Bangladesh Bank on Thursday issued a comprehensive Master Circular updating the operational guidelines for the Export Development Fund (EDF), allowing the repayment tenure of EDF loans to be extended up to a maximum of 270 days, subject to prior central bank approval.
The Foreign Exchange Policy Department of the central bank issued the circular to consolidate previously scattered directives and update foreign currency-based refinancing policies for export-oriented manufacturers importing raw materials and intermediate inputs.
Under the updated framework, regular EDF loans must be settled within 180 days, with the provision for extending the repayment window up to 270 days upon receiving prior approval from the central bank.
According to the new financial structure, Bangladesh Bank will provide refinancing to Authorized Dealer (AD) banks at a rate equal to the 6-month benchmark interest rate plus an additional 0.50 percent. AD banks, in turn, can charge exporters a maximum interest rate of up to 1.50 percent above the 6-month benchmark rate.
The central bank has also tightened eligibility criteria to ensure financial discipline. Exporters who fail to repatriate export proceeds within the stipulated timeframe, those whose EDF liabilities have been adjusted through other bank loans, and banks that default on timely EDF settlements will be ineligible for the facility. Exporters can, however, regain access to EDF financing once overdue export earnings are brought back or upon securing approval from the discount committee.
The Master Circular retains the existing sector-specific financing limits for back-to-back Letter of Credit (LC) imports, capped at up to $20 million depending on the industry. Sector-specific limits for bulk imports also remain unchanged, ranging between $1 million and $20 million.
In addition, a maximum EDF refinancing facility of $500,000 has been introduced for eligible bulk imports regardless of sector. Exporters who utilize both bulk imports and back-to-back LCs will be restricted to using the financing ceiling designated for a single trade association.
Business leaders have welcomed the central bank's initiative, noting that bringing isolated instructions under a single master circular will simplify compliance and make EDF operations far more transparent and efficient for commercial banks and exporters alike.