Home ›› 27 Apr 2022 ›› Front
The Bangladesh Bank has expanded the coverage of Post Import Financing (PIF), while also allowing the importers of industrial raw material more time under this facility to repay import liabilities.
PIF was previously available to importers of daily commodities and industrial raw materials. In a circular on Tuesday, the regulator’s Banking Regulation and Policy Department (BRPD) stated that the facility will now cover importers of other commodities and agricultural products.
It is a short-term credit facility available to importers for the purpose of settling bills of exchange that have matured and remain outstanding. Importers of daily commodities such as rice, onion, pulse, garlic, and edible oil can get 90 days under the PIF, while importers of other commodities – excluding the above mentioned items – will get 120 days.
Besides, importers of agricultural products such as fertilisers, seeds, pesticides, agri machineries and livestock products such as essential nutrients for livestock including fish and poultry, vaccines, medicines can get the PIF facility for 180 days.
The importers of industrial raw materials used to receive the PIF for 180 days, but now they will get 210 to repay the loans, read the central bank circular, adding that a bank will not be able to extend the PIF tenure for those sectors any further.
PIF facilities can also be restructured and rescheduled for up to 30 days for daily commodities and other trading products. This timeframe can be up to 60 days for the agricultural and industrial raw material sectors.
The Bangladesh Bank had made a guideline regarding the PIF facility in June last year, mentioning that all types of loans for payment of import liabilities will be called Post Import Financing (PIF).
Such loans are also known as “Loan against Trust Receipt (LATR) or LTR” for conventional banks and “Murabaha Trust Receipt (MTR)” for Islamic banks.
Under this guideline, the regulator had asked banks to set up a separate unit with skilled manpower for monitoring the trade related loans and PIF facilities. This unit has to ensure that the existing rules and regulations are complied with while disbursing trade loans.
If anyone commits irregularities, it should be reported to the authorities immediately. This can help reduce the non-performing loans against imports. The guideline also asked banks to formulate a separate policy on PIF and get it approved by their respective boards of directors.
