Banks asked to relax LC margin rate for Ramadan items

The Bangladesh Bank (BB) has directed all commercial banks to relax the cash margin rate against the opening of import letters of credit (LC) for eight food items at the minimum level to keep their prices at a tolerable level and supply adequate during the forthcoming Ramadan.

The food items are edible oil, sugar, chickpeas, pulses, beans, onions, dates and spices. 

In a circular issued to this effect on Sunday, the central bank asked all banks to keep the opening margin rate at the minimum level based on banker-customer relations.

The central bank fixed the opening margin rate for LC settlement at 75% to 100% in a bid to limit imports to save the depleting foreign currency reserves in the country.

Haji Md Sirajul Islam, president of the Dhaka Metropolitan Fruit Importer-Exporter and Traders Multipurpose Cooperative Society, hailed the Bangladesh Bank directive, saying, "We had to keep 100% cash margin while opening LCs for date imports. Our ability to open import LCs has increased due to the relaxation of margin conditions by the central bank. As a result, we can ensure adequate supply of dates before Ramadan."

Md Abdus Salam Azad, managing director and CEO of Janata Bank, told TBS that the government and the central bank had already issued instructions to ensure the import of daily necessities. 

The central bank's "timely" initiatives such as relaxing the cash margin requirements will ease imports of commodities, he observed.

Besides, the import cost will also decrease, which in result, is expected to help the prices of these products fall in the retail market, the Janata Bank MD said.