Bangladesh Bank Expands Export Refinance Fund to Tk7,000 Crore, But Raises the Price Exporters Pay

A Bigger Pool of Cheap Money for Exporters, at a Slightly Higher Price

Bangladesh Bank has expanded its Export Facilitation Pre-finance Fund from Tk5,000 crore to Tk7,000 crore, adding Tk2,000 crore to a pre-shipment credit refinance scheme that banks tap to lend exporters cash before their goods ever leave the country. The central bank confirmed the increase on October 1, alongside two smaller but telling changes: the maximum rate commercial banks can charge exporters under the scheme rises to 6 percent from 5 percent, and the rate participating banks themselves pay Bangladesh Bank to borrow from the fund climbs to 3 percent from 2 percent. The spread between the two rates stays at 3 percentage points either way, so banks' own margin on the facility is unchanged even as both sides of the transaction get more expensive.

The fund itself is not new. It traces back to a 2022 circular, lapsed for a period, and was revived in April this year specifically because of what the central bank described as global economic uncertainty weighing on export-oriented sectors, particularly garments. Reviving a scheme and then expanding it twice within the same calendar year suggests the central bank sees the underlying pressure on exporters as more persistent than a one-time shock, something to keep feeding capital into rather than a problem that resolves itself once initial support is in place.

Why This Lands the Same Week as September's Export Numbers

The timing is hard to separate from the export data Bangladesh released the same day. BD Financial Review's own reporting on September's $3.94 billion in merchandise exports, up 8.54 percent year on year but down roughly 11 percent from August, found Mohammad Hatem of the Bangladesh Knitwear Manufacturers and Exporters Association crediting part of the growth to exporters raising their unit prices as yarn costs climbed, and BGMEA president Mahmud Hasan Khan warning throughout September that international buyers are deliberately spreading orders across more supplier countries rather than concentrating them in Bangladesh. An expanded, cheaper pre-shipment credit line is precisely the kind of tool a central bank reaches for when it wants exporters to keep bidding competitively for orders even as their input costs rise and their buyers have more alternatives than they used to.

Pre-shipment finance works by giving exporters working capital tied to a confirmed order before the goods are produced and shipped, letting a garment factory, for instance, buy fabric and pay workers without waiting for the buyer's payment to clear months later. A bigger fund means more exporters, or the same exporters more often, can access that bridge financing. The single-borrower cap embedded in the scheme, no entity or group can hold more than Tk200 crore in outstanding loans under the facility at any one time, is designed to spread the expanded pool across a wider base of exporters rather than letting a handful of the largest conglomerates absorb most of the increase.

Term	Previous	New (October 2026)
Total fund size	Tk5,000 crore	Tk7,000 crore
Maximum rate charged to exporters	5%	6%
Rate banks pay Bangladesh Bank	2%	3%
Per-borrower cap	Tk200 crore outstanding	Tk200 crore outstanding (unchanged)

One Scheme Among Several

The Export Facilitation Pre-finance Fund is not the only refinance window Bangladesh Bank is running this year. Mercantile Bank signed on in late September to participate in three separate facilities totaling Tk5,000 crore: Tk3,000 crore for export diversification aimed at businesses broadening Bangladesh's export base beyond its traditional categories, Tk1,000 crore for green industrial development meant to encourage environmentally sustainable production, and Tk1,000 crore earmarked for the ICT sector to support technology-driven businesses. Taken together with the newly expanded Tk7,000 crore pre-shipment fund, Bangladesh Bank now has well over Tk10,000 crore committed across refinance schemes aimed broadly at keeping export-oriented and emerging sectors supplied with below-market financing.

That pattern of parallel schemes, each with its own rate structure and eligibility rules, reflects a central bank trying to do several things simultaneously: support the garment sector's immediate working capital needs, nudge exporters toward diversifying into non-garment categories, and encourage green and digital investment, all without using a single blunt tool like a broad rate cut that would affect the entire banking system rather than targeted sectors. The approach also fits a broader pattern BD Financial Review has tracked through late September, in which Bangladesh Bank has repeatedly reached for refinance facilities, bond approvals and similar targeted instruments rather than system-wide monetary easing, consistent with the central bank holding its main policy rate steady at 9.5 percent at its first quarterly review on September 30 even as it works other levers around the edges.

The Trade-Off Exporters Now Face

The rate increase embedded in this expansion deserves attention precisely because it cuts against the simple read of "more money available for exporters." A pre-shipment loan that cost an exporter at most 5 percent now costs at most 6 percent, a full percentage point more on working capital that garment factories in particular rely on constantly given how thin margins already are in a sector where, as Hatem noted, rising yarn prices are already eating into profitability. Bangladesh Bank appears to be betting that a larger pool of available credit, even at a somewhat higher rate, is more valuable to exporters right now than a smaller pool at the old cheaper rate, a reasonable bet if the binding constraint on exporters is access to capital rather than its exact price, but one that adds a little more cost pressure onto a sector already describing itself as squeezed.

Whether the expanded fund meaningfully changes exporters' competitive position will likely show up gradually rather than immediately, through whether Bangladesh holds onto buyers who might otherwise shift orders to Vietnam, India or other competing garment-producing countries over the coming months. For now, the clearest signal from October 1's announcement is that Bangladesh Bank views the pressure on exporters as serious enough to keep expanding a targeted lending facility for the second time in a single year, even while raising the price exporters pay to use it.