The country's top business leaders have requested the Bangladesh Bank to extend the repayment period for deferred letters of credit (LCs) liabilities from six months to 15 months, citing the need for greater financial flexibility amid economic challenges.
The demand was made during a meeting between a Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) delegation and Bangladesh Bank Governor Ahsan H Mansur on Sunday (26 January).
Alongside this request, business leaders also recommended measures to curb inflation, stabilise interest rates, ensure a steady supply of US dollars, and provide policy support for involuntary defaulters.
The FBCCI delegation at the meeting included former president Mir Nasir Hossain, former vice president Abul Kashem Haider, former directors Abdul Haque and Gias Uddin Chowdhury, PRAN-RFL Group CEO Ahsan Khan Chowdhury, former BGMEA president SM Fazlul Haque, FBCCI Secretary General Md Alamgir, and general body members Zakir Hossain Nayon and Zakir Hossain.
Speaking after the meeting, FBCCI Administrator Md Hafizur Rahman emphasised the need for stable interest rates to maintain the competitiveness of Bangladeshi products and investment in the global market.
“A request has been made to keep interest rates stable in order to control inflation. We have also urged the central bank to take steps to gradually reduce the interest rate,” he stated.
He also expressed concerns over an impending policy shift regarding loan defaults.
“Currently, a loan is classified as default if an instalment remains unpaid for six months. It is being speculated that this period will soon be reduced to three months. We have appealed to the governor to extend it to nine months instead.”
A senior official from the central bank’s relevant department, however, suggested that extending the deferred LC repayment period to 15 months would be difficult.
“In many cases, banks must settle payments with foreign banks immediately, while in others, the period is six months. Extending this further poses a risk to customers, as currency fluctuations may significantly impact the repayment amount,” he explained.
A managing director of a private bank, speaking on condition of anonymity, also raised concerns over potential liquidity risks.
“If LC payments are delayed, banks face cash flow crises. Additionally, importers bear increased payment risks and risk premiums, which could lead to recurring financial difficulties,” he noted.
During the meeting, Rahman further urged the Bangladesh Bank to take steps to ensure a business-friendly environment.
FBCCI’s recommendations included policy support for affected industries, assistance for entrepreneurs dealing with foreign exchange losses, timely settlement of export bills, and the expansion of special credit facilities for SMEs and the agricultural sector.
Responding to these proposals, the Bangladesh Bank governor reassured that the central bank is working intensively to maintain stability in the financial sector.
He also called for continued cooperation from the business community to ensure the sustainable development of the economy.
Regarding the deferred LC policy, officials from the central bank confirmed that from April this year, the overdue period for loans would be set at three months in alignment with international norms.
While acknowledging that this might initially lead to a rise in defaulted loans, they asserted that the measure would be beneficial in the long run.
