WB pledges $300m for export industries, capital market dev

The government and the World Bank concluded last week their negotiations in the city with the financier pledging US$300 million for the Financial Sector Support Project (FSSP).
The project aims at improving the standards of Bangladesh's banking and financial institutions and export-oriented industries, officials said Saturday.
"We sat with the Bank Thursday last for negotiation for the loan. The lender has assured us of providing the credit," a senior Economic Relations Division (ERD) official told the FE.
He has expressed the hope that a loan agreement to this effect will be signed by end of June next.
Under a US$350 million FSSP, the World Bank (WB) will bankroll this $300 million in loan for improving financial- market infrastructure, regulatory and oversight capacity of Bangladesh Bank (BB) and access to long-term financing for export-oriented industries.
The remaining $50 million for the project will be provided by the government from its own funds. All the funds will be utilised by the central bank.
The ERD official said under the project the BB will provide $292.5 million to the private-sector export-oriented enterprises as long-term-support credit to boost their financial health and safety standards for reducing their credit risk and supporting the industries seeking relocation. Besides, a part of the fund will be spent on the upgradation of the capital market and marketing of pension funds.
It will support long-term financing (an expected average of five years of financing) through the selected bank and non-banking financial institutions to private-sector enterprises, particularly exporters.
The ERD official said the funding will be mainly meant for manufacturing-sector firms. "BB will channel the long-term finance line to the selected bank and financial institutions."
He said the money would also be utilised to strengthen the central bank through improving the Credit Information Bureau, Bangladesh Financial Intelligence Unit, and Payment and Settlement System.
Additional secretary of the ERD Kazi Shofiqul Azam said: "Bangladesh's export-oriented industries are doing well. They need long-term financial support to hedge against the credit risk. The World Bank has come forward to support the industries."
Since the Bangladeshi industries are not getting long-term financial support from the foreign lenders, he said, the proposed World Bank funds would be provided through the Bangladesh Bank at lower rate of interest with longer repayment period.
"The initiative to provide financial support to the industries for relocating to a safer place from the risky areas will also be very helpful for our economy," he added.
According to the FSSP, $50 million will be utilised to strengthen the financial-market infrastructure.
It will build on previous efforts and improve financial-market infrastructure further, specifically focusing on activities in four broad areas: payment and settlement system development; expanding and modernizing the Credit Information Bureau (CIB) of the BB; strengthening the systems of the Bangladesh Financial Intelligence Unit (BFIU) and integration with systems of other stakeholders; and strengthening the IT governance and management of the BB, optimizing the IT assets of the central bank  and raising awareness of IT-security aspects for the financial industry.
The WB loan will also help in strengthening the financial-sector-regulator aims of strengthening BB's capacity to regulate and supervise the scheduled financial institutions (banks and non-bank financial institutions), running the BFIU more efficiently, and further developing and deepening the financial sector with new and innovative products. The component would support regulatory and supervisory strengthening.
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