Who will get the Tk 2,000 crore fund for frozen food exports?

Who will get the Tk 2,000 crore fund for frozen food exports?

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Bangladesh Bank has formed a new pre-financing fund of Tk 2,000 crore to overcome the existing economic crisis in the export-oriented frozen food and fish sector and increase its competitiveness in the international market.

Central bank officials said that traders in this sector have been in need of special financial support for a long time to meet the high inventory cost, huge cost of cold-chain management and low-interest working capital deficit. In that context, Bangladesh Bank has formed this three-year fund with the aim of diversifying the country's exports, earning foreign exchange, creating employment and expanding the rural economy.

In this regard, the Banking Regulations and Policies Department of Bangladesh Bank issued a notification on Sunday and gave detailed instructions to the Managing Directors (MDs) and CEOs of all scheduled banks in the country.

How much interest, who will get it?

According to the central bank's instructions, the maximum interest rate on loans at the customer level under the announced fund has been set at 7 percent. In contrast, participating scheduled banks will be able to avail pre-financing facilities from Bangladesh Bank at 4 percent interest.

Producers and exporters involved in processing frozen shrimp, fish and fish products and ready-to-cook food for export through scheduled banks will get this loan facility. However, no loan can be given under this fund to any borrower or institution identified as defaulter as per the Banking and Company Act. At the same time, institutions that are currently receiving facilities from any other government or central bank fund like EDF, EFPF or agriculture-based pre-financing will not get financing from this fund again for the same sector.

According to the policy, the loan flow of the pre-financing fund has been divided into multiple sectors. In case of construction of a completely new factory for frozen food processing, a maximum term loan of up to Tk 30 crore will be available. On the other hand, a maximum term loan of Tk 20 crore has been provided for renovation, modernization and expansion of existing infrastructure. In case of setting up a new factory, the maximum repayment period will be seven years with a grace period of one year. And in case of renovation or modernization, the repayment period will be maximum five years with a grace period of one year.

In addition, a maximum loan of Tk 20 crore can be given based on the turnover of the organization to meet the working capital such as purchase of raw materials, collection from contract farmers, payment of salaries and allowances of workers and payment of utility bills. Although the working capital period is one year, it will be renewable for a maximum of two years if the business transactions are satisfactory.

More loans will be available for solar power

According to the instructions of Bangladesh Bank, emphasis has also been placed on the formation of environment-friendly industries and increasing the use of renewable energy. If a factory wants to set up a solar power project, in that case, it will get an additional loan of maximum Tk 5 crore (or 30 percent of the main loan) in addition to the loan for the main project. However, as a condition, each organization receiving the funds has been obliged to meet at least 15 percent of their total electricity demand from solar power within two years. In addition, instructions have been given to ensure necessary measures are taken to eliminate occupational health risks for officers and employees working in factories.

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Source: Online/OFA