Banks can now open deferred import LCs for up to one year
This provision will remain in effect until December
Highlights
- Payment period for imported raw materials, agricultural inputs extended from 180 days to 360 days
- BB allowed delayed payments for imports to conserve foreign exchange reserves
- This facility does not apply to imports under Export Development Fund (EDF) loans
Banks can now open deferred letters of credit (LCs) for imports for up to one year, offering temporary relief to the country's foreign currency liquidity.
In a circular issued yesterday, the Bangladesh Bank extended the payment period for imported raw materials and agricultural inputs from 180 days to 360 days.
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A senior official of a private bank said opening deferred LCs or extending the payment period for import LCs would ease liquidity pressure on traders to some extent.
Additionally, shifting the payment burden of import LCs to a later date will alleviate pressure on foreign currency liquidity over the coming months, he added.
The central bank's circular specifies that the extended payment period applies to imports of raw materials for industries, including back-to-back imports, agricultural inputs, and chemical fertilisers.
This measure has been introduced to conserve foreign exchange reserves amid the ongoing dollar crisis and will remain in effect until December.
However, the circular clarifies that this facility does not apply to imports financed under Export Development Fund (EDF) loans.
Previously, a similar circular issued on 30 June last year had increased the delayed payment limit for these imports to 360 days, but it was valid only until 31 December 2024.
According to the latest circular, customers cannot extend the payment period for foreign currency liabilities beyond the specified timeframe.
The extension is anticipated to provide some relief to the foreign exchange market.
