In a decisive move to support the country’s struggling garment sector, Bangladesh Bank has reintroduced the much-needed 5,000 crore taka Pre-Shipment Credit (PSC) scheme. The announcement comes at a time when the global economy is facing substantial volatility, largely due to ongoing geopolitical tensions, including two major wars, which have severely impacted global trade and exports.
The garment sector, a backbone of Bangladesh’s export economy, has experienced a prolonged downturn, with recent months showing a negative export growth trajectory. The revival of the PSC scheme is aimed at providing financial relief to exporters who are facing high interest rates, significant losses, and a challenging business environment.
The Pre-Shipment Credit scheme was initially launched during the COVID-19 pandemic when the country’s economy was at a standstill. At that time, the government extended a 10,000 crore taka loan facility at a 5% interest rate to support industries, including textiles, that were struggling due to the pandemic’s effects.
As the world continues to grapple with economic uncertainties, Bangladesh’s textile and garment industry finds itself once again in a vulnerable position. High interest rates, global supply chain disruptions, and reduced international demand have placed considerable strain on exporters, leading to negative growth in exports over the past seven to eight months. The sector has also been facing challenges in attracting new investments, further exacerbating the financial strain.
Shehab Udduza Chowdhury, the Vice President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), highlighted the significance of this decision. In a recent statement, Chowdhury highlighted the current global economic situation, marked by the impact of ongoing wars and high global inflation, which has worsened the country’s economic position.
With Bangladesh’s export performance showing a negative trend, particularly in the textile and garment sector, he stressed the importance of re-launching the PSC scheme as an essential step toward sustaining the industry.
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The reintroduced scheme will offer revolving credit of up to 200 crore taka per institution or group, with the entire 5,000 crore taka fund made available for the garment sector. The 5% interest rate on the credit is significantly lower than the market rate, providing exporters with a much-needed lifeline. The scheme will be in effect until December 31, 2030, ensuring long-term financial stability and encouraging garment manufacturers and exporters to access affordable financing during these uncertain times.
Chowdhury expressed gratitude on behalf of the BGMEA to the government and Bangladesh Bank for their swift action in re-announcing the scheme. The scheme’s low-interest loans will help alleviate the financial pressure on garment manufacturers, enabling them to manage their working capital more effectively and stabilize their operations.
Apart from the Pre-Shipment Credit scheme, another important development was the issuance of a new circular by Bangladesh Bank. On March 13, 2026, Bangladesh Bank issued a directive under the BRPT Circular 5, addressing the issue of banks not renewing credit limits for exporters on time.
Many businesses have complained that commercial banks have failed to renew their credit limits on time, leading to gaps in financing and complicating operations for exporters. This has caused unnecessary financial stress, leaving exporters to deal with unresolved credit issues while banks hold onto loans without proper management.
The new circular mandates that banks renew credit limits at least two months before their expiration date. This provision is expected to eliminate delays in credit renewals and ensure that exporters continue to have access to essential funding for their operations. The move is being hailed as a proactive measure to protect exporters from financial gaps and ease the ongoing challenges they face in securing funding.
The garment sector, which accounts for a significant portion of Bangladesh’s export earnings, is vital to the country’s economic growth. The sector has been facing a series of challenges, including increased production costs, reduced demand from key markets, and stiff competition from other low-cost manufacturing countries.
Despite these challenges, Bangladesh’s garment sector remains one of the largest in the world, with a well-established supply chain and a reputation for delivering quality products at competitive prices.
The relaunch of the PSC scheme, along with the new circular from Bangladesh Bank, is expected to provide a much-needed boost to the industry. It will not only help exporters manage their liquidity issues but also create a more stable environment for business growth.
The government’s swift response reflects a deep understanding of the economic pressures faced by the textile and garment industry and its commitment to ensuring the sector’s long-term sustainability.
This initiative aligns with Bangladesh’s broader economic strategy, which aims to diversify exports, increase foreign exchange reserves, and reduce the country’s dependence on traditional export markets. The reintroduction of the PSC scheme and the circular on credit renewal come as part of these efforts to support the garment industry during a challenging period and ensure that the sector remains competitive in the global marketplace.
