BB unifies EDF rules, ties rates to SOFR for exporters
Bangladesh Bank (BB) Yesterday issued a comprehensive Master Circular for the Export Development Fund (EDF), consolidating all previous directives into a single regulatory framework to simplify export financing, enhance transparency, and align the facility with global market standards.
Replacing FE Circular No. 45 of 2017 and subsequent orders, the new framework introduces a pricing mechanism linked to the six-month Secured Overnight Financing Rate (SOFR).
Under the revised structure, the central bank will refinance Authorized Dealers (ADs) at the six-month SOFR plus 0.5 per cent annually, while commercial banks may lend to manufacturer-exporters at six-month SOFR plus 1.5 per cent.
In a major structural shift, the central bank permitted ADs to finance eligible imports from their own foreign currency resources using up to 50 per cent of their Non-Resident Foreign Currency Deposit (NFCD) balances. The circular also allows Islamic banks to access the EDF through deal-to-deal Restricted Mudaraba Agreements to ensure Shariah compliance.
The Master Circular redefined maximum borrowing ceilings based on trade association memberships. The loan limit is capped at $20 million each for BGMEA and BTMA member mills, $15 million for BKMEA and FLAXA members, and between $1 million and $10 million for other export sectors.
To enforce financial discipline, Bangladesh Bank warned that penal interest at four percentage points above the prevailing lending rate will be imposed on overdue EDF loans. Exporters who fail to repatriate export proceeds within the statutory 120-day period will become strictly ineligible for further EDF financing.
The repayment tenure remains 180 days, with a maximum extension option of up to 270 days under justified circumstances. Central bank officials stated that the unified framework aims to streamline trade operations, enforce uniform implementation across banks, and strengthen the country’s external trade ecosystem.
