The Bangladesh Bank has instructed banks to ease the cash margin rate for opening letters of credit (LCs) in 10 product categories, benefiting the cottage, micro, small, and medium enterprises (CMSMEs). The move aims to support the manufacturing sector by facilitating imports of industrial spare parts, textile raw materials, chemicals, plastics, and machinery. Previously, importers had to pay a 75% LC margin for these goods, but now banks can determine the margin based on their relationship with customers. While other product categories still require a margin of 75% to 100%, some exceptions include essential food products, medicines, capital machinery, and agricultural products. The government’s austerity measures and enhanced import monitoring by the Bangladesh Bank have resulted in a significant decline in LC opening and settlement. This downward trend in imports may have implications for industrial growth and employment opportunities.
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