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

Banking Regulation and Policy Department Bangladesh Bank Head Office Dhaka. Ref No: BRPD-12

26 April 2022 BRPD Circular Letter No.-12 Date: ----------------- 13 Bangabda 1429 Managing Director/Chief Executive Officer All Scheduled Banks operating in Bangladesh

Dear Sir,

Regarding the policy on Post Import Financing (PIF).

Reference is invited to BRPD Circular No.-12 dated 13 June 2021 on the above subject.

2. Through the aforementioned circular, the policy on "Post Import Financing" (PIF) was issued. Now, in order to maintain the country's overall import program stable in the long term through the sustainable development of the country's agricultural sector and other productive sectors, thereby integrating the national policy, the following clauses of BRPD Circular No.-12/2021 regarding the "Post Import Financing" or "PIF" policy are hereby replaced as follows:

"2.1. Definition: All types of funded credit facilities provided for the payment of import dues in various sectors such as essential consumer goods or trading goods, industrial raw materials, etc., whether referred to as XA/XAX/GA/GPIF or by any other name, shall be referred to as "Post Import Financing" in Bengali and "Post Import Financing (PIF)" in English. However, facilities provided in the EDF sector shall not fall under the purview of PIF. In this regard, the relevant policy on EDF shall be followed.

2.2. Sector and Tenor: The tenor of PIF shall be determined based on the bank-customer relationship, taking into account customer demand, the nature of the relevant product, and the production/marketing cycle; however, such tenor shall not exceed the following tenors: a) In the case of essential consumer goods (e.g., rice, lentils, onions, garlic, spices, cooking oil, etc.), the PIF creation date shall not exceed 90 (ninety) days; b) In the case of other trading goods excluding essential consumer goods, the PIF creation date shall not exceed 120 (one hundred twenty) days; c) In the case of imported products for the agricultural sector (e.g., fertilizer, seed, pesticide, etc.) and agricultural machinery/equipment, as well as imported products for the animal husbandry sector (e.g., nutritional supplements for domestic animals/birds including fish, vaccines, medicines, etc.), the PIF creation date shall not exceed 180 (one hundred eighty) days; d) In the case of industrial raw materials, the PIF creation date shall not exceed 210 (two hundred ten) days.

2.3. Credit Approval (c) If a PIF facility provided in favor of a customer becomes NPA, no new PIF facility shall be granted to said customer. However, if a PIF facility becomes NPA due to reasons beyond control, and there is a need to grant a new PIF facility to said customer before recovery, such grant must be approved by the Bank's Operational Management. In case of special need to grant new PIF facility during the interim period before the next Board Meeting, the Operational Management may delegate special authority to the Managing Director of the Bank. However, in this regard, the Managing Director shall present the justification for providing such PIF facility at the next Board Meeting. Furthermore, in the case of foreign banks operating in Bangladesh, approval from the local highest authority shall be obtained in lieu of Operational Management approval. (d) PIF facility shall not be provided against local letters of credit. Furthermore, PIF facility shall not be provided through bank channels in cases of purchase/sale between entities under the same group or with common interest.

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2.4. Restructuring and Rescheduling: a) In case of restructuring (Rescheduling) or extension of tenor of PIF facility, the tenor mentioned in serial No.-2.2 above may be increased by a maximum of once as follows, subject to verification of authenticity and approval of Operational Management (in case of special need to extend tenor during the interim period before the next Board Meeting, arrangements shall be made as per the instructions mentioned in clause 2.3(c)):

1. In the case of essential consumer goods, a maximum of 30 (thirty) days;
2. In the case of other trading goods excluding essential consumer goods, a maximum of 30 (thirty) days;
3. In the case of imported products for the agricultural sector and agricultural machinery/equipment, as well as imported products for the animal husbandry sector, a maximum of 60 (sixty) days;
4. In the case of industrial raw materials, a maximum of 60 (sixty) days; In verifying the authenticity of such tenor extension, matters such as the status of the goods, stock report, whether the goods are under the control of the borrower in unsold condition, and whether the tenor is being extended for the purpose of storing the goods, etc., shall be considered.

2.5. PIF Recovery and Monitoring: (c) PIFs shall be reported as overdue under CL-3 (e.g., PIF-Overdue Report) as mentioned in the relevant Circular. (d) If discrepancies are observed between the regularly collected stock reports and the outstanding PIF position, the bank shall take legal action against the importer."

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

4. These instructions are issued under the powers conferred by Section 45 of the Bank Company Act, 1991.

These instructions shall come into force immediately.

Yours faithfully,

(Maksuda Begum) Deputy General Manager Phone: 9530252