Bangladesh Bank (BB) has issued a comprehensive Master Circular for the Export Development Fund (EDF), consolidating all previous instructions into a single regulatory framework. The circular, which takes immediate effect, replaces FE Circular No. 45 of 2017 along with all subsequent directives related to the EDF. The new framework aims to simplify export financing, enhance transparency, and align the facility with a SOFR-based interest rate regime.
FAQ
Q: What is the main purpose of the new EDF Master Circular? A: The primary purpose of the new EDF Master Circular is to simplify the regulatory framework for export financing, ensure uniform implementation across the banking sector, and strengthen export financing in support of Bangladesh's external trade.
Q: How has the interest rate regime changed under the new circular? A: Under the new circular, Bangladesh Bank has introduced a pricing mechanism linked to the six-month Secured Overnight Financing Rate (SOFR). The central bank will refinance Authorized Dealers (ADs) at the six-month SOFR plus 0.5 percent per annum, while banks may lend to manufacturer-exporters at the six-month SOFR plus 1.5 percent.
Q: What are the new borrowing limits for exporters under the EDF? A: The new borrowing limits under the EDF have been revised based on membership of recognized trade associations. For example, member mills of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Textile Mills Association (BTMA) can borrow up to US$20 million each, while members of the Bangladesh Fruits, Vegetables and Allied Products Exporters Association (BFFEA) can borrow up to US$5 million.
Q: What compliance requirements have been tightened under the new circular? A: Under the new circular, exporters who fail to repatriate export proceeds within the statutory 120-day period will become ineligible for further EDF financing. Additionally, Authorized Dealers that fail to repay EDF loans within the stipulated timeframe will be barred from obtaining further EDF refinancing until all overdue liabilities are cleared.
