Payment period for raw material imports extended till December

The Bangladesh Bank (BB) has allowed the extended payment against imports of industrial raw materials – to 360 days from 180 – to remain in place till December 2023.

Previously, this facility was available till June this year. 

The payment period, also known as usance period, is the time permitted by custom, between the date of the bill and its payment.

Due to the prolonged Ukraine-Russia war, the country's import costs have increased and the latest extension was given owing to the dollar crisis, according to bankers.

Speaking to The Business Standard, a central bank official said, "The validity of the customer's imported buyer's credit was 180 days. Since the Covid-19 pandemic, it was extended to 360 days, which is still in force.

"Due to dollar shortages in the country's banks, many customers are unable to import and they are under pressure to pay for their previous imports. This move offers them some relaxation as they get an additional 180 days."

The pending payments, however, must be made according to the Secured Overnight Financing Rate (SOFR). Currently, the 180-day SOFR is 4.75%. Also, there is an additional charge of over 1%.

According to a central bank circular, such a facility will be applicable in case of industrial raw material imports, including back to back imports, and imports of agricultural implements and chemical fertilisers under the buyer's credit.

Buyer's credit refers to the credit available to an importer from overseas lenders, such as banks and other financial institutions, for goods they are importing.

The extended usance period will not be applicable for imports under loans of the Export Development Fund, the circular said.