Banks asked to impose 25% LC margin for non-essential items

The Bangladesh Bank instructed banks to charge a minimum 25 percent margin rate against the opening of letters of credit (LC) for non-essential consumer items in a bid to curb the escalated import payments.

The decision comes in a bid to facilitate overall currency and loan management activities in the context of the recent global trades, according to a circular issued by the Banking Regulation and Policy Department of the Bangladesh Bank.

With this, importers have to deposit at least 25 percent of their total imported payments while opening LCs.

The central bank said that LCs for importing baby food, essential food items and fuel, life-saving medicines, local and export-oriented industries and agricultural related products will be excluded from the directive.

Banks have been asked to implement the instruction with immediate effect and remain in force until further notice.

Until now, the margin rate in opening import LC depended on the banker-customer relationship.