Bangladesh Bank has relaxed the cash margin conditions on LCs for the import of fully electric and hybrid vehicles. Apart from this, the cash margin on other car imports has been halved.

The Banking Regulations and Policies Department of the central bank has issued a circular in this regard.

It is said that there are instructions to preserve 100 percent cash margin in setting up motor vehicle import credit to keep the country’s currency and credit management more coherent. However, the use of fully electric and hybrid vehicles is currently being prioritized worldwide due to energy efficiency and environmental friendliness.

In this densely populated country, this type of transport will be able to play a role in reducing carbon emissions and improving air quality indicators. In consideration of these issues, instructions have been given to preserve cash margin on the basis of banker-customer relationship in setting up import credit for fully electric and hybrid motorcars.

However, a minimum of 50 percent cash margin must be maintained in the case of establishment of import credit for motor vehicles (sedan cars, SUVs, MPVs etc.) other than fully electric and hybrid motor cars. This directive will be effective from February 1.

Bangladesh Bank has issued this instruction under the powers given in Section 29 of the Bank Companies Act, 1991. The directive has been sent to the managing directors and chief executive officers of all scheduled banks operating in Bangladesh.

Incidentally, earlier, 100 percent cash margin had to be deposited while opening the LC for car import. Currently, cash margin can be determined based on the banker-customer relationship for the import of electric and hybrid cars. Apart from this, importers can make LC by depositing 50 percent for other cars.