BB launches Tk 20,000 crore scheme to restart closed industries

Bangladesh Bank (BB) has launched a special scheme of Tk 20,000 crore to restart the closed institutions of the industry and service sectors. Under this scheme the interest rate on loans at the customer level has been fixed at a maximum of 7 percent. Alongside a six-month grace period has been given to the borrowers. As a result no interest will have to be paid in the first six months after getting the loan.

A circular in this regard was issued from the Banking Regulation and Policy Department-1 of Bangladesh Bank on Thursday (September 17).

The circular said financing will be provided to the closed institutions of the industry and service sectors through the banks under the ‘Closed Industry and Service Sector Support Pre-financing Scheme’. Through this the opportunity will be created to restart these institutions. For this Bangladesh Bank will provide pre-financing to the relevant banks.

According to the policy, the banks will have to pay interest at the rate of 4 percent against the pre-financing taken from Bangladesh Bank. However, there will be no need to pay this interest in the first six months after taking the pre-financing. After the end of the grace period interest will have to be paid to Bangladesh Bank on a quarterly basis. At that time the outstanding interest of the first two quarters will also have to be paid.

On the other hand, the interest rate of the loans that the banks will give to the customers under the scheme has been fixed at a maximum of 7 percent. A six-month grace period has also been kept for the customers. That is, no interest can be collected in the first six months after the disbursement of the loan. Interest collection will start after the end of six months and the outstanding interest of the first two quarters will also come under the scope of payment.

Bangladesh Bank informed that subject to the availability of funds the banks will be able to apply for pre-financing at any time during the three-year tenure of the scheme. That is, the banks interested in taking the benefits of the scheme will be able to apply to Bangladesh Bank within the stipulated three years. However, the matter of getting pre-financing will depend on the availability of funds.

The central bank has also given importance to whether the money of the scheme is being properly used in the designated work, the situation of loan use and recovery and the supervision of the relevant bank. The banks will have to ensure that the pre-financing money received from Bangladesh Bank is being used only in the designated sector. At the same time the situation of loan use and recovery will have to be supervised regularly.

After the end of the grace period the banks will also have to settle the interest payment account with Bangladesh Bank according to the stipulated rules.

Bangladesh Bank informed that this directive has been issued by virtue of the power given in Section 45 of the Bank Company Act, 1991. The directives given in the circular will be effective immediately.