Bangladesh: US$ 200 Mln RMG Fund Has Few Takers

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Bangladesh: US$ 200 Mln RMG Fund Has Few Takers

The country's apparel manufacturers are not eager to take loans from a US$ 200 million fund created for the sector by the development partners. European Union Ambassador to Dhaka Pierre Mayaudon said, "We are offering soft loans and the amount is about US$ 200 million. Nobody is using it still now. "EU, JICA, USAID, IFC and two or three other small organisations created the remediation fund aiming to remove loopholes in fire safety, electricity and structure of the readymade garment factories. Pierre Mayaudon said they offered the loan from the fund with 1-3% interest while the rate in the commercial banks is 15%.

The negotiation is on with the government, Bangladesh Bank and other stakeholders to utilise the soft loan fund, allocation for which is available through the banking channel, Mayaudon said. "This issue, to the best of my knowledge, has not yet found a proper solution," he added. According to Bangladesh's central bank officials, the central bank lends money to the country's commercial banks at 5% interest and they distribute the money at a negotiated rate fixed by the banks and the clients. The commercial banks collect 10-15% interest from the borrowers.After the collapse of Rana Plaza in 2013, all the stakeholders including the government, manufacturers, buyers, the development partners have taken the initiative to improve the workplace safety and security for the RMG workers.