Bangladesh Bank has tightened the eligibility criteria for Export Development Fund (EDF) loans, barring exporters with overdue export proceeds or converted EDF liabilities from accessing the foreign-currency lending facility unless they regularise their position.
Exporters that fail to repatriate export proceeds within the prescribed timeframe, or whose EDF liabilities have been converted into funded facilities, will no longer qualify for EDF financing, according to the circular issued by Bangladesh Bank (BB) on Thursday.
However, such exporters may regain eligibility once the overdue export proceeds have been repatriated or an exemption has been granted by the Discount Committee, the circular said.
"We have tightened the eligibility criteria for EDF financing to ensure greater credit discipline in the country's banking sector," a senior BB official told The Financial Express in response to a query.
Under the new framework, the central bank will refinance authorised dealer (AD) banks at the six-month Secured Overnight Financing Rate (SOFR) plus 0.50 percentage points, while banks may lend to exporters at the six-month SOFR plus 1.50 percentage points.
EDF loans will continue to be repayable within 180 days, although the repayment period may be extended to a maximum of 270 days, subject to Bangladesh Bank's approval.
The circular retains the existing sector-wise financing limits for back-to-back letters of credit (LCs), with a maximum ceiling of US$20 million depending on the export sector.
Separate financing limits have also been maintained for bulk imports under inland back-to-back LCs, with ceilings ranging from US$1.0 million to US$20 million.
In addition, the central bank has introduced a new EDF refinancing facility of up to US$500,000 for eligible bulk imports, regardless of sector.
Exporters using both bulk import and back-to-back LC facilities will be allowed to avail themselves of the financing limit applicable to only one trade association.
The circular also sets out detailed procedures for submitting EDF applications, obtaining repayment extensions and complying with other operational requirements.
Business leaders welcomed the central bank's latest move, saying the master circular consolidates multiple instructions into a single, comprehensive framework, making the EDF guidelines easier for banks and exporters to understand and implement.
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