Bangladesh Bank has reduced the interest rate for Support Safety Retrofits and Environmental Upgrades in the RMG Sector loan scheme to 5 percent from 7 percent.
In a circular issued on Monday, the central bank said the new interest rate of the scheme, commonly known as SREUP, will be effective from Sept 19.
The goal of the scheme, partnered by the French Development Agency, or AFD, European Commission Asian Investment Facility, or EU-AIF, KfW Development Bank, and German Technical Cooperation, or GIZ, was to provide soft loans to the readymade garments industry through private finance initiatives for safety retrofitting and environmental and social upgradation of the factories.
Under the scheme, commercial banks will be able to borrow funds from Bangladesh Bank at a 2.5 percent interest rate and lend to factory owners at 5 percent.
AFD is providing €50 million while EU-AIF and KfW are pitching in €10.29 million combinedly for the scheme’s fund. Bangladesh Bank, on behalf of the Bangladesh government, is also providing €0.99 million as credit.