.

5. We will comply with all other instructions issued by the Department and the Banking Regulation and Policy Department regarding this Scheme.

6. We understand that any violation of these undertakings may result in the termination of our participation in the Scheme and other legal actions.

Thanking you,

Yours faithfully,

Signature: ____________________ Name: ____________________ Title: Managing Director/Chief Executive Officer

Appendix-E Weekly Application for Refinance

To, The Deputy Governor Sustainable Finance Department Bangladesh Bank

Sub: Weekly Application for Refinance under Pre-Shipment Export Credit Refinance Scheme

Dear Sir,

We, [Name of the Bank], hereby apply for refinance under the Pre-Shipment Export Credit Refinance Scheme for the following shipments:

Sl. No.	Exporter Name	Invoice No.	Shipment Date	Amount (BDT)
1
2
3
...

Total Amount: _______________ BDT

Enclosed herewith are the required documents for the above shipments.

Thanking you,

Yours faithfully,

Signature: ____________________ Name: ____________________ Title: Authorized Signatory

Appendix-F Consolidated Statement of Distribution

To, The Deputy Governor Sustainable Finance Department Bangladesh Bank

Sub: Consolidated Statement of Distribution under Pre-Shipment Export Credit Refinance Scheme

Dear Sir,

We, [Name of the Bank], hereby submit the consolidated statement of distribution under the Pre-Shipment Export Credit Refinance Scheme for the period from [Start Date] to [End Date]:

Sl. No.	Exporter Name	Loan Amount (BDT)	Interest Rate (%)	Refund Amount (BDT)
1
2
3
...

Total Loan Amount: _______________ BDT Total Refund Amount: _______________ BDT

Enclosed herewith are the supporting documents.

Thanking you,

Yours faithfully,

Signature: ____________________ Name: ____________________ Title: Authorized Signatory

Appendix-G Quarterly Report on Loan Distribution and Collection

To, The Deputy Governor Sustainable Finance Department Bangladesh Bank

Sub: Quarterly Report on Loan Distribution and Collection under Pre-Shipment Export Credit Refinance Scheme

Dear Sir,

We, [Name of the Bank], hereby submit the quarterly report on loan distribution and collection under the Pre-Shipment Export Credit Refinance Scheme for the quarter ended [Date]:

Sl. No.	Metric	Amount (BDT)
1	Total Loans Distributed
2	Total Loans Collected
3	Outstanding Balance
4	Number of Beneficiaries
5	Average Interest Rate Charged
6	Total Refund Amount Paid

Enclosed herewith are the supporting documents.

Thanking you,

Yours faithfully,

Signature: ____________________ Name: ____________________ Title: Authorized Signatory