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LC Margin Relaxed |
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December 14, 2000
Dhaka-- (UNB) – Following adverse reaction from the business circles, Bangladesh Bank yesterday relaxed the import restriction of 30 percent LC margins on industrial raw material, imposed only two days back. However, importers still will be required to deposit half the LC value with the LC-opening bank for importing other goods. The central bank in a circular yesterday (Wednesday) said the LC margins for industrial raw material imports would now be determined on the basis of bank-client relationship. “We relaxed the restrictions responding to the prompt reaction of the business community and reviewing their statement of Tuesday’s press conference,” a senior central bank official told UNB. He said Bangladesh Bank wanted to restrict imports to reduce pressures on the foreign exchange reserves but the business community mounted pressure on the decision to relax it. “It’s true the earlier decision would cause loss of the businessmen to some extent,” said the official. Bangladesh Bank in its earlier circular on Monday slapped LC margins on imports to replete the country’s depleted foreign exchange reserves. According to the circular, the rate of LC margins for import of industrial goods has been fixed at 30 percent and of commercial items 50 percent barring petroleum and petroleum products, capital machinery and imports under back-to-back LC. In a swift reaction business leaders immediately called a press conference on Tuesday and demanded immediate withdrawal of the mandatory restrictions to avert major setbacks to the process of economic revival. They aired the apprehensions that following the decision, the border would be flooded with smuggled goods, directly affect revenue earnings, hit hard the consumers and the industrial upswing will be dampened at the point of upstart. Meanwhile, in a joint statement yesterday business leaders welcomed what they said half decision and urged a positive decision on the other half. “This will benefit the country’s economy. It also shows the Bangladesh Bank’s commitment to market orientation of the banking system,” they said in the statement. They said the central bank’s open-minded response to genuine requirements of business is indeed appreciable. However, they termed it “only a half decision” as the 50 percent margin requirement of LCs for commercial goods has been retained. “We strongly urge the Bangladesh Bank to kindly reconsider the requirement as it will cause price increase of essential products.” The businesspeople said the issue should again be left to the banks, which will take the requisite decisions based on bank-client relationship and the items to be imported. “We look forward to a positive response from the Bangladesh Bank on the issue of commercial imports.” The leaders were MCCI president Latifur Rahman, DCCI president Aftab ul Islam, FICCI president Waliur Rahman Bhuiyan and Bangladesh Aushad Shilpa Samity president Samson H Chowdhury. |