Reduced LC margin to ensure steady supply of products during Ramadan

In order to ensure stable supply during Ramadan with a minimum margin, Bangladesh Bank (BB) on Sunday asked banks to open letters of credit (LC) for the importation of critical commodities.

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.

For the duration of Ramadan, the financial sector regulator has issued a directive to control prices and guarantee a sufficient supply of vital commodities such edible oil, chickpeas, lentils, peas, onions, spices, sugar, and dates.

The rate of cash margin is supposed to be set aside for product import letters of credit (LC).

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.

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.

Source: UNB