Banks warned of tough actions unless cleared immediately

Bangladesh Bank (BB) has strictly instructed the authorised dealers (ADs) to clear overdue import payments to avert tougher regulatory measures.

The central bank's foreign-exchange policy department (FEPD) issued the circular in this regard on Tuesday, stating that the delays in payments deteriorate correspondent relations with counterparts and increase import costs.

Given the current improved situation, foreign exchange market of the country is in a long position. In this context, delays in making import payments by ADs are not acceptable against clean bills, and accepted bills, it said.

These possible developments notwithstanding, market information and different reports indicate that some ADs are delaying or defaulting to make timely payments.

This results in reputational loss for Bangladesh, leading to higher costs for imports relating to confirmation charges, trade credit, etc., according to the statement.

To rectify the situation, it said, the ADs need to adhere strictly to their commitments with regard to import payments.

Before issuing LCs (letters of credit), the ADs shall ensure appropriate credit lines available for the respective importers, it added.

Issuance of LCs on behalf of importers without underlying credit facilities is subject to adequate cash flows and prospective fund arrangements to cover import payments, it said.

Usance import should be financed through buyer's credit by offshore banking operations, or by the own fund of ADs, it said

The ADs are reminded to this effect that overdue import payments will no longer be acceptable. Failure to settle payments on time is subject to punitive actions, including personal accountability to the officials responsible for the transactions, the circular said.

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