BRPD Circular Letter No. 12: Policy for Post Import Financing (PIF)

Banking Regulations and Policy Department
Bangladesh Bank
Head Office
Dhaka.
Website: www.bb.org.bd

26 April 2022
BRPD Circular Letter No. 12 Date: ----------------- 13 Boishakh 1429

Managing Director/Chief Executive Officer
All Scheduled Banks Operating in Bangladesh

Dear Sir,

Regarding the Policy for Post Import Financing (PIF).

Your attention is drawn to BRPD Circular No. 12 issued on 13 June 2021 regarding the above subject.

2. Through the aforementioned circular, the policy related to "Post Import Financing" (PIF) was issued. Now, with the aim of consolidating the national economy through sustainable development of the agricultural sector and other essential sectors of the country, and to keep the overall import activities of the country stable in the long term, paragraphs No. 2.1, 2.2, 2.3(e), 2.3(f), 2.4(a), 2.5(f) and 2.5(j) of BRPD Circular No. 12/2021 regarding the "Post Import Financing (PIF)" policy are hereby replaced as follows:

"2.1. Definition: All types of funded loan facilities provided for the payment of import liabilities in various sectors including essential consumer goods or trading goods, industrial raw materials, etc., regardless of whether they are referred to as LTR/LATR/MTR/MPI, etc., these loans will be called "আমদানি পরবতীর্ অথার্য়ন" in Bengali and "Post Import Financing (PIF)" in English. However, financing provided under the EDF sector will not be covered by PIF. In this case, the relevant policies related to EDF shall be followed.

2.2. Sector and Tenure: The tenure of PIF will be determined based on the banker-customer relationship, in line with customer demand, the nature of the relevant product, and the production/marketing cycle, but such tenure shall not exceed the following periods:

a) For essential consumer goods (e.g., rice, pulses, onions, garlic, spices, edible oil, etc.), not exceeding 90 (ninety) days from the date of PIF creation; b) For trading goods other than essential consumer goods, not exceeding 120 (one hundred twenty) days from the date of PIF creation; c) For imported agricultural products (e.g., fertilizers, seeds, pesticides, etc.) and agricultural machinery/equipment, and imported products for the animal sector (e.g., necessary nutritional ingredients for fish and domestic animals/birds, vaccines, medicines, etc.), not exceeding 180 (one hundred eighty) days from the date of PIF creation; d) For industrial raw materials, not exceeding 210 (two hundred ten) days from the date of PIF creation.

2.3. Loan Approval

(e) If a PIF facility granted to a customer becomes overdue, no new PIF facility can be provided to that customer. However, if a PIF facility becomes overdue due to reasons beyond control, and if it is necessary to provide a new PIF facility to that customer before becoming a defaulter, it must be approved by the bank's Board of Directors. In the interim period between Board meetings, for special needs to provide new PIF facilities, the Board of Directors may delegate special powers to the bank's Managing Director. In such cases, the Managing Director shall present the justification for providing the PIF facility at the subsequent Board meeting. Furthermore, for foreign banks operating in Bangladesh, approval from the local highest authority must be obtained instead of the Board of Directors.

(f) PIF facilities cannot be provided against local letters of credit. Furthermore, PIF facilities cannot be provided for buying and selling transactions between institutions belonging to the same group or having related interests through the banking system.

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2.4. Restructuring and Rescheduling:

a) For restructuring or extending the tenure of PIF facilities, subject to verification of its justification and approval by the Board of Directors (in case of special need for such tenure extension during the interim period between Board meetings, measures similar to those described in paragraph 2.3(e) must be taken), the tenure mentioned in serial No. 2.2 can be extended a maximum of once as follows:

1) For essential consumer goods, a maximum of 30 (thirty) days;
2) For trading goods other than essential consumer goods, a maximum of 30 (thirty) days;
3) For imported agricultural products and agricultural machinery/equipment, and imported products for the animal sector, a maximum of 60 (sixty) days;
4) For industrial raw materials, a maximum of 60 (sixty) days;

When verifying the justification for such tenure extension, factors such as the seasonality and nature of trading of the product, whether the product remains unsold under the borrower's control, and whether the extension is for the purpose of hoarding the product, etc., must be taken into consideration.

2.5. PIF Collection and Supervision:

(f) Since PIF facilities are classified as demand loans, they must be reported in CL-3 by mentioning the relevant Product Name (e.g., PIF-Product Name).

(j) If inconsistencies are observed between regular stock reports collected and the outstanding PIF balance, legal action must be taken by the bank against the importer."

3. Furthermore, other instructions mentioned in BRPD Circular No. 12/2021 will remain unchanged.

4. This instruction is issued under the power conferred by Section 45 of the Bank Company Act, 1991.

This instruction will be effective immediately.

Yours faithfully,

(Maksuda Begum)
General Manager
Phone: 9530252