BB restores LC margin on rice import

FT ONLINE

The central bank has reinstated the letter of credit (LC) margin on rice import after more than one year to make sure farmers get fair prices for their produce.

The latest measure comes into immediate effect.

The measure allows commercial banks to impose the margin on opening of LCs for rice import on the basis of bank-client relationship considering the credit risk.

"No LC can be opened with zero-margin for rice import in any circumstances," a senior official of the Bangladesh Bank (BB) said.

He also said it would help discourage rice import.

The central bank issued a circular in this connection on Tuesday and asked the chief executives and managing directors of all banks to follow the instructions.

Import of food grain, particularly rice and wheat, jumped by more than 176 per cent to $2.70 billion in the first 10 months of this fiscal from $976.87 million in the corresponding period of fiscal year (FY) 2016-17.

Earlier on June 19 last year, the BB relaxed its policy allowing the banks to open LCs for rice import availing the zero-margin facility.

The new BB circular also requires the millers and rice traders to repay their loans in maximum 45 days instead of 30 days earlier set.