Bangladesh Bank (BB) has already got 66 project proposals involving US$ 403.63 million through different private banks to facilitate long term financing under the World Bank funded Financial Sector Support Project (FSSP).
“We have already approved 19 proposals with $90.26 million, of which $12.02 million has been disbursed, rest of the approved amount is under the process of disbursement,” a senior BB official told BSS here today.
Out of the total approved, some companies have disbursed a portion and others are under process as the amount will be disbursed through opening Letter of Credit (LC) for importing machineries, he said.
“We have submitted proposals of eight companies involving $40 million and of which one proposal has already been approved and rest of the proposals await approval,” said Additional Managing Director and COO of Mutual Trust Bank M Hashem Chowdhury.
The initiative will accelerate further the country’s export as the finance is providing among export oriented industries on a low interest rate (within 6.50 percent) for incorporating modern technology in production system and increasing the efficiency, he added.
Managing Director of Best Wool Sweater Limited Alamgir Kabir said, “We have imported machineries with the support of FSSP fund at a low interest rate.” It has created a great opportunity to set up modern technology based machineries in the industry and the production of the company has increased which will increase export, he added.
Best Wool Sweater Limited submitted a proposal for $2.82 million loan and of which BB approved $2.27 million through the Trust Bank Limited.
BB under the auspices of International Development Association (IDA) of the World Bank would provide a total of $350 million under FSSP, which would play a pivotal role in meeting the growing demand for long-term financing for productive sectors in the country.
BB has already signed separate Participating Financial Institutes (PFI) agreement with 31 banks to distribute the long term finance among the country’s export oriented industries.
Of the total amount, World Bank will provide $300 million and rest of the amount will provide from BB’s own fund. The tenure of the project is July 1, 2015 to March 31, 2021.
The amount will be provided under four components- strengthening financial market infrastructure (US$50m), strengthening financial sector regulators ($5million), long term financing facility ($292.50million) and project implementation and monitoring ($2.5million).
Under the FSSP fund for long-term financing, the banks can lend money for ventures in the industrial productive sectors for tenure of 5 to 10 years, having that the banks would have to pay interest rate between 2.50 percent to 3.50 including LIBOR (London Inter Bank Offered Rate) depending on the category of banks.
The interest will be fixed considering the respective bank’s CAMELS (Capital, Assets quality, Management, Earning, Liquidity, and Sensitivity) rating, a recognized international rating system that bank supervisory authorities use in order to rate financial institutions.