BM Desk : Bangladesh Bank has relaxed the requirement to maintain a 100% cash margin for opening letters of credit (LCs) for baby food imports. From now on, the margin rate for opening LCs for baby food can be determined based on the banker-customer relationship.

On Tuesday (October 21), the Bank’s Banking Regulation and Policy Department issued a circular regarding the matter, signed by the department’s director, Md. Alauddin.

According to the circular, on September 5 of last year, a mandatory 100% cash margin requirement was imposed for opening import LCs in order to stabilize the country’s currency and credit management amidst global economic instability. At that time, “non-cereal foods” and “processed food items and beverages” such as canned foods, chocolates, biscuits, juices, coffee, soft drinks, etc. were included in the list.

However, Bangladesh Bank recently noticed that some banks had included essential baby food in that list and were applying the 100% cash margin condition.

In response, the central bank clarified that essential baby food does not fall under that category of products. Therefore, the mandatory 100% cash margin requirement will no longer apply to baby food imports. The margin rate can now be determined based on the relationship between the bank and the customer.