Bangladesh Bank stated that well-known export credit agencies (ECAs) that are responsible for guaranteeing export goods would be able to enjoy loans as per their concern, even if they cross beyond the exposure limit. ECA provides financial assistance and other services to aid international trade.
Moreover, counties around the world have ECA. ECAs assist domestic companies in finding foreign markets for their products through employment, which supports the domestic economy. They also give loans, loan guarantees, and issuance to help the uncertain situation in importing and exporting worldwide.
However, there is a specified single-borrower exposure limit on loans which is 25 percent of the capital for a single person, business, or enterprise. But those who supply quality goods certified by ECA and AAA-rated worldwide can have the advantage of seeking loans more than the following limit from the bank.
Fazlul Hoque, former president of the Bangladesh Knitwear Manufacturers and Exporters Association, appreciated this initiative because it would help to gather the necessary funds for exporters. However, he also looks upon some facts like the complexity that exporters who simultaneously make shipments to various buyers can create. He also predicted that there is a chance that reputable ECAs can provide guarantees to some importers but not to others.
He also states, “Under such a situation, banks may face ambiguity in disbursing loans to exporters.” Regarding Bangladesh Bank should solve this issue with another notice
An official from Bangladesh Bank said there is a low risk in exporting products when a well-known ECA approves the shipment. He also mentioned that the Export Credit Agency would pay exporters regardless of whether the foreign buyer can deliver, which means banks will not be exposed to risks by providing loans to exporters.
According to the benchmark of the central bank, this exposure limit is not suitable for loans given to the government or some companies that regulate payment guarantees from the government, and borrowers who have contracts from bilateral development banks also have the acceptance to enjoy loans that is beyond the limit.