BB plans to lift LC margin of 8 products

The Bangladesh Bank is planning to withdraw Letter of Credit (LC) margin of eight products, including spices, dates, lentils, sugar and wheat, ahead of the upcoming Ramadan – the month of fasting.

Speaking to The Business Post, Bangladesh Bank Executive Director and spokesperson Mezbaul Haque said, “The central bank has taken this decision at the recently held bankers’ meeting. The move would help avoid any supply shortages of those products amid Ramadan.”

The regulator will issue a notice in this regard next week, Bangladesh Bank sources say, adding that the banks will be able to open LCs for those eight products on the basis of bank-customer relationship.

On July 4 this year, the central bank had imposed a 75 per cent margin on those products with the aim to further strengthen the country’s monetary and debt managements amid the ongoing forex volatility.

The regulator had also imposed a 100 per cent cash margin for opening LCs on cars, electronics, gold, precious metals, RMG, and pearls, among other items at the same time, which will remain effective until further notice.

On December 4 this year, following a bankers’ meeting, the regulator instructed banks to ensure a smooth process for opening LCs to aid in imports of essential commodities ahead of Ramadan.

The Bangladesh Bank is also going to form a crisis management cell for this particular purpose. The cell will aid businesses in importing essential commodities and help consumers purchase those at affordable prices, BB sources say.

The opening of LCs has been falling in recent months after the authorities imposed several conditions on imports as part of austerity measures. In November, LCs worth $4.02 billion got opened, down from $4.74 billion a month ago, show latest data from the Bangladesh Bank.