Central bank relaxes credit terms for industrial enterprises

Bangladesh Bank has relaxed rules asking banks to allow their industrial clients import capital machinery under supplier's/buyer's credit on usance term up to three years, officials said.

The central bank has revised the usance tenure from existing 360 days to stimulate long term investment, according to a circular issued on Sunday.

The revised term is also applicable to capital machinery imports by industrial enterprises operating in the export processing zones, private export processing zones, economic zones, hi-tech parks and other areas designated as specialised zones by the government.

Buyer's credit is a short-term loan provided by an overseas lender such as a bank or financial institution to finance the purchase of capital goods and services by an importer.

Bangladesh Investment Development Authority (BIDA) considers medium- and long-term external borrowing proposals of private sector industrial enterprises registered with them and the Department of Textiles, according to the circular.

Approvals for proposals are accorded by the BIDA based on the decisions of its scrutiny committee on foreign loan/supplier's credit chaired by the Governor of Bangladesh Bank.

At its 182nd meeting, the scrutiny committee accorded general authorisation for import of capital machinery on a three-year usance term, it added. Talking to the FE, a senior official at the BB said the central bank has relaxed the rules for the benefit of small and medium firms.

"It will also encourage long-term investment in the country's industrial sector," he explained.

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