The Bangladesh Bank has allowed the authorised dealer banks to retain export proceeds received in advance in dollar for 30 days for settling payment for the materials imported by the exporters under back to back LCs.
After that period, the banks will convert the foreign currency into taka and transfer it to the exporters' accounts, said the Bangladesh Bank in a circular issued yesterday.
Earlier, the banks converted the foreign buyers' advance payments into taka and transferred it to the exporters' accounts. Then the exporters had to convert the money again into dollars for importing materials needed for production.
"The new system will reduce the exporters' cost as they will not have to spend any money converting taka into dollars. They will be able to use the dollar received as advance payment from the buyers for importing materials needed for production," Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association, told The Business Standard.