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The Financial Express
Swasti Lankabangla Swasti Lankabangla

Pandemic fallout: BB unveils package to benefit businesses

| Updated: March 20, 2020 19:10:55


The Bangladesh Bank seal is pictured on the gate outside the central bank headquarters in Motijheel, the bustling commercial hub in capital Dhaka. — FE Photo/Files The Bangladesh Bank seal is pictured on the gate outside the central bank headquarters in Motijheel, the bustling commercial hub in capital Dhaka. — FE Photo/Files

The central bank has unveiled a stimulus package to help businesses ride out the storm of the pandemic, officials said.

Under the package, businessmen will get a string of benefits, including easing of foreign exchange rules for foreign trade and loan classification.

The Bangladesh Bank, BB, issued two separate circulars in this connection on Thursday and asked the chief executive officers of all banks to follow the instructions so that the fallout of covid-19 on economic activities can be minimised.

As part of the programme, the central bank relaxed its policy asking the banks to suspend "adverse" classification of loans until June 30 from January 01, 2020.

The global trade as well as Bangladeshi businesses experienced negative impacts due to the outbreak, the BB said in its circular.

"For the ongoing adverse effects of the coronavirus on the overall economy of the country, including imports and exports, many borrowers are not able to repay their loans in time," the central bank said.

The banks may allow exporters to extend the tenure of realisation of export proceeds up to six months instead of the existing four months in view of the unfolding situation.

Also, importers will be allowed to submit bill of entries to the banks within six months instead of four months from the day of payment.

However, the issuance period of back-to-back letters of credit (LCs) opened under suppliers'/buyers' credit can be extended.

The central bank will consider application for the extension of Export Development Fund loans up to six months from the prevailing extendable tenure of three months to settle the payments against such loans for legitimate grounds.

The banks may allow exporters to repatriate export bills at a discounted price for bonafide grounds up to 10 per cent of FoB (Free on Board) value without prior approval of the BB.

The BB's latest measures came against the backdrop of falling trend in foreign trade because of global economic slowdown along with the pandemic in 176 countries across the world.

Business leaders welcomed the BB move.

Talking to the FE, Shams Mahmud, president of the Dhaka Chamber of Commerce & Industry, urged the central bank to take initiatives to convert direct LC into EDF scheme to help boost foreign trade.

"The central bank may also create an emergency fund with Euro of its foreign exchange reserves to provide low-cost loans to exporters, which will help clear wages and salaries of workers before the upcoming Eid festival," said Mr. Mahmud, managing director of Shasha Denims Ltd.

Mohammad Hatem, a vice president of the Bangladesh Knitwear Manufacturers and Exporters Association, or BKMEA, said it was essential for keeping the business activities running following the coronavirus outbreak.

"We'll meet top policy makers next week to seek more policy support as well as incentives," said Mr. Hatem.

siddique.islam@gmail.com

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