BRPD Circular Letter No. 13: Regarding L/C Margin for Rice Import — BB — BD

Ref No: BRPD Circular Letter No. 13
Banking Regulation and Policy Department
Bangladesh Bank
Head Office
Dhaka.
26 June 2018
BRPD Circular Letter No. 13 Date: ------------------ 12 Asharh 1425

To:
Managing Director / Chief Executive
All Scheduled Banks Operating in Bangladesh

Dear Sir,

Regarding the determination of L/C margin in the context of rice import.

Reference is invited to BRPD Circular Letter No. 06 dated 19 June 2017 and BRPD Circular Letter No. 07 dated 21 June 2017 on the subject cited above.

Through BRPD Circular Letters No. 06/2017 and 07/2017, instructions were issued to establish zero-margin credit instruments based on bank-customer relationships in the context of rice imports to ensure the supply of rice in the market due to disruptions in the normal supply of rice caused by natural disasters in the country. Furthermore, instructions were issued that advances/loans taken by all paddy/rice traders, including local mill owners, in the context of revolving CC/OD loans contrary to the guidelines of the Bangladesh Bank must be mandatorily settled/adjusted within a maximum of 45 (forty-five) days, reduced to 30 (thirty) days. The validity of the aforementioned instructions expired on 31 December 2017.
In recent times, the weather conditions in the country have been favorable for paddy cultivation, resulting in satisfactory paddy production this year. In this context, the government is taking various steps to ensure fair prices for farmers and local rice producers, as well as to encourage farmers to cultivate paddy. Additionally, the government is working to ensure food security by preserving food grain stocks at the desired level. In order to achieve the aforementioned objectives, it is advised to determine the margin rate for credit instruments for opening L/Cs based on bank-customer relationships, considering credit risk in the context of rice imports. However, zero-margin credit instruments must not be issued under any circumstances.
It is further instructed that advances/loans taken by all paddy/rice traders, including local mill owners, in the context of revolving CC/OD loans contrary to the guidelines of the Bangladesh Bank must be mandatorily settled/adjusted at least every 45 (forty-five) days.
Advice is given to comply with the above instructions properly.

Yours faithfully,

(Abu Farah Md. Naser)
General Manager
Phone: 9530252

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