Bangladesh Bank (BB) has issued new instructions to streamline Export Development Fund (EDF) loan applications, aligning the overdue status of local back-to-back Letters of Credit (LCs) with the permissible 270-day grace period (deferred payment).
The central bank’s Foreign Exchange Policy Department-1 (FEPD-1) issued a directive to all Authorized Dealers (ADs) in foreign exchange on Wednesday.
According to the circular, signed by FEPD-1 Director (Current Charge) Dr. Md. Abu Bakkar Siddique, Authorized Dealers will now consider EDF financing for bulk imports to eligible producers provided that local delivery bills against back-to-back LCs do not remain outstanding beyond 270 days.
The central bank noted that the decision was taken to ensure consistency between the maximum deferred payment period and the process of determining overdue status for deemed exporters.
Under previous instructions, ADs were required to verify the overdue status of deemed exporters before applying for EDF loans. Meanwhile, earlier guidelines issued on August 13 allowed the opening of back-to-back import LCs on a deferred payment basis for up to 270 days.
Bangladesh Bank clarified that all other existing instructions regarding EDF loan operations will remain unchanged.