Central Bank Launches Export Diversification Fund For Industries

The Bangladesh Bank has officially launched a Tk 30,000 million (Taka thirty billion) refinancing scheme titled the “Export Diversification Refinancing Scheme”. The primary objectives of this financial initiative are to expand the operational base of the nation’s export sectors beyond the Ready-Made Garments (RMG) industry and to strengthen the domestic manufacturing capabilities of alternative sectors. The Sustainable Finance Department of the central bank issued a formal regulatory circular regarding this implementation on Sunday, 7 June 2026.

According to the official circular, the scheme has been specifically designed to mitigate product-centric and market-centric vulnerabilities arising from an over-reliance on the RMG sector. Furthermore, it aims to facilitate the development and structural growth of non-traditional export sectors that exhibit high growth potential.

Fund Structure and Lending Terms

The central bank has outlined the precise structural mechanisms and monetary regulations governing the newly formed fund. The financial resources for this refinancing facility will be drawn entirely from the surplus liquidity available within scheduled commercial banks operating in Bangladesh. The fund will function continuously as a revolving financial pool.

The operational guidelines prescribe the specific interest rates and temporal conditions for participating institutions and borrowers:

• Central Bank Refinancing Rate: The Bangladesh Bank will provide the refinancing facility to Participating Financial Institutions (PFIs) at a fixed interest rate of 4% per annum.

• End-User Export Rate: Eligible exporters and manufacturers will receive financing from the PFIs at a maximum capped interest rate of 7% per annum.

• Calculation Method: The applicable interest on all disbursed credit under this scheme must be calculated utilizing the reducing balance methodology.

• Tenure and Grace Period: The maximum tenure for individual credit facilities under this scheme is established at three years, which includes a maximum permitted grace period of six months.

Through this structural mechanism, the central bank aims to enhance the international competitive edge of domestic exports, accelerate foreign exchange inflows, improve the national balance of trade, and generate employment opportunities through the systematic expansion of non-traditional export sectors.

Target Sectors and Eligibility Criteria

The distribution of credit under the refinancing scheme is strictly tied to the national Export Policy 2024–27. Financial facilities will be extended exclusively to industries categorized under the “Highest Priority” and “Special Development” sectors within the framework of the state policy.

To ensure financial discipline and protect public exchequer funds, the central bank has instituted stringent exclusionary criteria. The following categories of entities are legally barred from accessing credit facilities under this refinancing initiative:

• Any exporter or manufacturing entity flagged as a loan defaulter in the official reports compiled by the Credit Information Bureau (CIB).

• Any corporate institution or enterprise that has failed to repatriate legitimate export earnings within the statutory timeline.

• Any commercial entity or manufacturing establishment with a documented corporate history of loan write-offs.

Participation Framework and Administrative Requirements

Commercial banks and financial institutions intending to disburse credit under this facility must formally execute a Participation Agreement with the Sustainable Finance Department of the Bangladesh Bank. The central bank has also integrated Islamic banking windows into the operational framework, permitting Islamic banks to extend financing via Sharia-compliant investment modalities. However, Sharia-based operations must strictly adhere to the standardized interest equivalents, maximum profit caps, and repayment tenures specified in the general guidelines.

To obtain the refinancing facility from the central bank, PFIs must submit formal applications accompanied by all required legal and financial documentation within exactly 90 days of disbursing credit to the end exporter. The mandatory administrative documentation package comprises:

1. A formally executed Demand Promissory Note.

2. A valid Letter of Continuity.

3. An authorized Debit Authority Letter.

4. An updated and clean CIB report for the borrowing entity.

Furthermore, all investment operations executed under the umbrella of this refinancing scheme must maintain a strict minimum debt-to-equity ratio of 70:30.

Supervision, Penalties, and Statutory Authorization

The Bangladesh Bank has established a rigorous framework for monitoring and corporate accountability to prevent the diversion of capital. Participating Financial Institutions are mandated to submit comprehensive quarterly compliance and disbursement reports within 15 days of the conclusion of each fiscal quarter. Additionally, the central bank will deploy dedicated inspection teams to conduct regular, unannounced on-site audits to verify the appropriate end-use of the disbursed funds.

The circular outlines severe financial penalties for non-compliance and reporting discrepancies. If an institution or borrower is found to have provided fraudulent information or misapplied the funds for non-intended commercial activities, the central bank will impose a punitive interest rate of an additional 5% per annum over the standard refinancing rate. This penalty will be directly debited from the current account maintained by the respective financial institution with the Bangladesh Bank.

In the event that a borrowing exporter defaults on their repayment schedule, the financing PFI is legally obligated to immediately notify the central bank. Upon receipt of such notification, the Bangladesh Bank retains the statutory right to recover the entire outstanding refinancing amount through a one-off automated deduction from the current account of the concerned financial institution.

The Export Diversification Refinancing Scheme has been enacted under the statutory powers conferred upon the central bank by Section 45 of the Bank Company Act 1991 (amended up to 2023). The regulatory directives contained within the official circular have been declared effective immediately across all territories of Bangladesh.