BB eases rules for industrial imports

The Bangladesh Bank (BB) has eased the process for industrial imports, allowing importers to proceed with purchases using a letter of agreement instead of the traditional letter of credit (LC).

In this regard, the Foreign Exchange and Policy Department of the central bank issued a circular yesterday.

The new directives aim to facilitate imports primarily into specialised economic zones, such as Export Processing Zones (EPZs) and Economic Zones (EZs).

The directives also outline provisions for short-term import credit, ensuring that businesses have access to foreign goods under standard arrangements.

Importers can now independently secure short-term foreign loans to settle their import obligations.

Moreover, foreign lenders are permitted to issue LCs, standby letters of credit (SBLC) or guarantees to suppliers, with repayment for both the principal loan amount and any associated interest according to mutually agreed terms.

Besides, the central bank has granted general approval for corporate, personal or third-party guarantees to assist with short-term import credit, offering importers greater flexibility in managing their financial commitments.

According to the circular, commercial imports under this new agreement will be eligible for a short-term foreign credit facility with a repayment period of up to 60 days, providing essential support to industrial enterprises engaged in international trade.

According to industry insiders, this new rule will facilitate imports under sales contracts and eliminate confusion surrounding "third country imports" and "third country LCs".

It will enable smoother transactions with suppliers with whom importers have established relationships, they said.

A central bank official said that there is confusion in the market regarding imports without LCs despite policy support in the Import Policy Order.

The circular provides detailed guidance that will promote imports under contracts. It will also reduce the exposure of banks, he added.