BB cuts interest on RMG loans

The central bank yesterday slashed the interest rate on the loans under a programme that provides funds to the readymade garment sector to beef up its safety system and upgrade environmental standards.  

In 2019, the government constituted the fund with the Bangladesh Bank to support the RMG factories through medium to long-term finance under the "Programme to Support Safety Retrofits and Environmental Upgrades in the Bangladeshi Ready-Made Garments Sector Project (SREUP)".

The fund size of the project is 50 million euro.

When the financing facility was introduced three years ago, the interest rate was fixed at a maximum of 7 per cent.

At the customer level, the interest rate has been re-fixed to a maximum of 5 per cent per annum instead of the existing 7 per cent, said the BB in a notice yesterday.

The new interest rate will be applicable to all new and existing sub-loans under the programme.

The interest rate to be paid by participating financial institutions to the BB is fixed at 2.5 per cent annually.

Investment grants will be sanctioned on a "first come, first served" basis, said the BB.