Banks urged to reduce fees on fertiliser import LCs
Monday, 6 October 2008
Shakhawat Hossain
The finance ministry Sunday suggested the state-owned commercial and specialised banks and private commercials banks to reduce fees they charge while opening letters of credit (LCs) by the private sector fertiliser importers.
The suggestion was made at a meeting attended by high officials of the finance ministry, private and state-owned banks and representatives of the Bangladesh Fertiliser Association (BFA) on the day to facilitate smooth import of fertiliser ahead of the next boro season.
"The fees charged by the banks include letter of credit (LC) margin and LC commission," said Bangladesh Fertiliser Association (BFA) executive secretary Riaz Uddin Ahmed.
Besides, the meting presided over by an additional secretary of the finance ministry asked the banks to increase bank guarantee in favour of the importers following price hike of fertiliser in the global market.
"We demanded this to facilitate smooth import of fertiliser," Ahmed said.
The BFA wants banks to keep LC margin between 5.0 per cent and 10 per cent and lower the rate of LC commission between 0.25 per cent and 0.30 per cent from the existing rate of over 0.40 per cent.
"Without fulfilling the demands it will be difficult to reduce import cost," Ahmed said, adding that the farmers would have to buy fertilisers at high prices if charges are not reduced.
The BAF, the association of private sector fertiliser importers, will import 0.8 million tonnes of fertilisers, mainly Murite of Potash (MoP), Triple Super Phosphate (TSP), and Di-Amononium Phosphate (DAP).
The quantity is about one fifth of the country's annual demand for fertilisers mostly used during winter when the country's largest rice crop -- boro -- is harvested.
The state-run fertiliser factories and organisations produce and import the rest of the fertilisers.
High officials of the state-owned commercial and specialised banks and private commercials banks assured the meeting of extending help to the importers.
Agrani Bank CEO Abu Naser Bakhtiar said the meeting discussed various issues related to the fertiliser import and its high import cost due to price hike of the product by almost 100 per cent in the international market.
Fertiliser importers should get cooperation from the banks as the issue is very important and linked with the rice production, he said.
He, however, said increasing bank guarantee would largely depend on relation between banks and their customers while fees on market situation.
Finance ministry officials said they will ask the central bank to oversee the implementation of the recommendations.
It will also ask the central bank to ensure timely disbursement of agricultural credit by the commercial banks and specialised banks during the upcoming winter season so that farmers do not face fund shortage of fund to buy agricultural inputs, mainly fertiliser.
The finance ministry Sunday suggested the state-owned commercial and specialised banks and private commercials banks to reduce fees they charge while opening letters of credit (LCs) by the private sector fertiliser importers.
The suggestion was made at a meeting attended by high officials of the finance ministry, private and state-owned banks and representatives of the Bangladesh Fertiliser Association (BFA) on the day to facilitate smooth import of fertiliser ahead of the next boro season.
"The fees charged by the banks include letter of credit (LC) margin and LC commission," said Bangladesh Fertiliser Association (BFA) executive secretary Riaz Uddin Ahmed.
Besides, the meting presided over by an additional secretary of the finance ministry asked the banks to increase bank guarantee in favour of the importers following price hike of fertiliser in the global market.
"We demanded this to facilitate smooth import of fertiliser," Ahmed said.
The BFA wants banks to keep LC margin between 5.0 per cent and 10 per cent and lower the rate of LC commission between 0.25 per cent and 0.30 per cent from the existing rate of over 0.40 per cent.
"Without fulfilling the demands it will be difficult to reduce import cost," Ahmed said, adding that the farmers would have to buy fertilisers at high prices if charges are not reduced.
The BAF, the association of private sector fertiliser importers, will import 0.8 million tonnes of fertilisers, mainly Murite of Potash (MoP), Triple Super Phosphate (TSP), and Di-Amononium Phosphate (DAP).
The quantity is about one fifth of the country's annual demand for fertilisers mostly used during winter when the country's largest rice crop -- boro -- is harvested.
The state-run fertiliser factories and organisations produce and import the rest of the fertilisers.
High officials of the state-owned commercial and specialised banks and private commercials banks assured the meeting of extending help to the importers.
Agrani Bank CEO Abu Naser Bakhtiar said the meeting discussed various issues related to the fertiliser import and its high import cost due to price hike of the product by almost 100 per cent in the international market.
Fertiliser importers should get cooperation from the banks as the issue is very important and linked with the rice production, he said.
He, however, said increasing bank guarantee would largely depend on relation between banks and their customers while fees on market situation.
Finance ministry officials said they will ask the central bank to oversee the implementation of the recommendations.
It will also ask the central bank to ensure timely disbursement of agricultural credit by the commercial banks and specialised banks during the upcoming winter season so that farmers do not face fund shortage of fund to buy agricultural inputs, mainly fertiliser.