BB cuts interest rate on borrowing from EDF

Staff Correspondent

20 November, 2019 12:00 AM printer

The central Bangladesh Bank (BB) has cut the interest rate on loans from its Export Development Fund (EDF) by 1.5 per cent interest with LIBOR (London Interbank Offered Rate).

After enhancing the volume of EDF, the central bank took this decision to boost export-import trade.

From now, the EDF interest rate would be the six-month dollar LIBOR plus 1.5 per cent, Bangladesh Bank said in a circular on Tuesday. The rate was previously 2.5 per cent more than the LIBOR.

The LIBOR is what the banks charge each other for short-term loans in the London Interbank Market. It serves as a global benchmark for the banks for short-term interest rates.

The latest interest rate on EDF will remain effective until June 30, 2020, according to the circular.

Banks will get funds from the central bank at the six-month dollar LIBOR + 0.5pc, compared to 1pc earlier, to disburse among manufacturers

On Feb 27, BB increased the volume of the fund to $3.5 billion from $3 billion to help exporters.

The EDF was introduced by the central bank in 1988

with a capacity of $30 million, which was increased in phases.

Members of Bangladesh Garment Manufacturers and Exporters Association and Bangladesh Textile Mills Association can take loans up to $25 million.

The loan window is also available for several other sectors, such as leather and leather products, ceramics and pharmaceuticals.