Bangladesh, with support from France’s Agence Francaise de Developpement (AFD), has formed a €50-mn loan fund in Bangladesh Bank to support safety remediation and environmental and social upgradation of readymade garment (RMG) factories. The programme is called Support Safety Retrofits and Environmental Upgrades in the Bangladeshi RMG Sector Project (SREUP).

The programme will receive technical assistance worth €14.29 mn from the European Union, German State-owned development bank Kreditanstalt fur Wiederaufbau (KfW), German development agency Gesellschaft fur Internationale Zusammenarbeit (GIZ) and Bangladesh Bank.

Participating financial institutions would be provided with pre-finance for disbursing the credit to eligible RMG factories under the loan fund, according to a Bangladesh Bank circular. Eligible RMG factories would get a loan amount up to €1 mn with a maximum 7 per cent interest rate and the loan amount may be extended up to €3 mn for major environmental upgradation, Bangla media reported citing the circular.

The maturity of the loan would be usually 3 to 5 years but in case of major environmental up-gradation or any other duly justified and documented case, it might be extended up to seven years. The circular also said that eligible RMG firms will have to apply for loans to the financial institutions for their sub-projects’ investments based on corrective action plans commitments to the EU retailers platform Accord, North American buyers group Alliance and National Tripartite Plan of Action.