Textile millers have sought the central bank's intervention to get payments against raw materials they supplied to apparel exporters under back-to-back letters of credit (LCs) opened by commercial banks.
Bangladesh Textile Mills Association (BTMA) has said the banks are not making payment worth over $47 million for a year to some 26 textile mills that supplied apparel raw materials to more than 350 readymade garment (RMG) exporters.
The BTMA, in a letter to the Bangladesh Bank (BB) on March 03, said after submitting buyers' acceptance and other related documents, including negotiating papers, the LC-opening banks have yet to make payment despite giving payment dates to the suppliers.
BTMA President Mohammad Ali Khokon signed the letter addressed to BB Deputy Governor Nurun Nahar. It reads: "The spinning mills have been facing difficulties in running business and making timely payment against imported raw materials."
According to BTMA data, payments worth $45.8 million against the supply of yarn from 21 spinning mills to 363 RMG factories remained overdue for a year.
And, five mills supplied fabrics worth US$1.32 million to 13 RMG factories and the payments against their supplies also remained blocked for the last one year.
In all cases, the mills made shipments complying with the LC conditions and the buyers gave acceptance of the shipments, according to the BTMA.
Earlier, the BTMA had sent a separate letter to the financial integrity and customer services department of the central bank seeking necessary steps in this regard.
In the letter, the BTMA said its member Salek Textile Mills Ltd supplied fabrics to local RMG exporter Shirt and Jacket Zone Ltd against two separate back-to-back LCs, issued by a private commercial bank, dated March 5, 2023 and May 8 2023.
After making shipments, Salek Textile Mills negotiated the documents through another private commercial bank to get a maturity date from the LC- opening bank, according to the letter.
The bank gave October 8 and November 29 last year respectively for the payment against the two LCs. Despite expiry of the dates, the payments, however, remained held up.
When asked, Mr Khokon said: "It is a complete violation of banking rules."
Like Salek Textile, there are dozens of mills that are not getting the payments, he added.
Talking to the FE, BTMA secretary-general in-charge Monsoor Ahmed alleged that despite getting maturity dates, the payment from the deemed exporters in the textile sector was kept overdue by almost all the banks.
Munni_fe@yahoo.com