Bangladesh Bank yesterday reduced the interest rate on short-term foreign loans availed by exporters and importers.
The interest rates on loans are on the rise in the global market, which is why the central bank has taken the decision such that local businesses can be safeguarded from high interest rates, said a Bangladesh Bank official.
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As a part of the move, the BB revised the all-in-costs ceiling for short-term trade finance, the highest tenure of which is below one year, in foreign currencies.
All-in-costs comprise the entire cost of a financial transaction or business operation, including all taxes and fees such as closing costs, origination fees or commissions.
Given the global market trends, the BB decided to set the all-in-costs ceiling per annum with a markup of 3 per cent over the benchmark rate, applicable to the relevant currency, according to a BB notice.
The previous markup rate was 3.5 per cent.
As usual, banks may continue to arrange finance with the London Interbank Offered Rate (Libor) as the benchmark rate till its usability ceases, it said.
The Libor is a benchmark interest rate at which major global banks provide short-term loans to one another in the international interbank market. It will be, however, phased out by June 30, 2023, due to a rate-setting scandal, which came to light in 2012.
