BB clears importers to give guarantee to foreign lenders

Bangladesh Bank has allowed importers to give a guarantee to foreign lenders to make payments to suppliers.

The central bank issued a notice on Wednesday saying that importers can give guarantees like corporate guarantee, personal guarantee or third-party guarantee to foreign lenders to make payments to suppliers under buyer’s credit against imports on sight letters of credit.

A sight letter of credit refers to a document that verifies the payment of goods or services, payable once it is presented along with the necessary documents. The BB notice said that this move would facilitate short-term import financing.

A high official of the central bank said that the initiative will facilitate short term import finance under buyer’s credit. Import Finance is a type of the funding of the gap between receiving the goods, and sending the payment. Furthermore, it is usually seen as a short-term type of finance and is provided by a third party.

External lenders including offshore banking operations extend buyer’s credit against usance import bills duly accepted by Ads.