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Bangladesh Bank (BB) has allowed commercial banks to offer working capital to 'B' and 'C' categories of companies operating in the Export Processing Zones (EPZs) to boost the country's investment and foreign exchange earnings.
The central bank has already relaxed the foreign exchange regulations relating to investment in such categories of industries in EPZs by the commercial banks, official sources said.
The new regulations allowed the country's commercial banks to offer funds to such industries as working capital for importing raw materials and run their units for a minimum of four months on the basis of banker-customer relationship.
But the banks will have to adjust the loans from the export earnings of the industries within a short period as stipulated by the new regulations, the sources added.
They said the volume of imported raw materials will have to be fixed on the basis of export performances in the previous year. But the Bangladesh Export Processing Zones Authority (BEPZA) will finalise the volume of importable raw materials in a case of newly set-up industries.
The BB has already informed the banks of the changes in the regulations through a circular and asked the authorities concerned to follow the new rules while sanctioning loans to the industries, sources in the central bank said.
Earlier, the commercial banks were not allowed to offer funds for working capital from their own financing sources.
Sources in the BEPZA said a total of 27 'B' category (joint venture) industrial units are operating and 51 'C' (100 per cent locally owned) in six export processing zones in the country.
Besides, at least 132 'A' category (fully foreign owned) industries are now operating in the specialised zones of the country.
At least 100 new industries are now under construction in the EPZs, which may also take the advantage of the new regulations.
"We have relaxed the regulations in line with the suggestions of entrepreneurs," a BB senior official told the FE, adding that the regulations will open a new window for investment of the banks.
According to the existing guidelines on foreign exchange transactions, taka loan may be granted to a joint venture (B category) industrial unit in EPZ upto 100 per cent of short-term foreign currency loan brought in and encashed to taka.
Loan in taka for procurement of capital machineries for setting up a B-type industry, not exceeding the local partners' share of ownership of the unit, may be extended on normal banker-customer relationship, it added.
Prior approval of the central bank should be obtained by the banks while providing foreign exchange for import of the machineries out of the taka loan, the guidelines said, adding repayments of the taka loans along with interests should be received out of the foreign exchange earnings of the unit.
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