B Mirror Report: Bangladesh Bank has introduced stricter eligibility criteria for loans under the Export Development Fund (EDF), barring exporters who fail to repatriate export proceeds within the prescribed timeframe or whose EDF liabilities have been settled through commercial bank loans from accessing the facility.

The central bank issued a new master circular on Thursday, consolidating all previous EDF-related instructions into a single framework. The circular also updates operational guidelines, including interest rates, loan tenures, refinancing arrangements, and financing limits.

Under the revised rules, the interest rate on EDF loans will be linked to the six-month benchmark rate. Bangladesh Bank will provide funds to commercial banks at the benchmark rate plus 0.50 percentage points, while banks may charge exporters a maximum of 1.50 percentage points above the benchmark rate.

The standard repayment period for EDF loans remains 180 days. However, with Bangladesh Bank’s approval and valid justification, the tenure may be extended up to 270 days.

The circular introduces tougher eligibility conditions for exporters seeking EDF financing. Exporters who fail to bring export earnings back to Bangladesh within the stipulated period or whose EDF liabilities have been converted into regular bank loans will no longer qualify for new EDF loans.

However, exporters may regain eligibility if the overdue export proceeds are repatriated or if they receive clearance through the designated discount committee.

The financing limits for back-to-back letters of credit (LCs) and bulk imports remain unchanged. Depending on the sector, EDF financing for back-to-back LCs is capped at up to US$20 million, while bulk import financing ranges from US$1 million to US$20 million.

The master circular also introduces a new refinancing facility, allowing eligible bulk imports across all sectors to receive EDF refinancing of up to US$500,000. Businesses using both bulk import and back-to-back LC arrangements will be allowed to avail financing under only one trade association’s prescribed limit.

Industry stakeholders welcomed the consolidated circular, saying that bringing all EDF-related instructions under a single framework would reduce confusion, simplify loan applications, facilitate repayment extensions, and improve overall operational efficiency.