LC margin restrictions on imports go

Bangladesh Bank (BB) has simplified the process of importing raw materials and capital machinery to improve the business environment and ensure smooth supply of daily essentials in the domestic market.

As part of easing the business climate, the central bank has lifted the margin restrictions on opening letter of credit (LC) to facilitate importing all types of goods apart from luxury products and domestically produced import-substitute items.

The decision was made as the foreign exchange reserves position has improved, according to a circular issued on Thursday.

From now on, the commercial banks can set the LC margin based on the bank-client relationships.

However, the importers will still have to pay 100 per cent LC margin for importing luxury goods and import substitutes.

These items included motor cars (sedans, SUVs, and MPVs), electrical and electronics, home appliances, gold and jewellery, valuable assets and pearls, readymade garments, leather goods, jute products, toiletries, furniture, fruits and flowers, non-cereal food, processed food, alcohol, and tobacco.

In 2022, the BB had asked the commercial banks to take up to 100 per cent of the payment in advance from the businesses while opening LCs for luxury and non-essential items in an effort to keep forex reserves stable.

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