Export Development Fund:

Bangladesh Government with the help of International Development Association (IDA), World Bank, created the EDF fund in 1989. During creation, the amount was USD 300 million in size as of now, it is USD 5 billion .  The EDF is held and managed by the Foreign Exchange Reserve and Treasury Management Department (FRTMD) at the head office of BB.

Objectives: EDF is intended to facilitate access to financing in foreign exchange for input procurement by manufacturer- exporters. Authorized Dealer (AD) banks can borrow US Dollar funds from the EDF of Bangladesh bank to provide to exporters.

The ADs can also lend to some extent from their own foreign exchange funds for input procurement (up to fifty percent of NFCD balances, cf., para 20, chapter 13, GFET 2009).

  

 Interest rate on borrowings from EDF:

To facilitate export trade, it has been decided that interest rates on EDF loans to ADs will be charged by Bangladesh Bank at six-month USD 1%, while ADs will charge interest to manufacturer-exporters at  USD 2%; for disbursements .

Tenor of EDF loans: 180 days from dates of disbursement, extendable by BB up to 270 days upon application to BB explaining the necessity of longer period for repatriation of export proceeds.

 Eligibility for EDF loans:

EDF financing will be admissible for input procurement against back to back import LCs/inland back to back LCs in foreign exchange; by manufacturers producing final output for direct export, and also by producers of local deliveries of intermediate outputs to manufacturers of the final export.

 Amounts of EDF loans:

 Exporters from six sectors can get loans from the EDF and the central bank can set a separate credit ceiling for them. For instance, a single member of the Bangladesh Garment Manufacturers and Exporters Association is allowed to get $25 million from the fund and a member of the Bangladesh Knitwear Manufacturers and Exporters Association $ 25 million. 

 Procedure of application for EDF loans from BB:

Head offices/principal offices of AD banks shall submit to FRTMD, BB duly filled in application listing the input procurements financed by them in foreign exchange, against which they are seeking the EDF loans. The application, signed by two appropriately empowered officials will also authorize BB to realize the principal and accrued interest on the EDF loans to the ADs immediately upon expiry of the permissible periods of the loans by debit to the FC clearing accounts of the concerned ADs with BB; unless repaid by them earlier. Repayment advices of the ADs should be accompanied by calculation worksheets.

LIBOR (London Interbank Offered Rate)

(The US Dollar LIBOR interest rate is the average interbank interest rate at which a large number of banks on the London money market are prepared to lend one another unsecured funds denominated in US Dollars. The US Dollar (USD) LIBOR interest rate is available in 7 maturities, from overnight (on a daily basis) to 12 months. The table below shows a summary of the current rates of all USD LIBOR interest rates.

The US dollar LIBOR interest rate serves as a base rate for all sorts of other products such as savings accounts, mortgages and loans. Alongside the US Dollar LIBOR there are also LIBOR interest rates in 4 other currencies)