Bangladesh Bank has scrapped the mandatory requirement for exporters to retain 10 percent of their advance export earnings received from foreign buyers, a move aimed at boosting cash flow and simplifying business operations.
The central bank issued a circular on Thursday, lifting the retention obligation to facilitate the procurement of raw materials, streamline production activities, and simplify the supply of goods.
The new directive, however, includes several safeguards to ensure genuine transactions. Under the guidelines, exporters must have a confirmed Letter of Credit (LC) or a valid contract.
Additionally, exporters must have a satisfactory track record of previous export activities and the capacity to fulfil the order. The advance payment must also be interest-free.
Business leaders have welcomed the decision, calling it a significant relief for exporters. They believe it will make the sourcing of raw materials, production, and order fulfilment much easier. They also noted that the bank's continued supervision would ensure compliance with the rules and regulations.