In a bid to stabilise and rejuvenate six liquidity-strapped banks, Bangladesh Bank has rescinded its earlier mandate of a 100% margin on letters of credit (LCs).
The move, aimed at bolstering the financial and operational conditions of these institutions, allows them to resume import financing without the previous stringent conditions.
The six banks—Islami Bank, First Security Islami Bank, Social Islami Bank, Union Bank, Global Islami Bank, and Bangladesh Commerce Bank—have undergone significant changes in governance, with their boards being entirely restructured.
To alleviate their liquidity crises, Bangladesh Bank has extended a loan package amounting to Tk22,500 crore.
Bangladesh Bank recently issued directives lifting the stringent LC margin requirements for these banks, citing the necessity of improving their financial health.
However, the regulator has underscored the need to adhere to general LC guidelines applicable to all banks.
Bank officials believe this measure will help reinstate import businesses, which had suffered as most clients were unwilling to operate under the 100% margin rule, prompting them to seek services from other banks. With this relaxation, many of these clients may return.
