The Bangladesh Bank has tightened the letter of credit (LC) rules, doubling the margin for all imports, save for some essentials, to ease import-payment pressure on the economy.
Under the latest move, the central bank imposed a prohibitive 50% cash LC margin at the minimum on all non-essential items instead of 25%, according to a notification issued by the Bangladesh Bank on Tuesday.
Besides, such LC margin for high-end motor vehicles like sports utility vehicles (SUVs) and sedan cars along with electrical and electronic products which are being used as home appliances has been fixed at minimum 75%, up from 25%.
The products exempted from the LC-margin-restriction inventory are baby foods, essential food and energy products, lifesaving drugs, local and export-oriented industries, government imports for priority projects and agriculture-related imports, according the notification.
Earlier on April 11 last, the central bank imposed minimum 25% cash LC margin on all imports excepting some essential items on the same grounds, as reports say the country's foreign-exchange reserves could get under stress.
The fresh regulatory move comes against the backdrop of rising trend in the current-account deficit alongside depreciating mode of the local currency against the US dollar recently mainly due to higher import-payment pressure on the economy.
The exchange rate of Bangladesh Taka has so far depreciated by 1.05% or Tk0.90 against the US dollar since January 2022 following higher demand for the greenback for settling import-payment obligations, according to market operators.
The dollar was quoted at Tk86.70 each on the inter-bank market on Tuesday, unchanged from the previous level. It was Tk85.80 each on January 9 this calendar year.