The Bangladesh Bank on Monday slapped a 100% cash margin when opening letters of credit (LC) to discourage import of luxury items and keep the country's currency and debt management in check.
The margin was set on automobiles (sedans, SUVs, MPVs), electronics, gold, precious metals, RMG, and pearls, among other items.
The central bank issued a circular in this regard and sent it to all concerned offices on Monday.
Banks have also been instructed to refrain from giving credit to importers to meet the margins.
According to the circular, the decision comes against the backdrop of the long-term negative effects of Covid-19 and more recently the Russia-Ukraine War, which led to a more unstable global economy already rocked by the pandemic.
The central bank move aimed to further strengthen the country's monetary and debt management amid times of such volatility, added the circular.
The other products that fall under the central bank's latest directives – leather products, jute products, cosmetics, furniture and decorative items, fruits and flowers, non-grain food products, processed foods and beverages.
Meanwhile, for – baby food, essential food products, fuel, life-saving drugs and medical equipment recognized by the Directorate General of Health Services (DGHS), directly imported capital equipment and raw materials for manufacturing oriented local industries and export-oriented industries, essential commodities for use in government priority projects – the margin for LC opening has been set at a minimum of 75%.
