Bangladesh Bank has allowed importers to bring in 11 kinds of food on credit ahead of Ramadan, to keep prices bearable and supply steady. Under an instruction issued on Wednesday, 11 November, importers of rice, wheat, onions, lentils, soybean oil, palm oil, sugar, chickpeas, spices, dates and peas can pay for them up to 90 days after import.
The facility can be used under either suppliers' credit or buyers' credit. Importers will not have to pay the full value as soon as the goods arrive; with payment due at the end of the term, they can sell the goods and then settle with their bank. Bangladesh Bank officials believe this could ease importers' working capital pressure.
The facility runs until 15 March next year. Demand for rice, lentils, onions, edible oil, sugar, chickpeas and dates usually rises in Ramadan, which makes steady supply and restrained prices important at that time. Bankers expect the decision to encourage importers to bring in more of these goods.
On 8 November Bangladesh Bank had already told banks to keep the cash margin on letters of credit (LCs) for the same goods at a minimum, based on the banker-customer relationship. The LC margin is the cash or security an importer must deposit with the bank when opening an LC, usually a set percentage of its value; at 100 per cent margin the importer deposits the full import value in cash, while a relaxed margin lets an LC be opened with little capital.
Taken together, the two decisions are meant to ease importers' cash needs at both stages of Ramadan food imports, opening the LC and paying for the goods. The report is by News Bangla 24's staff correspondent.
Photo: Press Information Department / Wikimedia Commons (Public domain)
Source: News Bangla 24
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