Bangladesh Bank (BB) on Tuesday asked the banks to relax the cash margin rate against the opening of letters of credit (LCs) for imports of 10 categories of products for the smooth manufacturing sector under cottage, micro, small and medium enterprises (CMSMEs).
The central bank issued a notice on the day saying that banks can fix the opening margin rate based on banker-customer relations for imports of industrial and industry-related spare parts, textile raw materials, chemical and ancillary products, plastic products, UPS and IPS machinery.
Previously, importers had to pay 75 per cent LC margin on imports of these goods.
Currently, importers of other products will have to pay 75 per cent to 100 per cent margin for opening letters of credit.
However, there is flexibility to import some products including baby food, essential food products, fuel, medicines and equipment, directly imported capital machinery, raw materials for production-oriented local industries, export-oriented industries and agricultural products.
Now the LC opening and LC settlement have fallen sharply due to austerity measures taken by the government and strengthened monitoring of imports by Bangladesh Bank (BB).
During the July-May period of FY2022-23, LC opening fell by 25.34 per cent and LC settlement by 9.76 per cent.
LC opening for capital machinery import fell by 55 per cent to $2.69 billion while LC settlement also dropped by 29.47 per cent to $3.21 billion, the BB data showed.
Experts said that the falling trend of imports will impact the industrial expansion and job creation.
