Bangladesh Bank: Bangladesh Bank (BB) has instructed banks to ensure timely payments for letters of credit (LC), emphasizing the importance of maintaining correspondent relationships and minimizing import costs.
According to Bangladesh Sangbad Sangstha, the central bank issued a circular stressing the necessity of adhering to the settlement procedures for import transactions, including permissible inland deliveries in foreign currency. The circular highlighted that delays in payments against clean bills and accepted bills are unacceptable, as they harm Bangladesh’s reputation and lead to increased costs related to confirmation charges and trade credit.
The circular noted that, given the current favorable foreign exchange market conditions, any delay by Authorized Dealers (ADs) in making import payments is particularly unwelcome. The BB underscored that some ADs have been reported to delay or default on timely payments, resulting in reputational damage for the country.
To address these issues, BB outlined a
framework for ADs to follow. This includes ensuring appropriate credit lines for importers before issuing LCs and ensuring that LCs are backed by adequate cash flows or prospective fund arrangements. Additionally, usance imports should be financed through offshore banking operations or the ADs’ own funds as per the guidelines.
The circular warned that overdue import payments will no longer be tolerated and stated that failure to comply with these directives could lead to punitive measures, including personal accountability for the officials involved. ADs are urged to adhere strictly to these guidelines and to clear any overdue bills immediately.