BB Bank reduced interest rate of EDF Loan from 2.00% to 1.75% to boost export amid Corona Pandemic

Bangladesh Bank, the central bank of Bangladesh has reduced interest rates on loans under the Export Development Fund (EDF) from 2.00% to 1.75% to help exporters to recover from pandemic-related disruptions. Such an interest rate on loans under the EDF will continue until March 31, 2021, according to a notification, issued by the Bangladesh Bank (BB) on 28.10.2020.

The interest rate for Authorised dealer (AD) banks was also reduced from 1.00% to 0.75% to get the EDF fund i.e. Authorised dealer’s spread will remain unchanged.

Besides, The central bank has enhanced the size of the EDF fund from $3.5 billion to $5.00 billion.  EDF financing is allowed for input procurements against import and procurement in foreign exchange by manufacturers producing final output for direct and indirect exports.

The EDF loans are payable by the banks upon receipt of export proceeds within 180 days from the date of disbursement, extendable by the BB up to 270 days in case of a longer period for the repatriation of export income.

 

Banks started reducing salary and cutting job due to effect of Covid-19

Corona virus hits profitability of Banking sector severely even some banks could not bear administrative expenses. As a result banks has started reduction of employees salary and cutting jobs as well. We have news that AB Bank Ltd. has already reduced salary of the employee by 3% to 5% and Mutual Trust Bank also thinking to do the same. 

Probable Corona Virus effect on Banks/Financial Institutions

1. Reduction of profit margin even some medium and week bank may start incurring loss

2. Sharp increase of Non Performing Loan as Corona Virus hits every sector of the business which leads borrowers non capable to serve the debt.

3. Banks/Financial Institution will face difficulties to bear operational expenses and will be compelled to reduce salary of the employees even may reduce employee as well.

4. May face liquidity crisis in near future.