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Ailing garment units relieved as interest rates slashed
12
Jul '11
With a view to give some relief to ailing garment units in the country, the Bangladesh Bank (BB), the country's central bank, has slashed interest rates for 270 ailing garment firms from a high of 15 percent to eight percent.

Jahangir Alam, one of the Executive Directors of BB, after a meeting between leaders of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and BB Governor Atiur Rahman informed that even from the eight percent interest rate, five percent would be borne by the owners, while the Government would subsidise the rest.

Mr. Alam stated that the BB's move will enable the owners of the ailing garment units to obtain loans at a flat interest rate of eight percent, and thus help the firms to recuperate from heavy losses.

He further revealed that 88 of the 270 firms are indebted to private commercial banks, while the remaining 182 firms owe money to public commercial banks.

However, he did not disclose any details regarding the total sum that these firms owe to the public and private banks or the amount of subsidy that the Government would pay or even the amount waived off by the Government.

Pursuant to an appeal by the garment exporters, the BB Governor consented to raise the Export Development Fund (EDF) from the current US$ 400 million. However, no details regarding the new increased EDF have yet been disclosed.

In addition, the central bank will also decrease the export proceed time from the present 120 days, so as to enable the country to earn foreign exchange in a shorter span. Mr. Alam informed that due to long proceed time, the country is still awaiting clearance of a pending export bill of two billion dollars.

He further said that the BB would soon provide clarifications regarding some terms in circulation of its second stimulus package awarded to exporters of ready-made garments to balance the setback caused by the global economic slump.

The funds from the second stimulus package have yet not been disbursed to the garment exporters owing mainly to the ambiguity in the meaning of certain words.

Fibre2fashion News Desk - India

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