B Mirror Report:  The deadline for scheduled banks to apply for the Tk 2,000 crore refinance plan, which aims to assist the growth and development of the nation’s shipbuilding industry, has been extended by Bangladesh Bank (BB).

The central bank announced in a circular on Sunday that banks will now have until December 31, 2026, to apply for the facility. The action is a component of Bangladesh Bank’s endeavors to enhance the shipbuilding sector’s export potential and increase foreign exchange profits.

In its BRPD Circular Letter No. 04, the central bank stated that the timeline of the refinance scheme titled “Refinance Scheme for Development, Operation and Expansion of the Shipbuilding Industry” has been revised substantially. Previously, the deadline for submitting applications was set for June 30, 2024.

The extension reflects the central bank’s intention to ensure sufficient financial support for a sector considered to have strong growth prospects in export markets.

The refinance scheme was first introduced through BRPD Circular No. 09 issued on May 26, 2022, with an overall fund size of Tk 2,000 crore.

The latest instruction was issued by the Banking Regulation and Policy Department-1 (BRPD-1) of Bangladesh Bank, noting that the extended timeframe will enable banks to more effectively channel credit to shipbuilding projects.

Under the eligibility provisions outlined in Paragraph 4 of the guidelines, all scheduled banks operating in Bangladesh are eligible to participate in the scheme. To access the fund, interested banks must sign a participation agreement with the Banking Regulation and Policy Department-3 (BRPD-3) of Bangladesh Bank.

According to the circular, participating banks will independently decide which loans to provide in accordance with their internal credit rules and risk management systems. However, banks must confirm with BRPD-3 that refinance funds are available before approving any loans under the scheme.

Banks must include a thorough loan disbursement and payback schedule with their application in order to accomplish this. The central bank also made it clear that loans have to be given to customers in stages, contingent on the shipbuilding projects’ viability and physical development.

Banks will be eligible to claim refinance from Bangladesh Bank only after disbursing the credit to the borrower. The scheme also allows refinance claims against interim installments, which is intended to support liquidity management during long-term projects.

To guarantee Islamic banks’ involvement, the circular also contains measures for funding based on Shariah. Paragraph 15(gh) states that Shariah-compliant methods authorized by BRPD-3 may be used by Islamic banks and conventional banks with Islamic windows to offer investments under the plan. The wording and finance structure must adhere strictly to Islamic law.

All other terms and conditions stated in the initial circular published in May 2022 will not alter, according to Bangladesh Bank. The directive went into effect right away after being issued in accordance with Section 45 of the Bank Company Act of 1991.