Bank-Insurance
ADB Grants $400 Million Loan to Boost Bangladesh’s Economic Recovery
The Asian Development Bank (ADB) has granted a $400 million loan to Bangladesh, marking the second subprogram of the Sustainable Economic Recovery Program initiated in October 2021. The loan aims to drive reforms in domestic resource mobilization, enhance the efficiency and productivity of public spending, and provide accessible and affordable bank financing to small businesses, particularly those led by women.
ADB Principal Public Management Economist for South Asia, Aminur Rahman, emphasized that this subprogram will enable Bangladesh to bolster its revenues, promote transparency and efficiency in public spending and procurement, and implement vital reforms in state-owned enterprises. Additionally, it will facilitate access to low-interest credits from the banking sector for microentrepreneurs and small businesses. Rahman further highlighted the program’s commitment to gender equality, climate change, and digitization, supporting the government’s initiatives to generate income for the impoverished and vulnerable segments of society.
Under this program, income tax collection will be strengthened through the adoption of the new Income Tax Act, reducing tax loopholes and enhancing compliance and enforcement measures. The country’s tax net will also be expanded. Transparency and efficiency in public procurement will be promoted through the enhancement of electronic procurement and payment systems. Furthermore, the digital system for public project appraisal and approval processes will streamline the approval of public projects.
The loan package aligns with the innovative financing services recently introduced by the Bangladesh Bank, which enable commercial banks to offer low-cost microcredit through digital channels and e-wallets. This will facilitate access to finance for marginalized and landless farmers, small traders, and low-income earners. Micro and small businesses, as well as women entrepreneurs without substantial assets, will also be able to secure financing based on their trade receipts and other non-fixed collateral, such as small equipment and machinery.
The program places significant emphasis on promoting gender equality, social inclusion, and addressing climate change concerns in public investment and national budgeting. ADB remains committed to fostering a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while continuing its efforts to eradicate extreme poverty.
By approving this loan, ADB aims to support Bangladesh in its ongoing recovery efforts, enabling the country to implement critical reforms, foster economic growth, and empower small businesses, particularly those led by women, in the post-Covid-19 era.
In light of the current situation, Bangladesh Bank has mandated that all banks and financial institutions refrain from charging additional fees for late payments of credit card bills and loan installments.
The central bank issued this directive through two separate notifications on Wednesday, providing a significant relief measure to the financially burdened.
Borrowers and credit card holders who were required to make payments during the curfew and public holidays now have until July 31 to settle their dues. Bangladesh Bank has explicitly stated that banks and financial institutions are prohibited from imposing any extra interest, penalties, or late fees for installments or credit card bills due between July 18 and 25. Furthermore, no savings schemes shall be canceled for non-payment of installments during this period.
The central bank’s notification acknowledges that many borrowers and credit card users have struggled to meet their payment deadlines due to the prevailing circumstances.
Additionally, numerous depositors have been unable to make timely deposits into various savings schemes, including the Deposit Pension Scheme (DPS). To address these challenges, the new guidelines will be in effect from July 18 to 25, covering dues on loans, credit card bills, and savings scheme installments.
According to the directive, if the outstanding loan and credit card payments are settled by July 31, any accrued interest, penalty interest, additional interest, excess profit, or late fees will be waived. Similarly, if savings scheme installments are paid by July 31, no late fees or penalties will be imposed.
Moreover, any interest, penalty, or late fee already collected on loans, credit cards, or savings schemes must be refunded or adjusted, as per the Bangladesh Bank directive.
The Bangladesh Bank (BB) has announced an extension for the payment period against imports of industrial raw materials from 180 to 360 days, a measure now set to remain in place until December 2024. This policy, initially scheduled to end in June of this year, has been prolonged to facilitate trade transactions, according to a BB circular issued today.
“To support trade transactions, it has been decided to extend the policy support until December 31, 2024. The extended usance period will not apply to imports under EDF loans, as previously stipulated. All other relevant instructions remain unchanged,” the circular stated.
To ensure timely payment of salaries and bonuses to garment industry workers before Eid-ul-Azha, the branches of banks in key industrial areas will remain open on a limited basis on June 14, 15, and 16.
The Bangladesh Bank (BB) issued a notification stating that bank branches in Dhaka metropolitan, Ashulia, Tongi, Gazipur, Savar, Bhaluka, and Narayanganj will operate on these days to facilitate financial transactions for garment sector employees.
Typically, Friday and Saturday (June 14 and 15) are weekly holidays, and Sunday (June 16) will be closed for Eid. Despite these closures, the BB has mandated that banks in industrial regions stay open to manage the disbursement of wages and bonuses and facilitate the sale of export bills.
Additionally, bank branches in Chattogram metropolitan and industrial areas will also be open to support garment workers’ payments and the processing of export bills.
The BB has instructed banks to coordinate with local authorities to ensure adequate security at the branches during this period.
Eid-ul-Azha, one of the most significant religious festivals for Muslims, will be celebrated in Bangladesh on June 17.
