Bangladesh Bank (BB) on Monday inked "Participation Agreements" with 49 commercial banks for Taka 10,000 crore Export Facilitation Pre-finance Fund (EFPF).
The central bank formed the EFPF fund for exporters to continue the development and expansion of export-oriented industries.
Under the fund, exporters will be able to take loans in local currency against the purchase or import of raw materials at an interest rate of four percent. The tenure of the loan will be 180 days.
However, the interest rate will be 1.5 percent for banks, according to a central bank release.
Addressing the agreement signing ceremony, BB Governor Abdur Rouf Talukder said, "I strongly believe that this fund will contribute significantly to the development of the country's export sector given the economic fallout of Covid-19 and the Russia-Ukraine war."
He said the funding activities of EFPF will start soon.
For the time being, no more funds will be created from foreign exchange reserves, the governor also noted.
The size of the Export Development Fund (EDF) will be reduced gradually by adjusting the amount and a US$1 billion adjustment has already been made to EDF, he added.
Director of Banking Regulations and Policy Department of the Bangladesh Bank Maqsuda Begum and managing directors of the participating banks signed the agreement on behalf of their respective sides.