Bangladesh Bank has withdrawn the obligation to take 100% margin for opening LCs of six weak banks as the liquidity situation has improved.
From now on, commercial banks will be able to open LCs or investment certificates with margin based on banker-customer relationship. At the same time, they will be able to open LCs with a minimum margin based on bank-customer relationship for the import of 11 types of daily commodities for the upcoming Ramadan.
However, they will have to open LCs with a 100% margin for importing 14 types of luxury goods like other banks according to the central bank’s previous circular.
A separate letter has been sent to the chief executives of six commercial banks in this regard from the central bank. It says that the restrictions imposed by the central bank on taking LC margins have been withdrawn as the liquidity situation of those banks has improved recently.
Sources said that all of the six banks that were given the condition of taking 100% margin for opening LCs were under the control of the LC group. These banks have been occupied and looted since 2017. As a result, the banks have become weak. The liquidity crisis has taken a serious shape.
Due to which they were not able to return the deposit money of the customers. In view of this situation, the central bank issued a letter imposing restrictions on the opening of LCs by six banks. The letter was issued in October and November.
Recently, the central bank has provided liquidity of 22,500 crore taka by printing money to six commercial banks. In addition, liquidity has been provided to those banks through other strong commercial banks with the guarantee of the central bank.
This has increased the overall flow of liquidity in weak banks. As a result, not only are customers able to withdraw money from the bank as per their demand, but importers can also open LCs with lower margins from now on.
The import trade of those banks was being hampered due to the imposition of 100% margin on LCs. Because it was not possible for many entrepreneurs to open LCs with 100% margin.
