Bangladesh Bank cuts lending rate from

JICA-funded scheme to 5pc

Staff Correspondent | Published: 00:50, Dec 21,2020


The Bangladesh Bank on Sunday lowered the loan interest rate from a scheme at 5 per cent to promote the country’s trade and investments with Japan and Japanese companies.

The loan facility would be available for Bangladeshi companies, which have substantial amount of deals with Japanese firms outside the economic zones to be developed.

The BB is implementing the project funded by Japan International Cooperation Agency.

It is an on-lending loan scheme to provide short, medium and long-term loans to Bangladeshi enterprises with Japanese investments, JapanBangladesh joint venture companies in Bangladesh and Bangladeshi enterprises with substantial business deals with Japanese companies through accredited Participating Financial Institutions.

Substantial amount of deals means that the aggregate amount of deals with Japanese firms is expected to exceed $100,000 within one year after applying for the loan.

Bangladeshi companies owning business contracts with Bangladeshi companies with Japanese investments such as sub-contracts, supply contracts, service contracts, among others, are also included in this category.

The loan facility would be granted from the ‘Two-Step Loan Component of Foreign Direct Investment Promotion Project’ in Bangladesh.

Earlier, the interest rate from the fund was 7 per cent, 2 percentage points higher than the new rate fixed by the central bank.

Under the revised rules, participating financial institutions, which have agreements with the central bank to disburse loans from the project, would receive funds from the BB at 1.5 per cent for issuing credit to their clients. Earlier, the rate was 3 per cent.

The BB also reduced the interest rate spread for the participating banks to 3.5 per cent from 4 per cent.

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