BB tightens shippers' EDF facility

The Bangladesh Bank (BB) on Tuesday tightened the Export Development Fund (EDF) facility for the shippers to some extent, as settlement of liabilities from the funded facility is no more allowed.

The central bank issued a circular, signed by director of foreign exchange policy department Sarwar Hossain, regarding the matter.

It reads: "It has been decided that those customers whose EDF liabilities have to be settled through funded facilities against disbursement from the date of this circular will not be accessible for further EDF loan."

Sector insiders said that the new order would bar many exporters from diverting their export proceeds.

"To my mind, the exporters will be more careful in enjoying the EDF facility," said Syed Mahbubur Rahman, managing director and CEO of the Mutual Trust Bank Limited.

The central bank has been providing the facility to the exporters through US$8.0-billion EDF fund, which helps lower their cost of doing business.

In another development relating to the EDF, the BB on the day extended the borrowing time limit for the textile millers and garment makers for six more months until December 31 this year.

The central bank raised the disbursement limit by 20 percent to $30 million in this January and the disbursement deadline was set at June 30.

The facility has now been extended for members of the Bangladesh Textile Mills Association (BTMA) and the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the BB circular said.

Meanwhile, the BTMA top leaders urged the central bank on Tuesday to extend the time of Usance Paid At Sight (UPAS) LC or deferred LC payment to 360 days from the existing 180 days, as the dollar crisis deepened. The request came up at a courtesy call with the BB governor.

The time limit for payment of industrial raw materials under the deferred LC is 180 days, but it has become difficult to pay following the current dollar crisis, the BTMA said in a statement.

BTMA President Mohammad Ali Khokon requested the central bank to extend the payment time to 360 days, according to it.

Mr Khokon also requested BB Governor Abdur Rouf Talukder to fix the time at two years for making payment of capital machinery under UPAS LC.

The central bank governor said a circular on increasing the time limit for raw material import from 180 days to 360 days would be published soon, according to the BTMA officials.