BRPD Circular Letter No. 41: L/C Margin on Import Financing

Bangladesh Bank Chief Executive Office Motijheel, Dhaka-1000 Bangladesh. Ref No.: B.R.P.D.C.M.D. Banking Regulation and Policy Department 05 September 2024 BRPD Circular Letter No. 41 Date: ------------------- 21 Bhadra 1431 Managing Directors / Chief Executive Officers All Scheduled Banks operating in Bangladesh Dear Sir, Regarding the preservation of cash margin in the context of establishing import letters of credit.

1. We draw your attention to BRPD Circular Letter No. 25 issued on 04 July 2022, BRPD Circular Letter No. 54 issued on 22 December 2022, and BRPD Circular Letter No. 19 issued on 20 June 2023.

2. Through the aforementioned circular letters, instructions were provided regarding the determination of the cash margin rate for establishing import letters of credit, with the aim of maintaining a more consolidated currency and credit management system in the country in the context of the prevailing international economic instability.

3. Now, considering the gradual improvement in the stability desired in the country's foreign exchange rate and transactions, instructions are hereby provided to determine the cash margin rate on the basis of banker-customer relationships for the opening of import letters of credit for all goods except those mentioned in Clause 4, with the objective of facilitating import trade to make the country's business-industry-commerce sector dynamic and to ensure the supply of essential consumer goods in the domestic market.

4. A 100% cash margin must be preserved in the context of establishing import letters of credit for the following luxury goods and domestically produced import substitutes:

1. Motor cars (Sedan cars, Jeeps, Trucks, etc.); 8) Cosmetics;
2. Electrical and Electronic Home/Office Appliances; 9) Furniture and Decoration items;
3. Gold and Gold ornaments; 10) Fruits and Flowers;
4. Precious metals and Pearls; 11) Non-cereal food or Non-grain food products;
5. Ready-made garments; 12) Processed food items and beverages: such as canned food, chocolate, biscuits, juice, coffee, soft drinks, etc.;
6. Leather goods; 13) Alcoholic beverages; and
7. Jute products; 14) Tobacco, tobacco products, or their substitutes.

5. Hereby, the instructions of BRPD Circular Letter No. 25/2022, BRPD Circular Letter No. 54/2022, and BRPD Circular Letter No. 19/2023 are repealed. However, actions taken in accordance with the instructions of the repealed circulars prior to the issuance of this circular shall be deemed valid.

6. These instructions shall be effective immediately.

7. These instructions are issued under the powers granted in Section 29 of the Bank Company Act, 1991.

Yours faithfully, (Mohammad Shahriar Siddique) Director (BRPD) Phone: 9530252