Earlier, banks could make advance payments up to $5,000 on behalf of importers without central bank approval
Bangladesh Bank on Monday doubled the ceiling for advance payments made against imports to help small importers of the country.
Earlier, the allowable limit for advance payment against imports was $5,000. This has now been raised to $10,000, according to a circular issued by the central bank.
Small importers do not want to open LCs (letters of credit) for importing goods in small quantities. Hence, they are allowed to make payments in advance to their sellers abroad through their respective banks.
The banks could then make the payment, up to $5,000, on behalf of the importers without taking prior approval from Bangladesh Bank.
However, from now on, banks can make such payments amounting to a maximum of $10,000 without the central bank's approval.
The central bank raised the ceiling after receiving many requests for approval of advance payments that exceeded the existing ceiling, according to a senior Bangladesh Bank executive.
He added that this higher ceiling will smoothen the businesses of small importers in Bangladesh.