Dhaka Bank has mobilised foreign funds amounting to $40 million at a cheap interest rate for Chandpur Power Generations.

Two banks based in Germany -- Commerzbank AG and AKA Ausfuhrkredit-Gesellschaft mbH -- provided the fund to Dhaka Bank, after which the lender disbursed the funds to the power company. The fund, covered by global credit guarantee company Euler Hermes, is the first ever loan for Dhaka Bank under the export credit agency (ECA).

The ECA acts as an intermediary between governments and exporters to issue guarantees for financing.

Dhaka Bank signed an agreement with the two German banks on June 7 to avail the fund.

The move enabled Dhaka Bank to expand its footprint in the international financial market and widen its spectrum of operation in structured financing, according to Emranul Huq, the bank's managing director.

"The client has also availed the fund at a cheaper rate than the rate offered by local banks," he said.

Chandpur Power Generations is a 115 MW heavy fuel oil based power plant which is now under implementation in Chandpur.

The project will be an IPP (independent power producer) for 15 years.