Bangladesh Bank relaxes deferred payment rules to boost rice import

In another step to increase supply in the market and curb prices, Bangladesh Bank has relaxed the foreign exchange transactions rules for traders by allowing them to open Letter of Credit (LC) against deferred or usance basis or under buyer's credit to import rice.

In a notice issued on Thursday, it notified the chief executives of all banks about the latest decision.

It said LCs against deferred or usance basis or under buyer's credit up to 90 days’ term for import of rice might be issued until Dec 31 this year.

About the circular, a central bank official of the relevant department, seeking anonymity, told bdnews24.com that fertilisers, capital machinery and raw industrial materials are beingimported using that same facility.

“Traders can import them against deferred payment or buyer’s credit taken from a bank of that country. The interest rate of that 90-day credit is maximum 6 percent.”

The official said Bangladesh Bank decided to extend the same facility to the traders to encourage them because they have to pay 9-15 percent interest against the credit taken from local banks for importing goods.

It also aims to control the prices of rice in local markets, the official added.

On Jun 19, the central bank also instructed all banks to allow private traders to import rice without any deposit against LC margin.

The new rules allowed the traders to import rice first and make the payments afterwards.

The LC margin varies from bank to bank depending on relations between bankers and customers.

The next day, import duty on rice was slashed to 10 percent, from the existing 25 percent, to encourage traders to purchase more from abroad.

The moves later appeared to have somewhat worked as rice prices went down in the past few weeks, but are still over Tk 40 per kg of any kind.