Export Development Fund (EDF)

Export Development Fund (EDF)

Export Development Fund (EDF) is a special credit window created by Bangladesh Bank to provide short-term finance in foreign currency for import of raw materials by opening L/C at sight by the export oriented garment industries.
At the request of Bangladesh Government with a view to developing its export, the International Development Organization (IDA) established an export development fund in Bangladesh Bank (Loan – 2000 BD). In this respect a treaty was signed with IDA on 26 April 1989 and the project started its activity from October’ 89.
Initial Proposed fund for 31.20 mUS$ was arranged as under:
i. IDA – 25.00 mUS$
ii. Bangladesh Govt. – 5.00 mUS$
iii. US Aid – 1.20 mUS$
• To help import financing for the exporters of non-traditional items, especially where high value addition is maintained.
• To grow confidence of foreign suppliers.
• To expedite high value added export where import is made under BTB LC under bonded warehouse system.
1. Limit US$500,000.00 for single import bill.
2. Aggregated amount US$20,00,000.00 to single importer at the time of disbursement.
3. Interest LIBOR + 1% and 10% for interim period
4. To be refunded within 180 days from the date of receipt of fund from Bangladesh Bank (may be extended to 270 days for special case)
1.Intimation to Bangladesh Bank:
• At the time of opening EDF BTB LC, intimation in a prescribed form stating details of LC is given to Bangladesh Bank through International Division.
• The branch will claim for disbursement of EDF sub-loan immediately after receipt of Negotiated import bills complying credit terms from the negotiating bank abroad.
• The branch will submit following returns/statements in respect of L/Cs opened under EDF:
 L/C opening statement under EDF daily
 Monthly statement of L/Cs opened under EDF (within 7 days of month following the month to which it relates)
At the time of opening LC the following voucher are passed:
Dr. Customers liability on EDF LC ( @ B.C. Selling)
Cr. Bankers liability on EDF LC ( @ B.C. Selling)
Dr. Customer A/c
Cr. Income A/c commission, charges, etc.
2.Lodgement of Documents:
After receiving credit conform negotiated documents they are lodged and reversal voucher of LC liability is passed.
Dr. Banker’s liability on EDF LC ( @ B.C. Selling)
Cr. Customer liability on EDF LC ( @ B.C. Selling)
3.Payment of EDF LC:
After lodgment of import bill, payment to the negotiating bank is settled by creating EDF Loan. then vouchers are passed as follows:
Dr. PAD EDF Loan (@ OD sight)
Cr. General A/C – ID, Head Office (IBCA)
A payment instruction is given to the bank through which payment will be settled.
At the same time requisition for fund is forwarded to Bangladesh Bank through ID.
International Division, after getting requisition of other branches, forward an accumulated requisition to Bangladesh Bank.
Getting fund from Bangladesh Bank, ID credit the same to branch by IBCA.
Then the branches respond IBCA as follows:
Dr. General A/C – ID Head office (Responding)
Cr. FC Held EDF Loan
When export is done and proceeds are realized then the EDF Loan account is adjusted and fund is returned as follows:
Dr. FC Held EDF
Cr. EDF Loan A/C
Return of fund:
Dr. FC Held account for BTB payment (Bill value + intt. for interim + LIBOR
+1%) (@OD sight export)
Cr. MBL General A/C (IBCA on Bangladesh Bank account)
(with interest @ LIBOR rate)
Cr. MBL General Account on Nostro (for interest amount)
Dr. MBL General Account on Nostro (for interest amount)
Cr. I/A interest on EDF
Cr. I/A Exchange gain
Bill amount :US$50,000..00
Bill payment date : 14.05.2008 (EDF Loan creation date)
Fund received date : 27.05.08
EDF adjustment date : 12.11.08
Bill Amount 50,000.00
Intt. for 13 days @ 10.00% 180.56
Intt. for 169 days @ 1% 234.72
Intt. f or 169 days @2.85% (LIBOR) 668.96
Dr. FC Held BTB payment account
$51,084.24 @68.20 Tk.34,83,945.17
Cr. IBCA on B.Bank $50,000.00 @ 68.20 Tk.34,10,000.00
$668.96 @ 68.20 Tk. 45623.07
Cr. IBCA on AMEX NY (for sale of margin)
$415.28 (180.56+234.72) @ 68.20 Tk.28,322.10
Dr. IBDA $415.28 @ 68.25 Tk.28,342.86
Cr. Intt. on EDF Tk.28,322.10
Cr. I/A Exchange gain Tk. 20.76

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