NBFIs allowed to borrow funds from overseas
Friday, 17 April 2009
FE Report
The central bank has issued a guideline for non-banking financial institutions (NBFIs) seeking Bangladesh Bank approval to borrow foreign currency from overseas sources.
Welcoming the BB's move, the NBFI's said that this would enable them to provide loans to their clients at low interest rates.
Under the guideline, the NBFIs will be allowed to invest the funds borrowed from overseas only in manufacturing and infrastructure sectors and not in real estate development.
"The tenure of repayment of the overseas loans will be minimum five-year with grace period," the central bank said in its guideline that has been sent to the foreign exchange dealer banks and NBFIs.
The NBFIs will receive local currency loan from any local commercial bank against the borrowed overseas funds, the guideline added.
The central bank took the move following a long-standing demand raised by the NBFIs to help them in reducing the cost of funds.
"We've opened a new window for NBFIs to receive loan from overseas sources that would help to reduce their cost of funds," a senior official of the Bangladesh Bank (BB) told the FE.
He also said the central bank will allow such oversees borrowings on case to case basis after examining different aspects including the interest rates, tenure of the loans and mode of repayment.
"Manufacturing and infrastructure sectors will be given priority for such loans because the central bank wants to discourage investment of the loans to less productive sectors like housing," the BB official said while replying to a query.
The central bank has issued a guideline for non-banking financial institutions (NBFIs) seeking Bangladesh Bank approval to borrow foreign currency from overseas sources.
Welcoming the BB's move, the NBFI's said that this would enable them to provide loans to their clients at low interest rates.
Under the guideline, the NBFIs will be allowed to invest the funds borrowed from overseas only in manufacturing and infrastructure sectors and not in real estate development.
"The tenure of repayment of the overseas loans will be minimum five-year with grace period," the central bank said in its guideline that has been sent to the foreign exchange dealer banks and NBFIs.
The NBFIs will receive local currency loan from any local commercial bank against the borrowed overseas funds, the guideline added.
The central bank took the move following a long-standing demand raised by the NBFIs to help them in reducing the cost of funds.
"We've opened a new window for NBFIs to receive loan from overseas sources that would help to reduce their cost of funds," a senior official of the Bangladesh Bank (BB) told the FE.
He also said the central bank will allow such oversees borrowings on case to case basis after examining different aspects including the interest rates, tenure of the loans and mode of repayment.
"Manufacturing and infrastructure sectors will be given priority for such loans because the central bank wants to discourage investment of the loans to less productive sectors like housing," the BB official said while replying to a query.