Bangladesh Bank has increased the size of its pre-shipment credit refinancing scheme for export-oriented industries to Tk 7,000 crore from Tk 5,000 crore, while setting a maximum interest rate of 6% for new loans at the customer level.

The central bank issued a circular in this regard on Thursday (October 1) through its Banking Regulation and Policy Department-1.

According to the circular, the move aims to support export-oriented industries through pre-shipment credit facilities, sustain export activities and boost foreign currency earnings.

To expand the scheme, Bangladesh Bank transferred an additional Tk 2,000 crore from its Tk 10,000 crore Export Facilitation Pre-Finance Fund (EFPF), bringing the total allocation for the pre-shipment credit refinancing scheme to Tk 7,000 crore.

Following the transfer, Tk 3,000 crore remains in the EFPF.

Under the revised arrangement, participating banks can charge customers a maximum interest rate of 6% on new loans under the scheme. In return, banks will pay 3% interest to Bangladesh Bank on the refinancing facilities.

The circular also stated that banks failing to repay the refinancing funds according to the prescribed schedule will be charged interest at the bank rate for the period of default.

Additionally, banks will be allowed to repay or partially adjust the refinancing funds before the maturity date, providing greater flexibility in managing their liabilities.

All other existing instructions governing the scheme will remain unchanged, and the new directives will take effect immediately.