The Netherlands Development Finance Company (FMO), which supports the private sector in developing countries and emerging markets, and Standard Chartered Bank have signed an agreement that will provide better letter of credit (L/C) access for clients of private commercial banks in Bangladesh.

Under the Bangladesh Trade Enhancement Facility (BDTEF), the Dutch development agency partially guarantees the confirmation by Standard Chartered of L/Cs issued by Dhaka Bank, Dutch-Bangla Bank, Prime Bank and Southeast Bank.

SME benefits

FMO and Standard Chartered announced in 2001 their commitment to support the US$52 million BDTEF, which is designed to benefit private sector importers and exporters, especially small- and medium-sized enterprises in Bangladesh.

Under the terms of the facility, FMO with the International Finance Corporation (IFC) would jointly guarantee Standard Chartered up to US$26 million of the total facility amount of US$52 million.

Project aims

The two-year revolving facility will give businesses in Bangladesh - which have limited access to trade finance from local and international commercial banks - better access to L/C confirmations by guaranteeing documentary credits originated by selected commercial banks.

The facility aims to increase the availability of short-term trade finance to Bangladeshi importers and exporters by supplementing country limits that restrict commercial banks operating in the country.

The BDTEF also aims to help build the reputation of Bangladeshi banks in international markets and promote confidence in the country's private and commercial banking sector.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.