Cenbank relaxes import regulations for industrial sectors without LC
The new directives will primarily benefit imports into specialised economic zones such as the Export Processing Zones (EPZs) and Economic Zones (EZs)
Bangladesh Bank has introduced new guidelines allowing industrial imports under contracts without letters of credit (LCs) and permitting commercial imports up to $5 lakh per year, in line with the Import Policy Order.
The central bank today (24 October) issued a circular directing all scheduled banks to follow these guidelines.
According to the circular, banks are required to submit information about imports through the Bangladesh Bank's online reporting portal and to obtain credit reports of suppliers.
However, banks are prohibited from facilitating imports through contracts if there are any outstanding payments from previous such imports.
Welcoming the move, industry insiders have highlighted that the new system removes ambiguities related to third-country imports or third-country LCs.
A central bank official explained that despite policy support in the Import Policy Order, there was confusion in the market regarding imports without LCs. The circular provides detailed guidance to promote imports under contracts and reduce the exposure of banks.
The circular's instructions are applicable to industrial imports under contracts for enterprises operating in specialised zones (EPZ/EZ). Short-term external borrowing for imports of permissible goods is allowed within the prescribed cost ceiling.
Under the new system, importers can independently secure short-term foreign loans to settle their import liabilities.
Furthermore, foreign lenders will be permitted to issue LCs, standby letters of credit (SBLCs), or guarantees to suppliers, with both the principal loan amount and any associated interest to be repaid according to the agreed terms of the loan.
A general waiver has been granted to importers for the issuance of corporate guarantees, personal guarantees, or third-party guarantees in favour of foreign lenders or importers for admissible imports.
The circular specified that commercial imports under the agreement will benefit from a short-term foreign credit facility with a repayment period of up to 60 days, offering an additional layer of support to industrial enterprises engaged in foreign trade.