Bangladesh Bank toughens stance against import of non-essential items

The same margin has to be maintained for opening LCs for sedans and SUVs as well. Importers have to keep a margin of 50 per cent on the opening of LCs for non-essential items like clothes and other goods.

This payment is estimated to eat away $2.24 billion of the country's foreign exchange reserves, a Bangla media report said.

The ACU is an arrangement through which participating countries settle import payments for intra-regional transactions. Bangladesh, Bhutan, India, Iran, the Maldives, Myanmar, Nepal, Pakistan and Sri Lanka are members of the Tehran-headquartered ACU, established in 1974.

On April 11, banks were instructed to impose a margin of at least 25 per cent on the opening of LCs for non-essential consumer goods. However, this has failed to contain a rise in import payments.

The central bank in its previous circular did not delineate the items that faced the margin. But this time it mentioned several luxury and non-essential items which would face the high margin.

The central bank, however, did not impose any margin on essential commodities such as baby food, fuel oil, lifesaving drugs, and the products for the farm, export and local industrial sectors. For these items, banks can maintain margins based on their relationship with the customers.

The central bank bought a record $7.93 billion from local banks in the last fiscal when imports plummeted amidst the coronavirus pandemic. This boosted the country's foreign exchange reserves, which stood at more than $48 billion in August last year.

Fibre2Fashion News Desk (DS)