Published :
Updated :
For all latest news, follow The Financial Express Google News channel.
Japan is set to relax conditions for its two-step loan programme aiming to extend credit facility for industrial units hit by Covid-19, officials have said.
Usually, Bangladeshi companies that export to Japan and the joint venture between Bangladesh and Japanese companies get loans from the programme, which is being administered by the central bank.
Officials said chief representative of the Japan International Cooperation Agency (JICA)'s Bangladesh Office Hirata Hitoshi, in a recent letter to central bank governor Fazle Kabir, expressed interest that the credit facility can be offered to other industrial units, which were hit by the coronavirus pandemic related disruptions.
In the letter, he referred to a survey conducted by the relevant chamber of commerce, which pointed out that "quite a few companies are suffering from a shortage of working capital due to Covid-19, and requesting a concessional loan to survive in this difficult period."
He also wrote that the existing conditions for the two step loans under Foreign Direct Investment Promotion Project does not allow it to provide credit facilities to the enterprises suffering from Covid-19 pain, which are in dire need of loans.
There is a good amount of unutilised funds under the loans programme, which can be offered to these distressed companies by changing the necessary conditions, Mr Hitoshi noted.
"Fortunately, there are considerable amount in the loan agreement as unutilised, which could be utilised for supporting Covid-19-affected industries," he said.
" … JICA would like to propose to relax the sub-loan condition and reallocate unutilised amount towards Covid-19 affected industries under the ongoing programme," he added.
Mr Hitoshi also said that under the revised programme, the eligibility and sub-loan interest rate could be "as attractive as stimulus package" announced by the government.
Contacted over telephone on Wednesday, a senior Bangladesh Bank official acknowledged receiving such a proposal and said the issue is discussed through a video conference as well and being scrutinised.
According to the official, JICA provides Bangladesh government with the loans under the Foreign Direct Investment Promotion Project at 0.01 per cent interest.
However, the enterprises can avail the loans at 7.0 per cent rate of interest.
He said JICA proposed to cut the interest rate to 4.5 per cent in line with the interest rate charged in government announced incentive package for Covid-19 recovery.
The official said the steering committee of the programme is considering lowering the existing interest rate.
Senior secretary of the Financial Institutions Division Ashadul Islam told the FE the steering committee met recently where lowering the interest rate and changing the operating guideline for the programme were discussed, among other issues.