Central bank hikes pre-shipment, export financing interest rates

The Bangladesh Bank (BB) has raised the interest rates for Refinance Scheme for Pre-Shipment Credit and Export Facilitation Pre-finance Fund (EFPF).
This adjustment by the country's central bank aligns with the newly introduced reference rate known as SMART (Six months Moving Average Rate of Treasury bill), according to two circulars issued by BB's Banking Regulation and Policy Department (BRPD).
In the circulars, BB said that the interest rate for the Refinance Scheme for Pre-Shipment Credit at the client level was 3.50 per cent, while the rate for credits under the Export Facilitation Pre-finance Fund (EFPF) was set at 4.0 per cent.
"Now, the interest rates for both the refinance and pre-finance schemes have been readjusted upward to 5.0 per cent," BRPD Director Mohammad Shahriar Siddiqui said.
On the other hand, the Bangladesh Bank has imposed an interest charge of 1.5 per cent on outstanding pre-finance to the participatory financial institutions (PFIs), which include banks and other financial establishments. At the same time, PFIs borrowing funds from the Refinance Scheme for Pre-Shipment Credit are subject to a 0.5 per cent interest rate.
This change will enable PFIs to access credits from these two schemes at a rate of 2.0 per cent moving forward, according to Shahriar Siddiqui.
In case a borrower fails to meet the repayment obligations to BB, the PFIs will be liable to a penalty equivalent to clearing the outstanding dues at a bank rate of 4.0 per cent, according to the BB circulars.
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