এগ্রো ট্রেড গেটওয়ে

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Interest Rate and Incentive (Plant Product export)

Interest Rate

Bangladesh bank has announced new monetary policy for July-December 2023 . According to the policy, Bangladesh Bank (BB) will determine reference lending rate. Based on the reference lending rate banks would be able to determine their lending rate up to a certain margin determined by BB. The reference lending rate, known as the "SMART" (Six months moving average rate of Treasury bill), will be announced on the first working day of each month through the BB website.  To determine the reference lending rate, BB relies on the yields of 182-Day Treasury Bills (TBs) offered by participating financial institutions.

According to the BRPD circular letter no-64 dated 27 November 2023, all scheduled banks can add maximum 3.75% with SMART to determine lending rate. For, pre-shipment export credit the scheduled banks can add maximum 2.75% with SMART to determine lending rate.

Bangladesh Bank in its website publishes the new SMART rate on the first working day of each month. The SMART rate for November is 7.43%.

According to the policy, schedules banks determine their interest rate on monthly basis.

  

Service Charge/Commission for Trade Finance

Bangladesh Bank has determined the maximum service charge or commission for all scheduled banks in BRPD circular no. 11, dated 10 July 2021. The service charge/commission is in the table:

SN

Service

Charge/Commission

1

Commission for 100% LC

Maximum 0.25% per quarter

2

Commission for deferred/usance LC

Maximum 0.50% per quarter

3

Commission for sight, back-to-back and other LC

Maximum 0.40% per quarter

4

Charge for LC transmission, LC amendment, confirmation, cancellation, and foreign correspondent charge for mailing, courier, telex, swift

At actual

5

LC advising charge

750 taka maximum

6

LC amendment charge

750 taka maximum

7

LC transfer charge

750 taka maximum

8

Charge for LC acceptance

Maximum 0.40% per quarter

9

Charge for LC confirmation

Maximum 0.20% per quarter

10

Commission for export bill negotiation

Maximum 0.15% per quarter

11

Commission for export bill Collection

Maximum 0.15% per quarter

12

Charge for issuance of back-to-back LC

500 taka maximum

13

Charge for issuance of C&F certificate

500 tk maximum

14

Charge for issuance of Proceed Realization Certificate (PRC)

500 taka maximum

15

Commission for Bank guarantee

0.50% maximum per quarter and 1000 minimum

 

16

Issuance charge for Demand draft, Telegraphic Transfer, Mail Transfer in foreign currency

For not more than 1,00,000 taka

Maximum 100 taka

1,00,001- not more than 5,00,000 taka

Maximum 200 taka

5,00,0001- not more than 10,00,000 taka

Maximum 300 taka

For more than 10,00,000 taka

Maximum 500 taka

For cancelling instrument

Maximum 200 taka per cancellation

Source: BRPD circular no 11

Incentives for Export

Government of Bangladesh is providing cash incentive for export for several processed food products. Bangladesh Bank in its FE circular no. 13 dated August 24 2023 has declared cash incentive for the year of 2023-2024. Rate of cash incentive for plant-based products are:

https://www.bb.org.bd/en/index.php/mediaroom/circular 17-12-2023

SL No.

Product

Applicable rate

1

Agricultural products and Agro-processed products

20%

2

Tea

4%

 

Fiscal Incentive

 

In the draft of Agro-food Processing Industry Policy 2021, the government proposes various types of incentives for agro agro-processed food industry including capital assistance, interest subsidies, tax exemption on imports of capital machinery, research incentives, laboratory grants, and waiver of income tax. The proposed fiscal incentives for the agro-processed food item are;

 

Products Items

Proposed rate

Capital subsidy
  • Up to 50% of project cost (includes plant & machinery, technical civil works), limited to 50crore taka in the form of soft loan
  • An extent of 25% of new/upgraded equipment cost, limited to 50 crore taka in the form of soft loan.

Interest subsidies
  • 5% per annum on the term loan taken for fixed capital  investment (cold chain infrastructure), for a period of 5 years, with a  maximum limit of taka20 crore.
  • 5% per annum on term loan taken for fixed capital investment, for a period of 7 years from, with a  maximum limit of taka 10 crore.

 

Tax exemption on imports of capital machinery
  • For micro & small enterprises, 100%, Medium industries, 75%, and large Industry unit, 50% of net VAT will be reimbursed for a period of 5, 7 and 7  years respectively

Research incentives
  • Exemption of import duties on machinery
  • Three–year corporate income tax exemption on the revenue of an existing  project with corporate income tax exemption cap not exceeding 50 percent of the investment capital (excluding cost of land and working capital).

Stamp Duty
  • 50% exemption of stamp duty and transfer duty on purchase or lease of land meant for industrial use to be paid by the industry.
  • 50% exemption of stamp duty for lease of land/shed/buildings, mortgages and  hypothecations.

Source: Draft of Agro-food processing industry policy 2021and BIDA

 

VAT waive:

Guidelines for Availing Cash Incentive

Agriculture products (vegetables and fruits)

Bangladesh Bank FE Circular No. 15 (06/10/2005) (Bangla) has detailed the requirements for cash incentive for vegetables and fruits. According to the circular, the documents which are required for cash incentive along with application form are:

  • Export invoice
  • Packing list
  • Bill of lading/Air way bill
  • Proceed Realization Certificate (PRC)
  • Cash incentive certificate from Bangladesh  Exporter's Association (BFVAPEA)/Export Promotion Bureau (If not member of the association)
  • Freight certificate indicating freight charge (If applicable)
  • Physical verification certificate from customs (Bangladesh Bank FE Circular no. 05 (18/04/2022) (Bangla)

Agro-processed products

Bangladesh Bank FE Circular No. 15 (06/10/2005) (Bangla) has detailed out the requirements for cash incentive for Agro processed products. The Agro processed products eligible for cash incentive has published in the circular. According to the circular, the documents which are required for cash incentive along with application form are:

  • Export invoice
  • Packing list
  • Bill of lading/Air way bill
  • Proceed Realization Certificate (PRC)
  • Cash incentive certificate from Bangladesh Agro-Processors Association (BAPA)/Export Promotion Bureau (If not member of the association)
  • Freight certificate indicating freight charge (If applicable)
  • Physical verification certificate from customs (Bangladesh Bank FE Circular no. 05 (18/04/2022) (Bangla)

 

Tea

Bangladesh Bank FE Circular No. 35 (10/11/2021) (Bangla) has detailed out the requirements for cash incentive for rice. According to the circular, the documents require to submit along with application are:

  • Commercial Invoice
  • Packing list
  • Bill of lading/Air waybill
  • Bill of Export (Issued and certified by Custom, and attested by freight authority based on on-board)
  • Cash incentive certificate from Export Promotion Bureau