Bangladesh Bank (BB) has started working to extend the repayment tenures of different incentive or stimulus packages announced by the government to overcome the impact of Covid-19 pandemic that cast a severe blow to the country's economic activities.

The central bank has recently been informed of such a decision from the higher level of the government, sources said.

Considering a prolonged impact of the second wave of the prevailing Covid-19 pandemic, BB is also thinking these issues positively and it has already sent letter to all commercial banks and financial institutions seeking information in details about the implementation position of various incentive packages, said a central bank source.

"We have started working on the issue . . . our departments concerned have already prepared a draft report for extending the tenures of the incentive packages in line with the government's instruction," said chief spokesperson of Bangladesh Bank Sirajul Islam.  

He said BB will take final decision immediately after getting information from the commercial banks.

According to sources, 31 incentive packages have been announced so far to provide financial and policy support to revive the country's economy hit hard by Covid-19 as the government declared general holiday from March 17, 2020 to contain the spread of coronavirus in the country.  

Of these packages, 10 are low-interest loan-based incentives and the remaining 21 are policy support-based ones.

The first incentive package was announced with a fund of Tk 5,000 crore for the payment of salary and allowances to workers and employees of export-oriented industries.

Later, the size of this fund was enlarged by Tk 3,000 crore more increasing the total package to Tk 8,000 crore. The loan is to be repaid through a total of 18 equal instalments, including a grace period of six months, in the first two years.

Service charge at the rate of 2 percent will have to be paid against the loan. However, six months have been passed. According to the rules, the instalment payments in this regard are expected to be started from the current month.

But Bangladesh Garment Manufacturers and Exporters Association (BGMEA) demanded an extension of the loan repayment period to five years from the existing two years arguing that the apparel sector has not yet been able completely to cope up with the negative impact of corona.

Besides, the export activities are being hampered again due to the second wave of the Covid-19, the BGMEA said.

Talking to the Bangladesh Post, BGMEA President Dr Rubana Huq said BGMEA raised to extend the grace period for at least one year but no decision was taken till now and banks have already started cutting the service charge.

"We are worried about it . . . . Covid-19 has hard the garment sector and factories are still struggling to cope with the situation. Factories which will not be able to pay the charge will face closure and employees loss jobs," she said, and repeated BGMEA's demand for extension of the grace period for one year.      

But no decision has yet been taken by the government in this regard as the matter is now under review of the authorities concerned. However, it has been informed that the loan repayment period may be extended for a short period of time.

A fund of Tk 30,000 crore was formed to provide working capital to large or big industries and the service sector. The fund's size was further increased in two phases to a total of Tk 40,000 crore. Entrepreneurs are being given loans at 4 percent interest rate from this fund and around 95 percent of this package has been implemented so far. The deadline to implement the fund has been extended till June this year.

An incentive package of Tk 20,000 crore has been announced to provide working capital to cottage, small and medium industries and entrepreneurs are being given loans at the interest rate of 4.5 percent from this fund.

The implementation period of this fund has already been extended till next March, BB sources said. But BB is considering to extend the tenure of this fund till June this year as the implementation rate till last December was only 50 percent.

The size of the Export Development Fund has been increased from US$350 crore to US$500 crore to import raw materials for export-oriented industries. The interest rate of the loan of this fund has been reduced to 1.75 percent in two phases and loan facility will be available up to March 31 this year.

But due to the prolonged effect of the coronavirus pandemic, the tenure of this fund is expected to be extended till June this year, BB sources said.

A fund of Tk 5,000 crore has been set up for pre-shipment loans for export-related product shipments. The loan is being given at 6 percent interest from this fund. This is a rotating or revolving f