Banks asked to keep LC margin at minimum 25%

The central bank has directed scheduled banks to charge margins at a minimum rate of 25% against the opening of import letters of credit (LC) in a bid to facilitate overall currency and loan management.

The central bank has fixed the margin rate for opening import letter of credit (LC) at minimum 25% in a bid to facilitate overall currency and loan management activities in the wake of recent global trade trends.

LCs for importing baby food, essential food items and fuel, life-saving medicines, local and export-oriented industries and agricultural related products will, however, be excluded from the directive, a circular of the Banking Regulation and Policy Department of the Bangladesh Bank said on Monday.

Until now, the margin rate in opening import LC has been based on the banker-customer relationship.

This new directive will come into effect immediately and will remain in force until further notice, the central bank said.

Moreover, the Information Technology Enabled Services (ITES) will be provided with incentives or cash assistance from now on, the central bank said. 

All members and non-members of the Bangladesh Association of Software and Information Services (BASIS) and the Bangladesh Association of Call Centers and Outsourcing (Bacco) will receive this incentive under the existing system, said another circular of the Bangladesh Bank.