STAR BUSINESS REPORT

Bangladesh Bank yesterday raised the interest rate on loans availed from its export development fund (EDF) by 50 percentage points to make borrowing costlier in an effort to save foreign currencies.

As per the new decision, if manufacturers and exporters take loans from the EDF, they have to pay interest at the rate of 4.5 per cent whereas previously it was 4 per cent.

Meanwhile, commercial banks have to pay 3 per cent whereas it was 2.50 per cent earlier, according to a BB notice.

Banks first take money from the EDF and then use it to disburse loans among businesses.

The central bank started to increase the interest rate in July last year, when clients had to pay 2 per cent.

This means the interest rate has increased 125 per cent in the past seven months.