BB gets 73 proposals for long-term financing

Bangladesh Bank (BB) has so far received 73 project proposals involving $435 million from export-oriented companies to facilitate long-term financing under the World Bank funded Financial Sector Support Project (FSSP).

"We have already sanctioned 27 proposals with $109.77 million, of which $50.79 million of 18 proposals has been disbursed, the rest of the sanctioned amount is under the process of disbursement," a senior BB official said yesterday.

Out of the total sanctioned funds, some have been disbursed partially and some others are under the process as the amounts will be disbursed through opening Letter of Credit (LC) for importing machineries, he added.

Out of the total applications received through commercial banks, the central bank is processing 27 proposals while 13 have been sent to the World Bank for consideration, the BB official said.

He also said the BB has also rejected six proposals with $31.71 million for various reasons. "We have submitted proposals of 11 companies involving $52.99 million, of which four companies have already been given their sanctioned funds amounting to $8.46 million," said Additional Managing Director and COO of Mutual Trust Bank M Hashem Chowdhury.

Out of the total submitted proposals, he said, one proposal has already been approved, two have been withdrawn for different reasons and rest of the proposals awaits approval.

BB under the auspices of International Develop-ment Association (IDA) of the World Bank would provide a total of $350 million under FSSP, which would play a pivotal role in meeting the growing demand for long-term financing for productive sectors in the country.

BB has signed separate Participating Financial Institutes (PFI) agreement with 31 banks to distribute the long term finance among the country's export oriented industries. Of the total amount, World Bank will provide $300 million and rest of the amount will provide from BB's own fund. The tenure of the project is July 1, 2015 to March 31, 2021.

The initiative will accelerate further the country's export as the finance is providing among export oriented industries on a low interest rate (within 6.50 percent) for incorporating modern technology in production system and increasing the efficiency, said M Hasim Chowdhury of Mutual Trust Bank.

Managing Director of Best Wool Sweater Limited Alamgir Kabir said, "We have imported machineries with the support of FSSP fund at a low interest rate." It has created a great opportunity to set up modern technology based machineries in the industry and the production of the company has increased which will increase exports, he added.
Best Wool Sweater Limited submitted a proposal for $2.82 million loan, of which BB approved $2.27 million through the Trust Bank Limited.

Under the FSSP fund for long-term financing, the banks can lend money for ventures in the industrial productive sectors for tenures of five to 10 years, under the condition that the banks would pay interest rate between 2.50 percent and 3.50, including LIBOR (London Inter Bank Offered Rate) depending on the category of banks.

The interest is being fixed considering the respective bank's CAMELS (Capital, Assets quality, Management, Earning, Liquidity, and Sensitivity) rating, a recognized international rating system that bank supervisory authorities use in order to rate financial institutions.