Bangladesh Bank relaxes guidelines to assist exporters

The central bank has relaxed regulations, allowing banks to discount usance export bills in foreign exchange with their own way to obtain funds, to facilitate exporters.

Beneath the relaxations, the authorised dealer (AD) banks are now permitted to discount usance export (direct and deemed) bills in forex with their own sources, so long as the fund isn't committed to using otherwise, according to a notification, issued by the Bangladesh Bank (BB) on Sunday.

"We've relaxed our restrictions to facilitate the exporters for meeting their working capital demands," a BB senior official advised the FE, while explaining the key objective of the notification.

The banks can use their unutilised foreign currency fund in discounting such export bills, in line with the central banker.

The export bill lower price is one type of financing where customers sell the drafts under a usance letter of credit (LC) accepted by the issuing bank or documentary collection drafts just before the maturity of such drafts, as the bank pays customers the facial skin value amount of the bills less the price cut charges and related fees.

A usance LC is a specific type of LC which allows a predetermined credit rating period to the buyer, i.e. the importer. In keeping business use, a usance LC can be known as a deferred LC.

Currently, the banking institutions are also permitted to arrange cash for discounting usance export bills in forex through their correspondent banking institutions, finance institutions abroad or international funding institutions.