The Bangladesh Bank has issued a circular extending the payment period for deferred letters of credit (LCs) for up to one year, providing temporary relief to the nation's foreign currency liquidity situation.
Previously capped at 180 days, the payment period for imported raw materials and agricultural inputs has now been extended to 360 days.
This adjustment, outlined in the central bank's latest directive, aims to support traders facing liquidity constraints by allowing for a longer repayment window.
A senior official from a private bank stated that the extension of LC payment terms is expected to alleviate some of the liquidity pressures faced by importers.
The deferred payment schedule will also ease the burden on foreign currency reserves in the coming months, he added.
The circular specifies that the extended terms are applicable to imports of raw materials for industrial production, back-to-back imports, agricultural inputs, and chemical fertilisers.
This measure will remain in effect until December as part of efforts to conserve foreign exchange reserves amid the ongoing dollar shortage.
It is important to note that this facility does not extend to imports financed under Export Development Fund (EDF) loans.
The last similar measure was introduced on 30 June last year, with a validity until 31 December 2024.
The central bank has clarified that the payment period for foreign currency liabilities cannot be extended beyond the stipulated timeframe, ensuring that customers adhere to the new deadlines.
This initiative is anticipated to bring some stability to the foreign exchange market.
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