The Bangladesh Bank on Thursday formed a Tk 15,000 crore revolving refinance scheme with a view to supporting the implementation of the Tk 30,000 crore stimulus package announced by the government for the coronavirus outbreak-affected entities in the industry and service sectors.
As per the BB’s circular issued on the day, the banks and non-bank financial institutions would be entitled to get fund from the central bank’s refinance scheme at 4 per cent interest.
The banks and NBFIs would get 50 per cent as refinance from the BB against the loans they would disburse to the affected entities in the industry and service sectors.
The Tk 15,000 refinance scheme, formed with the BB’s own fund, has been launched for a period of three years, the BB circular said.
To get the fund from the scheme, the banks or NBFIs will have to sign participation agreements with the BB, said the BB circular, adding that the refinance facility would only be issued against the working capital to be provided by the banks to the sectors the BB would allow.
On April 12 this year, the central bank, in line with the government’s announcement, issued guidelines on issuing working capital facility to the industries and services affected by the coronavirus pandemic, setting interest rate ceiling at 9 per cent.
Of the 9 per cent interest, the government would provide 4.5 per cent a subsidy and another 4.5 per cent would be paid
by the borrower.
Thursday’s BB circular asked the banks and NBFIs to submit application to the central bank for refinance fund within 10 days of loan disbursement to the businesses specified by the central bank.
Afterwards, the central bank would release 50 per cent of the outstanding loans that are disbursed to the affected businesses by the banks or NBFIs.
The banks and NBFIs would be entitled to get access to the refinance fund for three years upon complying with the BB-set limit for the banks and NBFIs.
The banks or NBFIs will have to pay instalments on quarterly basis within 10 days of the immediate next month of each quarter-end.
In case of lending to any other sectors which were ineligible for the stimulus, the central bank would charge 2 per cent on the banks or financial institutions as penalty.
An official of the central bank said that the refinance fund would be an encouragement for the banks and NBFIs as they would have to take the credit risk of the lending.
Besides, it would also help save banks from any liquidity crisis as the implementation of the government-announced stimulus packages to revive the economy after the coronavirus outbreak would require a huge amount of credit, the BB official said.
He also mentioned that the low-cost fund would help keep banks’ liquidity situation stable.
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