Textile millers demandfixed interest rate

Industry Desk: The Bangladesh Textile Mills Association (BTMA) wants to pay off the loan it took in US dollars from the central bank’s Green Transformation Fund (GTF) in local currency.
In a meeting with the Deputy Governor of Bangladesh Bank Abu Farah Md Nasser yesterday, textile mill owners also urged the central bank to determine a fixed interest rate for the GTF loan.
In addition, they called for special facilities for loan repayment and the extension of the Export Development Fund (EDF) fund limit and loan repayment period.
The Bangladesh Bank launched the GTF Fund in 2016 with a $200 million refinancing scheme for textiles, leather, jute, manufacturing and export-oriented entities so that they can import capital machinery and accessories for environment-friendly initiatives.
According to central bank sources, BTMA officials in the meeting said textile mills used to get loans from GTF Fund at 2-3% interest as the Secured Overnight Financing Rate (SOFR) was low two years ago. But currently, more than 8% interest has to be paid due to an increase in the SOFR rate. Hence, they called for fixing the rate at 5%.
BTMA said, “If the loan taken from the GTF fund is allowed to be paid in taka, it will be helpful for the textile companies.”
Mezbaul Haque, the spokesperson of the Bangladesh Bank, told, “The central bank has a clear guideline on who will get the GTF loan and how it will be repaid. The loan is disbursed in dollars and has to be repaired by borrowers in dollars. There is no scope for repayment in taka.”
“‘The businessmen want payment deferral till 2024 against term loan, including loan interest. They have been told that the loan repayment facility was available till June this year. The central bank has no plan to extend the repayment time,” he added.
In the meeting, BTMA officials said the EDF loan limit should be increased to $30 million. At the same time, they demanded a 360-day loan repayment facility which was offered during the Covid period.
Apart from this, the textile owners said that currently there is a liquidity crisis in the textile mills due to unsold yarn and cotton. To meet this crisis, they wanted time till June next year for the repayment of term loans and other loans, plus interest.
An official of the central bank, seeking anonymity, told, currently EDF has a loan repayment period of 180 days, with the option to extend it by another 90 days, subject to application.
“Banks are demanding loan repayments within 180 days as there is a shortage of dollars. If the banks do not accept the borrower’s time extension application, then what could the central bank do? We have assured textile owners that we will write to the banks to seriously consider the extension of the loan repayment period.”
Fazlee Shamim Ehsan, vice president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), on Sunday, “I think the problem we are facing now is more complicated than Covid. We paid off our loans almost on time when the central bank gave us repayment facilities during covid. Now, the facilities provided by the central bank should be increased rather than reduced.”