BB to give foreign currency loans to small, medium manufacturers

Posted by BankInfo on Thu, Oct 29 2015 11:46 am

Bangladesh Bank is set to provide long-term foreign currency financing to small- and medium-scale manufacturers with funds from the International Development Association, the World Bank wing that offers concessional loans and grants to the poorest countries.

The amount to be lent to Bangladesh under the deal with the IDA is yet to be disclosed. The tenure will be up to 10 years, and the funds will be disbursed through financial institutions.

The refinance rate will cover the cost of funds, operating costs and other risks, and will be competitive with market rates. The pricing of the loan will be variable both in terms of LIBOR and spread as per the decision of the BB.

An indicative pricing range of six-month LIBOR + 3-4 percent will be applicable to the institutions, the BB said in a notice.  

The central bank said the institutions will determine their own loan interest rates for borrowers covering their borrowing costs and expenses, along with a reasonable risk-adjusted spread and profit margin, which would be 1 to 3 percent above the cost of funds.

The grace period will be determined by the institutions themselves based on the projected timing of the cash inflows of individual projects. But it will not be more than two years.

News:The Daily Star/28-Oct-2015
Posted in News, Banking