Bangladesh Bank (BB) has relaxed the cash margin requirement for opening letters of credit (LCs) for fruit imports, replacing the existing 100 percent cash margin requirement with a margin to be determined by banks based on their relationship with customers.
The central bank issued the instruction in a circular today, saying the move was aimed at facilitating fruit imports, ensuring adequate supply at affordable prices and creating a competitive market, while also considering public health and nutritional needs.
According to the circular, the 100 percent cash margin requirement for opening import LCs for certain luxury goods and import-substitute products was introduced against the backdrop of global economic instability to strengthen the country's currency and credit management.
Fruit was included among those products subject to the mandatory 100 percent cash margin.
The central bank noted that fruits are an essential nutritious food item, particularly in the daily diets of children, patients, elderly people and pregnant women.
Considering that stability in the country's foreign exchange rate and transactions has been gradually improving, the necessity of maintaining a 100 percent margin for opening LCs for fruit imports has declined, it said.
Against this backdrop, Bangladesh Bank instructed banks to determine the required cash margin for fruit import LCs on the basis of the banker-customer relationship instead of imposing a fixed 100 percent margin.
The central bank said all other instructions issued through its earlier circulars on the matter would remain unchanged.
The directive was issued under the powers vested in Bangladesh Bank by Section 29 of the Bank Company Act, 1991, and took effect immediately.