Bangladesh Bank Eases LC Rules to Facilitate Fruit Imports

Bangladesh Bank has removed the mandatory 100% cash margin requirement for opening letters of credit (LCs) to import fruits, in a move aimed at making fruit imports easier and potentially improving supply in the domestic market.

The central bank issued a circular on Sunday (August 16) through its Banking Regulation and Policy Department, announcing the change.

Previously, banks were required to maintain a 100% margin when opening LCs for fruit imports because fruits were classified as luxury goods under the existing import financing rules.

Bangladesh Bank said fruits are an important part of the daily diet of the general population, particularly children, patients, elderly people and pregnant women.

Considering the importance of fruits for public health and nutritional needs, the central bank decided to withdraw the mandatory 100% margin requirement.

Under the revised arrangement, banks will be able to determine the applicable LC margin based on their banker-customer relationship rather than being required to impose a fixed 100% margin.

Industry stakeholders believe the decision could increase competition among importers and improve the availability of fruits in the market.

Lower upfront financing requirements may make it easier for importers to open LCs and bring more products into the country. If supply increases and competition strengthens, retail fruit prices could come under downward pressure.

However, the ultimate impact on consumer prices will also depend on import costs, exchange rates, transportation expenses, taxes and duties, and overall market demand.

The policy change is therefore expected to provide greater flexibility to fruit importers while supporting the availability of nutritious food items in the domestic market.