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The Financial Express

Tk 400b stimulus enters 2nd phase, foreign companies included

| Updated: July 15, 2021 19:12:49


- Picture used for illustrative purpose - Picture used for illustrative purpose

Implementation process of the second phase of the stimulus package worth Tk 400 billion for large industries and service sector business entities has started with the inclusion of foreign-owned companies operating in Bangladesh, officials said.

The central bank has already sent limits to all scheduled banks, like the previous year, for execution of the second phase of the stimulus package for large industries and service sector entities to help revamp the coronavirus-hit economy.

The second phase of the financial package has started after 98 per cent implementation of the first phase of the package as on June 30, according to the central bank officials.

The borrowers, who availed assistance from the first phase of the package, would not be eligible for the second phase in line with the Bangladesh Bank's (BB) policy.

"But loans of the borrowers will be continued in line with 'bank-customer' relationship, paying 9.0 per cent interest rate," a BB senior official told the FE while replying to a query.

As per the BB's policy, the package will be continued for three years from April 14, 2020, while a borrower will be entitled to enjoy interest subsidy at 4.50 per cent for maximum one year.

Actually, the borrowers will pay interest rate at 4.50 per cent out of the 9.0 per cent under the package, while the remaining 4.50 per cent will be paid by the government as interest subsidy to the banks concerned.

"New business entities can avail the low-cost financing in the second phase of the package," the central banker said while replying to another query.

"We've already started the process of implementing the second phase of the stimulus package for large industries and service sector business entities," Syed Mahbubur Rahman, former chairman of the Association of Bankers, Bangladesh, told the FE while replying to a query.

Mr Rahman, also managing director and chief executive officer of Mutual Trust Bank Limited, said: "We're now more careful in sanctioning fresh loans under the package to avoid risks."

On the other hand, the BB on Monday asked the scheduled banks to provide low-cost funds under the package to the foreign-owned companies across the country.

The latest initiative, taken by the central bank, would help the country brighten its image globally, another BB official told the FE.

"We've taken the move to extend financial support to the foreign industrial units, like the local ones, to help run their business activities smoothly," he noted.

The units that are operating under the Bangladesh Economic Zones Authority, the Bangladesh Export Processing Zones Authority, and the Bangladesh Hi-Tech Park Authority will be eligible for getting the funds to revive their businesses.

There are three types of units - A, B and C - in the economic zones.

Firms with 100 per cent foreign ownership are considered as Type-A companies. Joint venture companies with foreign and Bangladeshi ownerships are treated as Type-B, and those with 100 per cent Bangladeshi ownership are Type-C.

The central bank already enhanced the size of the stimulus package for large industries and service sector firms to make the low-cost funds available for the factories located in the economic zones.

The amount of the package was increased by Tk 70 billion to Tk 400 billion as part of the BB's effort to facilitate both local and foreign industries in the industrial zones.

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