Interest of pre-shipment loans now in line with new reference rate

The central bank has asked banks to fix the interest rate of pre-shipment loans in line with the new reference lending rate as part of its efforts to make it market-based.

The move is aimed at making export-oriented companies more resilient against shocks stemming from the ongoing global economic crisis, helping them thrive and ensuring a more efficient credit management in the banking sector, said the Bangladesh Bank in a circular yesterday.

Banks have been asked to add a maximum of 2 percent in margin with the reference lending rate, known as the SMART (six-month moving average rate of Treasury bill), when they fix the interest rate of pre-shipment export credits.

The pre-shipment credit is a loan granted to an exporter for financing the purchase, processing, manufacturing or packing of goods prior to shipment.

In June, the BB introduced the market-driven lending rate for banks and non-banking financial institutions, replacing the 9 percent lending rate cap that had been in place since April 2020.

If all installments of a loan or partial installments are categorised as overdue, a maximum of 1.5 percent penalty interest can be slapped on the entire outstanding of a working capital loan or the installments of a demand loan that are behind schedule.

Source: The Daily Star
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Iram Hoque

Mohd. Iramul Hoque (Iram) completed his bachelor’s degree in Industrial Engineering in 2018 from Purdue University.

He joined Deloitte Consulting LLP as a Consulting Analyst based out of New York City having previously worked in similar roles at PricewaterhouseCoopers LLP & Landis+Gyr.

Iram left consulting and returned to Bangladesh to take up the family business. Realizing the opportunity in the capital market in Bangladesh, Iram worked relentlessly to found Columbia Shares & Securities Ltd in 2021.

Md Saiful Hoque

Md. Saiful Hoque received his bachelor’s degree in Civil Engineering from Columbia University in 1986 followed by a master’s degree from Texas A&M University in 1988. Upon completion of his Graduate Degree, he joined Gulf Interstate Engineering Company in Houston, USA serving as a Project Engineer.

He returned to Bangladesh in 1992 to join Columbia Enterprise Ltd., the family business of Shipping and Freight Forwarding services. In addition, he has built flourishing businesses manufacturing Garment’s Accessories and Fast-Moving Consumer Goods.