Bangladesh Bank on Tuesday extended special loan of Tk 1000 crore to private sector's Exim Bank, for 90 days at 10.50 per cent interest.
The loan was given against Demand Promissory (DP) notes as Exim Bank against bond, by printing money.
BB lent the money on condition that the loan can be used only for financing exports and paying salaries to officers and staff.
This money cannot be paid to any borrower in cash, but must be paid into a bank accounts or as a Mobile Financial Service (MFS).
Exim Bank's senior officer said, 'Approximately 300 companies in the garment sector are customers of Exim Bank.
Apart from this, there are 300 other companies that have clothing-related customers. These companies have to pay about Tk one thousand crore as salary.
After the fall of the Awami League government on August 5, the banking sector is under going through changes.
Already, the board of directors of 12 banks and financial institutions including Exim Bank has been restructured.
Businessman Nazrul Islam Majumder has been serving as Chairman of Exim Bank since 2001. He has also been Chairman of Bangladesh Association of Banks (BAB) since 2008.
Exim Bank is managed under Shariah principles. These banks cannot borrow money on a conventional interest basis.
However, Bangladesh Bank can provide interest-based special loans as a 'lender of the last resort' under existing rules.
Against this, 10.5 per cent interest rate applicable on Standing Lending Facility (SLF) will be applicable.
As per Section 16(4) (d) and Section 17(1) (b) of the Bangladesh Bank Order, such loans are extended for 90 days. In banking terms this is considered as overnight loan facility.
'Demand Promissory Note' of equal value has been taken from Exim Bank, by Bangladesh Bank for lending the credit under special arrangement.
This means that if Exim Bank goes bankrupt, its assets will be sold to settle the liabilities. Bangladesh Bank gave the loan to Exim Bank under four conditions.
First, the maximum tenure of the loan will be 90 days, second, interest rate at the SLF rate will be 10.5 per cent, third, a 'Demand Promissory' note equal to the actual amount with interest must be paid, fourth, wages of officers and workers of garment companies should be paid through banks for continuation of export activities.
Immediately after taking responsibility as Governor of Bangladesh Bank Dr Ahsan H Mansur had announced there would be no lending to banks by printing money.
He also said that other banks will lend money to meet the liquidity crisis of the banks whose board of directors has been changed. with BB standing as the guarantor.
But, BB Governor Dr Mansur moved away from his stand, and money has been printed to extend credit to Exim Bank.
Social Islami Bank, First Security Islami Bank, Union Bank, Global Islami Bank, Bangladesh Commerce Bank and National Bank, owned and controlled by the controversial S Alam Group, are still facing liquidity crunch.
Former BB Governor Abdur Rauf Talukdar allowed these banks o continue transactions even though they were facing liquidity crisis.
