BRPD circular letter no-25, on L/C Margin on Import Financing, dated 04 July 2022

The Bangladesh Bank has tightened the country’s imports further as the importers will have to maintain up to 100 per cent margin against the import of luxurious and nonessential items, including Sedan car, sport utility vehicle and multi-purpose vehicle. According to the circular, Bangladesh Bank has also brought several items under its high import letter of credit margin net.

Under the new circular, the importation of gold and gold-ornaments, precious metal, pearl, readymade garments, leather goods, jute goods, cosmetics, furniture and decoration items, fruits and flowers, non-cereal food, processed food and drinks, alcoholic drinks and tobacco or alternatives of these items and other luxurious products will be subject to 100 per cent cash LC margin. Previously, the obligation was on cars, electric and electronics home appliances.

There would be no mandatory LC margin limit on imports of baby food, essential food items, fuel, health directorate-approved life – saving drugs and other kits, raw materials and capital machinery directly imported for the production-oriented local industries and export-oriented industries, agricultural equipment and essential products of the government’s priority projects.

The required margin has to be taken from the customer’s own source as opposed to the establishment of import debentures for imported goods at 100 per cent and 75 per cent margins as directed in paragraphs 2 (a) and (b) respectively. In other words, no margin can be paid against the existing loan account in favor of the importer in the related bank or against the establishment of import loan by creating a new loan account.