BB relaxes EFPF rules

 
Bangladesh Bank (BB) on Wednesday relaxed the settlement rules of funds businessmen have taken from the Export Facilitation Pre-finance Fund (EFPF).

The money taken under the EFPF has rules for one-time repayment along with interest at the end of the term.

The Banking Regulations and Policy Department of the central bank issued a circular in this regard on Wednesday and sent it to the Managing Directors and Chief Executive Officers of all scheduled banks for immediate execution.

The central bank has relaxed this rule after businessmen argued for a partial payment opportunity to reduce the interest expense of the fund.
From now on, EFPF will be able to pay part or all the money before the expiry of the term if the bank wants.

Bangladesh Bank has raised the interest rate for the loans secured from the Export Facilitation Pre-finance Fund (EFPF) and the refinance scheme for pre-shipment credit as part of its efforts to make rates market-based.

Customers will avail loans from the EFPF at a 5 percent interest rate, up from 4 percent previously, said the BB in a notice issued on 13 August 2023.

Banks will pay a 2 percent interest instead 1.5 percent to borrow funds from the central bank. In January, Bangladesh Bank introduced the Tk 10,000-crore EFPF in order to help exporters revive their businesses. Exporters will have to use the funds to import raw materials.

The interest rate of pre-shipment credit increased to 5 percent from 3.5 per cent at the end-borrower level, the central bank said in a separate notice. Banks can receive funds at a 2 per cent interest rate, which was 0.5 percent previously.

The pre-shipment credit is a loan granted to an exporter for financing the purchase, processing, manufacturing or packing of goods prior to shipment. In June, the BB introduced the market-driven lending rate for banks and non-banking financial institutions, replacing the 9 per cent lending rate cap that had been in place since April 2020.