The central bank has asked the commercial banks and non-banking financial institutions (NBFIs) to disburse loans under the Japan International Cooperation Agency (JICA)-funded project for improving infrastructure and doing safety assessment in the country's apparel and clothing sector.

"We're ready to release the fund to the participating financial institutions (PFIs) under the project," Mr Masum Patwary, acting general manager of the SME and Special Programmes Department of the Bangladesh Bank (BB), told the FE Wednesday. 

Mr. Patwary also said the central bank would approach development partners for arranging further funds for the project to confirm success of it.

The central bank issued a notification in this connection Wednesday and asked the banks and NBFIs to take necessary measures for sanctioning loans in line with the related operating guidelines. 

Currently 39 banks and NBFIs are eligible for disbursing the loans under the project to interested RMG entrepreneurs for the purpose of retrofitting, rebuilding and relocating their factory buildings. 

"We expect that four banks and one NBFI will sign memorandums of understanding (MoUs) with the central bank shortly for disbursement of the fund," another BB official noted. 

The JICA has already provided Tk 1.0 billion as a soft loan for improving the working environment in the country's ready-made garment (RMG) sector. 

Under the project, an entrepreneur will be given maximum Tk 1.0 million as a soft loan at the maximum interest rate of 10 per cent to develop infrastructure for their garment factories. The loan will be repayable in 15 years including a two-year grace period. 

An MoU was signed to this effect by the JICA, the central bank, Public Works Department (PWD) under the Ministry of Housing and Public Works, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) at a hotel in the capital on October 3. 

The funding is aimed at providing financial support to the RMG enterprises for conducting safety assessment of their buildings under the supervision of JICA experts and engineers of the public works department under the Housing and Public Works Ministry. 

The central bank has taken the latest initiative against the backdrop of the Rana Plaza collapse at Savar in Dhaka on April 24 last, where more than 1,100 people died and hundreds were severely injured.