Bangladesh Bank has instructed banks to keep a minimum LC margin (cash advance) for importing rice and wheat, in order to keep their market prices at a tolerable level. Banking regulation and policy department of Bangladesh Bank issued a circular in this regard – with immediate effect – today and sent it to top executives of all banks. Read more: Bangladesh Bank allows LCs to import commodities for Ramadan The circular instructed that banks should kept LC margin at the minimum level, depending on the bank-client relationship. “Rice, wheat and crops prices are seeing an upward trend, owing to the disruption in the global supply chain caused by the Russia-Ukraine war. As a result, the transport cost of global commodities has gone up, affecting prices in the local market,” the central bank circular added. Read more: Bangladesh wants to buy sugar, wheat, soybean oil from Brazil To keep the import and supply channel smooth for rice and wheat, Bangladesh Bank asked banks to keep a minimum LC margin. The central bank also directed banks to take a minimum cash advance from importers while opening LCs for a number of essential commodities in order to keep their prices at a tolerable level during Ramadan. The demand for edible oil, lentils, onion, spices and dates usually goes up during Ramadan. As a result, the prices of the items also increase.

Bangladesh Bank (BB) on Sunday asked banks to open letters of credit (LC) for importing essential commodities to ensure stable supply in Ramadan at a minimum margin. The banking regulation and policy department of the central bank issued a circular in this regard and sent it to the top executives of the scheduled banks with an immediate effect. The financial sector regulator has issued the directive to regulate price and ensure enough supply of essential commodities such as edible oil, chickpeas, pulses, peas, onions, spices, sugar and dates during Ramadan. Read more: Monetary policy twice a year: BB According to the directives, the rate of cash margin to be reserved for import letters of credit (LC) of products. They issued the directive after recent meetings with trade bodies and the Ministry of Commerce. The businesses leaders have demanded that authorities allow them to open LC easily. The Bangladesh Bank tightened the LC opening to check unnecessary imports amid the foreign exchange crisis in the domestic market. Besides, the central banks also looked into the LC prices of goods, and whether it is arriving in the country at a due time or not because Bangladesh Financial Intelligence Unit (BFIU) and the BB in an investigation found that some traders smuggled money in the name of imports. Read more: General inflation in Bangladesh slightly down to 8.85% in Nov In some cases, the traders raised the price of goods from 20 percent to 200 percent in January-June this year. As a result, the central bank imposed strict monitoring on the LCs to protect against over-invoicing and under-invoicing.

Bangladesh Bank (BB) has changed the LC margin and asked banks to preserve 50 to 75 percent LC margin for imports, suspending a directive issued on April 11 in this regard. Banking regulations and policy department (BRPD) of BB on Tuesday issued the new directive with effect immediately which will remain in force until further notice. Also read: BB struggles with dollar demand as LCs worth $ 68.36 billion open in 9 months Russia-Ukraine war and considering changing global situation the BB has changed the earlier LCs margin for better management of loans and integrated foreign currencies, said the directive. The central bank has fixed a margin for opening letter of credit (LC) at a minimum 75 percent for motor cars, home appliance electronics and electrical products. Also read: BB enhances working capital loans limit for export-import trading Minimum 50 percent margin has been asked to be preserved to open LCs for importing all other goods and products excluding baby food, essential food items and fuel, life-saving medicines, local and export-oriented industries and agricultural related products.