The Bangladesh Bank will now impose 4% penal interest on banks' overdue amount of loans that were disbursed from the Export Development Fund (EDF).
If the loans and interests are not repaid within the deadline, the central bank can debit the overdue amount from the foreign currency clearing accounts that the authorized dealer (AD) banks maintain with it.
In a circular on Sunday, it said it observed that the EDF loans were not being realized in accordance with its instructions.
It has been decided that penal interest, or compensation in case of the Shariah-based banking, will be imposed by the BB on the ADs at 4% per annum above the prevailing interest rate on the overdue amount of the EDF loans for the delayed period.
The BB has asked the ADs to submit a debit authority for realizing the principal and accrued interest, including penal interest, at the time of application for the EDF loan.
A debit authority gives an individual or company permission to take funds directly from someone's bank account.
Currently, the EDF size is $6 billion, and the interest rate on the loans disbursed from the fund is 4.5%.