The central bank has relaxed its rules on the retention of advance remittances received against exports, waiving the requirement to keep back 10 per cent of such proceeds.
The move is intended to facilitate exporters, particularly smaller firms struggling with tight profit margins.
Bangladesh Bank (BB) announced the measure on Thursday, saying it aims to boost exporters' cash flow and ease trade settlement.
The revised instructions include safeguards to ensure genuine transactions while allowing quicker access to funds, officials explained. Previously, exporters were required to retain 10 per cent of advance payments with banks until shipments were executed.
"This posed difficulties for small exporters, as their profit margins are relatively low, making it harder for them to execute exports," a senior BB official told The Financial Express. Under the new rules, banks may now release the full amount of advance payments to exporters, subject to due diligence and verification of their export performance.
Exporters must have an irrevocable letter of credit (LC) or contract to execute shipments, demonstrate satisfactory past performance, and show sufficient capacity to fulfil the order. Advance payments must also remain interest-free.
In the event of non-execution of an export, including failure to issue an EXP Form against an advance payment, Authorised Dealer (AD) banks may allow refunds.
In such cases, funds shall first be utilised from the Exporters' Retention Quota (ERQ) account, with the remainder covered from Taka accounts, according to the BB notification.
Business insiders said the relaxation would help exporters secure raw materials and maintain operations at a time of global trade challenges, while compliance would continue to be ensured through oversight by banks.
siddique.islam@gmaiil.com
