The central bank has relaxed its policy, allowing banks to provide foreign currency loan under its export development fund (EDF) scheme to joint venture readymade garment industries in export processing zones (EPZs).
"It has been decided that EDF loan will be admissible against back-to-back import letters of credit (LCs) for input procurement by Type-B industries in EPZs producing readymade garment (RMG) for export," the Bangladesh Bank (BB) said in a notification on Monday.
Talking to the FE, a senior BB official said the central bank had relaxed the policy at the request of stakeholders.
Earlier, only Type-C RMG industries had been allowed to avail such foreign currency loan on the same grounds, he added.
Currently, 19 Type-B RMG industries are running their operations in the EPZs across the country.
In the fiscal year (FY) 2019-20, the RMG factories imported goods worth around US$200 million, according to the official.
The EDF financing allows manufacturers to procure inputs or raw materials against back-to-back import LCs or inland back-to-back LCs in foreign exchange to produce final output for direct export and local deliveries to the manufacturers of the final export.
Meanwhile, the central bank had increased the allocation of EDF scheme by nearly 43 per cent or $1.50 billion to $5.0 billion from $3.50 billion earlier to support the country's exporters.
Earlier, the central bank had extended the enhanced credit limit for the members of textiles and clothing exporters under its EDF scheme for six more months to help boost proceeds from overseas sales.
Under the relaxations, the members of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Textile Mills Association (BTMA) are eligible to enjoy the enhanced loan ceiling under the EDF scheme until June 30 this calendar year instead of December 31 last year.
Earlier on May 17 last year, the central bank raised the loan limit from $25 million to $30 million under the EDF scheme for the members of BGMEA and BTMA for input procurement.
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