Cenbank relaxes LC margin on fertiliser import to stabilise price

In a bid to stabilise fertiliser prices during the Rabi season this year, the Bangladesh Bank has directed all banks to maintain the letter of credit (LC) cash margin rate at a minimum level.

"In order to ensure an adequate supply of fertilisers as well as to keep its price at a tolerable level, the letter of credit (LC) cash margin should be maintained at a minimum level based on the banker-customer relationship," read a central bank circular issued from its Banking Regulation and Policy Department on Wednesday.

Previously, in early September this year, the Bangladesh Bank had waived the 100% LC cash margin on all types of import, except for some luxury items.

"There is scope for maintaining cash margin on the basis of a banker-customer relationship in opening LCs for all products, except for some goods," the central bank then stated.

Commenting on the latest directive, a higher official of the Bangladesh Bank yesterday told The Business Standard that the demand for fertilisers will increase during the upcoming crop season. 

"Instructions have been issued to banks to streamline the procedure for importers, allowing them to open LCs more conveniently for the importation of fertilisers," added the official.