Entrepreneurs would get loans at lower interest rate for Environment-friendly buildings from the refinancing scheme of shariah-based banks and non-bank financial institutions, a Bangladesh Bank master circular issued on Thursday said.
The master circular that revised a number of conditions said that the shariah-based banks and NBFIs that had already signed agreement with the central bank would have to sign deal with BB again within three months of the circular.
Bangladesh Bank in 2014 introduced the Islamic Refinance Fund Account for the Shariah-based banks and NBFIs from the additional funds the entities keep with the central bank with a view to circulating the idle fund for productive purposes.
Bangladesh Bank has so far allowed the shariah-based banks and NBFIs to award the refinance facility to 51 types of environment-friendly ventures.
The central bank master circular came to expedite plan of Bangladesh: 2010-2021, National Sustainable Development Strategy 2010-2021, seventh five-year plan and sustainable development goal, and to ease the refinance scheme facility.
Under the newly issued circular, BB relaxed some condition for the green industries to get the loan facility, a BB official told New Age.
The BB circular said that the banks would have to pay base rate, the lower rate between the provisional interest rate of Mudaraba savings account and bank rate,
to the central bank for the refinance facility, while the average rate of profit in shariah-based banks’ Mudaraba savings account would be treated as base rate for the shariah-based NBFIs.
Bank and NBFIs would be allowed to charge the highest three per cent plus base rate from the clients for any credit facility, treated as investments in shariah compliant banks, for less than 5 years tenure, the rate could be 3.5 per cent plus base rate for any loans between 5-8 years tenure and 4 per cent plus base rate for loans above 8 years tenure.
For distribution of loans through agents and outsourcing, a customer could be charged another 1 per cent for loans below 5 years tenure, another 1.5 per cent for 5-8 year tenure loans and another 2 per cent for loans above 8 years tenure.
No other hidden charges other than the BB approved schedule of charges could be imposed on the loans that would be provided under the facility.
Refinance loans could only be given against the term investments made by the banks and NBFIs.
Shariah-based banks or NBFIs would have to repay the entire refinance amount with 5 per cent penalty along with base rate, among others, for producing false information and improper use of the refinance facility.
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