BB further raises cash margin on LC to tighten imports

Bangladesh Bank asked all scheduled banks to increase the cash margin on LC for imports in a bid to tighten non-essential imports and lessen pressure on the exchange rate.

Now the central bank has fixed the minimum mandatory cash margin on LC for the import of motor vehicles, home appliances and electronics to 75 percent, according to the circular issued on Tuesday.

The cash margin on LC for imports of other items except for baby food, energy, essential food items including lifesaving drugs, inputs for local and export-oriented industries and agriculture-related imports will be a minimum of 50 percent.

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

With the new circular the previous circular issued on April 10, 2022, will be annulled, said the BB. Until April 10, the minimum cash margin on LC for imports depended on the banker-customer relationship.

The BB took the latest decision in a bid to curb imports and tackle the depreciation of the Taka against the US dollar.