BB caps charges on foreign trade financing to ease costs

The Bangladesh Bank has introduced a ceiling on interest rates and fees for foreign currency trade financing, aiming to reduce borrowing costs for importers and exporters amid persistently high global interest rates.

On Sunday, the central bank issued a circular in this regard, which took effect immediately on Monday.

Under the new framework, banks will not be allowed to charge more than 3 percentage points above internationally recognised benchmark rates for foreign trade financing.

The applicable benchmarks include the Secured Overnight Financing Rate (SOFR) for US dollar transactions and Euribor for euro-denominated financing.

The “all-in-cost” – covering interest, commissions, fees, and all related charges – will apply to short-term foreign trade finance facilities.

The ceiling will cover three key areas – short-term import financing, discounting of usance export bills, and advance payments against exports under open account arrangements.

For instance, if the SOFR rate for US dollars is around 4.5per cent , the maximum total cost of trade financing will be approximately 7.5per cent per year.

The new directive replaces an earlier cap issued by the Bangladesh Bank in August 2025.

Officials said the revised policy is intended to bring Bangladesh’s trade financing practices closer to international standards while preventing excessive charges by banks.

The measure is expected to benefit both importers facing rising input costs and exporters relying on affordable pre-shipment and post-shipment financing, while also improving transparency in foreign currency lending.