BIDA

Covid - 19

Last Updated: 20 September 2021

BIDA COVID-19 update for Investors

The COVID-19 pandemic has impacted countries world wide and exposed economies to its devastating consequences in terms of infections and fatalities, shut down of business operations and global supply chain resulting in GDP shrinkage and high unemployment rates. In order to minimize the adverse economic shocks of COVID-19, the Government of Bangladesh announced various fiscal and non-fiscal stimulus packages. Bangladesh Investment Development Authority (BIDA) is committed to supporting stakeholders during these challenging times and has been taking measures and actions to respond to the immediate and long-term impacts of COVID-19.

Policy Measures in Response to COVID-19

The Government of Bangladesh has announced a number of economic stimulus packages for various sectors and beneficiaries to mitigate the adverse impacts of the OCIVD-19 outbreak in Bangladesh. The size of the packages is nearly BDT 1.24 trillion (US$ 14.6 billion) and representing 4.44% of GDP as of January 2021. With all these stimulus packages and policy support along with an effective vaccination program, BIDA is working relentlessly to ensure the continuation of exiting investors’ business and increase new investment inflows into the country.

Monetary and Macro-prudential policies by Bangladesh Bank

Monetary and Liquidity measures

The Bangladesh Bank undertook several monetary and liquidity enhancement measures by providing adequate liquidity and loanable funds in the market to ensure uninterrupted business operations. Such policy measures include, but are not limited to, reduction in CRR, bank rate, repo and reverse repo rates, the introduction of term repo and extension of Advance to Deposit Ratio (ADR), and Investment to Deposit Ratio (IDR).

Cash Reserve Ratio (CRR)
Repo Rate

The repo rate was first reduced by 25 basis points to 5.75 percent with effect from 24 March 2020. It was reduced further by 50 basis points to 5.25 percent with effect from 12 April 2020. The rate was again reduced by 50 basis points to 4.75 percent with effect from 30 July 2020.

Term Repo Facility

A 360-day repo facility was introduced for supporting longer-term financing needs of the banks and NBFIs with effect from 13 May 2020.

Reverse Repo Rate

The reverse repo rate was reduced by 75 basis points from 4.75 to 4.00 percent with effect from 30 July 2020.

Bank Rate

The interest rate for loan and investment was reduced by 100 basis points to 4.00 percent with effect from 29 July 2020.

Advance to Deposit Ratio (ADR) and Investment to Deposit Ratio (IDR)
Credit and Interest Rate measures

The outbreak of the coronavirus has adversely affected business conditions and impaired the repayment capacity of borrowers in Bangladesh. Considering these negative impacts, Bangladesh Bank has suspended existing loan classification rules, formulated a special policy on loan rescheduling and one-time exit, allowed the transfer of interest/profit to non-interest bearing blocked account, eased rules for late payment and interest calculation against credit card bills, and instructed banks to disburse agricultural credit at 4 percent interest rate in crops and grains sector.

Loan Classification
Loan Rescheduling and One Time Exit
Long Term Financing Facility (LTFF)
Term Loans and Leases for Financial Institutions
Revolving Loan Renewal Facilities for FIs
Agricultural Credit
Transfer of Interest/Profit to non-Interest Bearing Blocked Account
Refinance Facilities under Stimulus Packages

The pandemic not only disrupted the global transportation and supply chain but also necessitated various public policy measures such as restricted business operations and lockdowns badly stalling industry, service, and the informal sector in Bangladesh. Therefore, to mitigate adverse shocks of COVID-19 on output, employment, and export earnings, BB has continued to step up with appropriate policy measures like credit and refinance facilities under the government declared stimulus packages.

Export-oriented Industries
Working Capital for Industrial and Service Sector
Special Working Capital Facility for CMSMEs Sector
Credit Guarantee Scheme
Refinance Schemes
External Sector and Foreign Exchange Measures

BB undertook a host of supportive policy measures and interventions to counteract the adverse impacts of COVID-19 on the external sector of Bangladesh. The following section summarizes measures and interventions in the foreign exchange market, foreign trade, and finance, remittances, external borrowing, etc.

Export
Import
Outward Remittances
Export Development Fund (EDF)
Short Term External Borrowing
Loans from Local Sources
Cash Incentive against Foreign Remittances
Simplification in Repatriation of Sales Proceeds
LC Margin on Child Food Import
Payment System and Digital Finance

Access to affordable and reliable financial services, especially digital payments and credits, plays a crucial role in the ease of business operations, particularly in this unprecedented pandemic situation when maintaining physical distance and staying home has become a norm. Hence, to provide a transparent, safe, and secure system of digital payment system tools, BB has proactively taken the following initiatives:

Uninterrupted Digital Financial Services
Salary, Wages, and Soft Loans Provided through MFS
Bangladesh Automated Clearing House (BACH)
Critical Service Management and Business Continuity Plan
Anti-Money Laundering and Combating Financing of Terrorism

In this pandemic situation, the model and typology of financial crimes have taken a new shape and the risks of cybercrime have increased significantly making financial institutions vulnerable to cyber-attacks. Considering the situation, Bangladesh Financial Intelligence Unit (BFIU), the central national agency to combat money laundering and terrorist financing, has taken different initiatives which include the following:

Source of Information