BB governor backs fund to subsidise interest on exporters' bank loans
FE Report

Bangladesh Bank governor Atiur Rahman Sunday backed creation of a special fund in the budget to subisidise interest on the loans taken by the exporters as part of a fiscal measure to combat global meltdown.
He told a delegation of knitwear exporters that the fund would largely ease the financial bleeding suffered by leading export sectors due to the fallout of the global economic recession, exporters said,
"The central bank governor is very much positive about creating a fund to subsidise the high interest we pay on our loans," president of Bangladesh Knitwear Manufacturers and Exporters Association President Fazlul Hoque said.
Hoque who led the BKMEA delegation during the meeting with Rahman said the new central bank governor has also assured his "allout support for formation of the fund in the next budget."
The BKMEA first came up with the proposal to create such fund --- in line with the similar one set up by the Indian government --- after claiming that they have been badly affected by the worst global recession in six decades.
Although shipments of knitwear products have surged by 21 per cent in the first nine months of the fiscal year, exporters said a massive fall in product prices meant they are hardly making any profits.
"We've already submitted a proposal to the finance ministry to form the fund very soon," the BKMEA chief said, adding that it would ease some of their pains and help the affected exporters ride out the recession.
He also urged the government to allow the subsidy to cover at least five per cent of the interest rate, which will bring down the overall rates on export-lending to a single digit from the existing 14 per cent.
Senior Executive Director of the BB Khandakar Muzharul Haque said the exporters should press for subsidy on interest rates as it would also help the banks, particularly the private commercial banks, lower their cost of fund.
The Bangladesh Bank can formulate the procedures through which the subsidy would be paid and who would qualify for the fund, he added.
The BKMEA leader also requested the BB governor to extend the deadline for loan rescheduling without any down payment until June 2010 from the existing September 30, 2009.
Last month the central bank relaxed the rules allowing loan rescheduling for five export-oriented sectors, being hit by the meltdown. These five sectors won't have to make down payment on their loans until September 30.
"We've proposed the central bank governor to include the trade bodies, which will certify which exporters are being affected by the downturn," Mr. Hoque said.
The five sectors --- frozen food, jute, leather, textile (including spinning) and readymade garment (RMG) --- have been allowed by the central bank to enjoy the loan rescheduling facility on the basis of bank-client relationship.
The BKMEA also urged the BB governor for quick disbursement of cash insensitive.
BB executive director Hoque said the central bank is now "examining ways to ease cash incentive payment system so that the exporters don't have to spend their valuable time to pursue their cases." He said the central bank is also scrutinising the legality of some of the commissions, fees and charges imposed by the commercial banks on the businessmen. "We have seen that some of the charges are exorbitant. We want to bring them down. We have urged the exporters to come up with sepcific allegations so that we can take action," he said.
The knitwear exporters have also urged the BB governor to form another special fund to set up effluent treatment plant (ETP) to treat industrial waste.
"The BB governor has said he would look into the request. We want the government to help us protect environment," the BKMEA president said.
According to the Environment Conservation Rules, 1997, every industrial plant should have an ETP. Otherwise, they would not get environment department's clearance, which is mandatory for power and gas connections.