FEPD Circular No. 24: Usance import under purchases/sales contracts

Foreign Exchange Policy Department Bangladesh Bank Head Office Dhaka www.bb.org.bd FE Circular No. 24 Date: October 24, 2024 All Authorized Dealers in Foreign Exchange in Bangladesh Dear Sirs, Usance import under purchases/sales contracts Import Policy Order (IPO) in force permits industrial imports through purchases/sales contracts without Letters of Credits (LCs), with commercial imports up to a set limit in a year. Short term external trade finance on supplier’s/buyer’s credit is permissible for imports as per paragraph 33(a), chapter 7 of the Guidelines for Foreign Exchange Transactions-2018, Vol-1 (GFET) and relevant subsequent circulars. In accordance with IPO in force and in compliance with the provisions of foreign exchange regulations, Authorized Dealers (ADs) may allow eligible importers to import admissible items through contracts on usance basis under supplier’s/buyer’s credit. The instructions to be followed for imports are outlined below: (a) Imports through the relevant purchases/sales contracts need to be submitted to designated ADs for onward submission to Bangladesh Bank online reporting portal as per FE Circular No. 29, dated October 20, 2022; (b) The usance period shall not exceed the limit as prescribed at paragraph 33(a), chapter 7 of GFET and relevant subsequent circulars; (c) Before submission of import information in Bangladesh Bank online reporting platform, (i) ADs shall be satisfied about past performances of importers; (ii) ADs shall obtain credit report of foreign suppliers as per prevailing regulations; (iii) An undertaking needs to be collected from the respective importer to the effect that they have necessary financing arrangements/appropriate cash flows for settlement of import liabilities on maturity; (iv) ADs shall not facilitate imports through purchases/sales contracts in case of any earlier such import payment remaining unsettled beyond maturity. 02. Imports are admissible under purchases/sales contracts for enterprises operating in specialized zones (Export Processing Zones, Economic Zones, Hi-Tech Parks, and other zones declared by the Government). ADs should observe relevant instructions stated above against such imports by enterprise of specialized zones. Cont’d to page-2

-2- 03. Short term external borrowing for imports of permissible goods is permitted within the cost ceiling as prescribed from time to time by Bangladesh Bank. Importers may arrange short term financing from external sources at such cost. The financing arrangement may include LCs/SBLCs/guarantee to suppliers by external lenders. Short term loans on account of import payments and financing costs may be effected as per underlying arrangements. General waiver from Section 13(1) of the FER Act, 1947 is hereby given to importers for issuance of guarantees (other than bank guarantee/standby LC) such as corporate guarantee, personal guarantee, third party guarantee, etc. favoring foreign lenders/suppliers against admissible imports. 04. Commercial imports without LCs within the prescribed limit of IPO in force will be executable only on document against payment basis, unless otherwise permitted on usance basis. General permission is hereby given for usance facilities up to 60 days against commercial imports of admissible goods without LCs within the provision of IPO in force and subsequent notifications. 05. ADs shall maintain records of import through contracts with relevant information including dates of maturity and settlement. Based on the records, ADs will notify importers to settle the liabilities before maturity. 06. As usual, ADs shall comply with relevant instructions of foreign exchange transactions including reporting routine and other applicable regulations. Please bring the contents of this circular to the notice of your clientele. Yours faithfully, (Md. Harun-Ar-Rashid) Director (FEPD) Phone: 9530123