RegAlert

Rule · BB · 7 Mar 2016

FEPD Circular Letter No. 04: Regarding Supply of Carton and Accessory Goods from Factories Operating under Bond License to Hundred Percent Export-oriented Factories Operating without Bond License

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Authorized dealer banks are permitted to issue Usance Letters of Credit (LC) for the supply of cartons and accessories from bonded warehouse license-holding packaging factories to 100% export-oriented factories that do not hold bond licenses, as well as Site LCs for advance payment receipt against various export contracts. This directive updates previous guidelines by incorporating recent decisions of the National Board of Revenue regarding the necessity of bonded warehouse licenses for such import transactions. Banks must ensure compliance with Chapter 3, Paragraph 3(C) of the Foreign Exchange Regulations, 2009 when settling payments for these LCs.

BangladeshBangladesh Bank

Foreign Exchange Policy Department
Bangladesh Bank
Head Office
Dhaka-1000.
Ref. No. FEPD(Circular Letter) 04
Falgun 24, 1422
Circular Letter No.- FEPD(Import Policy)123/2016-04 Date: ----------------- March 7, 2016 To, The Chief Executive Officer / Principal Office of all Authorized Dealer Banks engaged in foreign exchange transactions.

Dear Sir,

Regarding the provision of Site or Usance LC in foreign currency for the supply of carton and accessory goods used in hundred percent export-oriented factories operating without a bond license, from packaging industry-factories, hangars, and plastic product manufacturing units operating under a bonded warehouse license.

Reference is drawn to Circular Letter No.- FEPD(Import Policy)125/2010-1693 issued by Bangladesh Bank on December 12, 2010, concerning the establishment of LC against sales contracts. In said circular letter, Bangladesh Bank provided no objection from the perspective of foreign exchange control regarding the opening of import LC under Site or Usance arrangements against export contracts, and it was mentioned that the issue of the final exporter factory needing to obtain a bonded warehouse license should be considered by the National Board of Revenue.

  1. In light of Office Order File No.- 7(21)Custom: Export and Bond/2007/176(22) dated March 21, 2012, and recent decisions of the National Board of Revenue on the aforementioned matter, you are hereby informed that authorized dealer banks may issue Usance LC in foreign currency and Site LC in foreign currency for advance receipt of export proceeds in favor of packaging industry-factories, hangars, and plastic product manufacturing units operating under the purview of a bonded warehouse license, for the procurement of carton and accessory goods used in export-oriented factories without a bond license against all types of export contracts, such as: Sales Contract, Purchase Order, Proforma Invoice, etc.

  2. For the settlement of value of the aforementioned LCs, the instructions of Paragraph 3(C) of Chapter-3 of the Foreign Exchange Regulations, 2009 must be followed.

Please kindly inform all concerned parties about the contents of this circular letter.

Yours faithfully,

(Md. Zakir Hossain Chowdhury)
Deputy General Manager
Phone: 9530250

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