Dhaka, Bangladesh (CU)_ On April 11, the banking regulator requested that banks impose a minimum 25 percent margin on the issuing of LCs for non-essential consumer products, but this did not prevent an increase in import payments. As a result of this, the central bank has now adopted a further stringent action to limit imports by imposing a large margin for LCs.
Bangladesh Bank has imposed a new rule for the import of luxury items. BB has asked banks to collect up to 75% of payments in advance from importers of luxury and non-essential products while opening LCs. However, the central bank did not impose a margin on vital commodities such as infant food, fuel oil, life-saving medications, and products for agriculture, export, and industrial items. For these products, banks may preserve margins depending on their client relationships.
According to the latest BB notice, banks will be required to apply a minimum 75 percent margin while opening LCs for electronic items like air conditioners, refrigerators, and washing machines. It is necessary to maintain the same margin for both sedans and SUVs. Importers must maintain a 50 percent margin for LCs of non-essential commodities such as clothing and other goods.
In recent months, the country’s foreign currency market has been volatile due to a persistent increase in import payments and a reduction in incoming remittances. During the first nine months of the current financial year, the country’s import payments rose 44 percent annually to $61.5 billion. During the period, exports climbed 33 percent to $36.6 billion. In this context, the trade imbalance climbed to a record-high level of $24.90 billion between July and March.
