Loan Facility Parameters

The loan facility parameters for BIFFL have been set as under:

• a) Priority: The project should be in line with the GOB’s priority plans for the sector.
• b) Procurement: Projects will be expected to meet BIFFL’s requirement for International Competitive Bidding (“ICB”), National Competitive Bidding (“NCB”) or Local Competitive Bidding (“LCB”), as applicable. Appropriate limits for each of the process would be set out from time to time. In cases where a project is unsolicited, BIFFL may require that up to 40 percent of the total project cost or 100 percent of goods and services, whichever is less, be procured on a basis acceptable to BIFFL.
• c) Currency: BIFFL will extend credit facilities in local currency. BIFFL will not offer Foreign currency loans (FCL) unless BIFFL mobilizes foreign currency funds to on-lend. Loan tenor shall not exceed the tenor for which BIFFL has raised such funds. Currency Exchange risk should be passed on to the borrower entirely. Interest rate charged to borrower should mirror the variable benchmark rate used for BIFFL’s borrowings. Foreign currency loans may be provided only for projects which have a natural hedge by way of income in foreign currency or projects which can bear adverse exchange rate fluctuation without affecting the viability or repaying capacity.
• d) Tenor: BIFFL Loan tenor and grace period will be determined considering BIFFL’s source of finance and as per project requirements but not exceeding 15 years including a grace period not exceeding 4 years
• e) Interest Rate: Either fixed or variable rate as per customers will, reflecting current market conditions.
• f) Equity: To ensure commitment, sponsors will be required to provide at least 20 percent of the project’s equity.
• g) BIFFL Exposure to a project:Not exceeding 40 percent of the total project cost or US$ 100 million whichever is lower for a single project
• h) Return on Investment and Financial Charges:
• i. The lending rate shall conform to the prevailing rates offered by other financial institutions for long, medium and short term investments. At the same time, the management, in deciding lending rates, has to keep in mind the average cost of borrowing from various sources;
• ii. The management while fixing lending rates, in addition to the considerations given at (i) shall allow a gross average spread of 3 percent over its cost of funds;
• iii. Financial Charges as appropriate will be levied for funds disbursed or committed under the credit agreement until its execution/start of repayment by the borrower. Enhanced interest and delinquent charges would be imposed for delay in execution/start of repayment beyond the stipulated time;,
• iv. The following fees and charges, as applicable, shall be charged to the Borrower:
• Application fee;
• Due diligence fee;
• Arranger’s fee;
• Delinquent/Penal Charges;
• Prepayment fee.
• Agency Fee
• The fees and charges may be reviewed from time to time.
• i) Annual Volume of Financing: BIFFL will follow the investment plan prepared for the financial year and approved by the Board of Directors. This will be reviewed from time to time. The tentative investment of BIFFL for the year 2016 is BDT 1868 crore.