BB eases financing process for importing industrial raw materials

Bangladesh Bank (BB) has eased the process of issuing repayment guarantee for facilitating import of industrial raw materials.

"To facilitate short term import finance, it has been decided that the authorised dealers (ADs) may, on behalf of industrial importers, issue repayment bank guarantees without BB's approval," the central bank said in a circular today.

A repayment bank guarantee is a promise to cover a loss if a borrower defaults on a loan.

BB, however, said that the guarantees without its approval should only be issued in favoure of the International Islamic Trade Finance Corporation (ITFC), an autonomous entity within the Islamic Development Bank (IDB) Group created to help improve trade of Islamic countries.

BB also said that the short term buyer's credit would be given for up to 180 days for import of industrial raw materials for own use by the importers.

In the circular BB further said that the ADs would issue the repayment bank guarantees on sight basis, subject to adherence to all applicable credit norms and prudential parameters including single borrower exposure limit.

In case of invocation of the guarantees, the ADs shall report BB giving full details of the circumstances leading to invocation and a copy of bill of entry relevant to the concerned imports, the circular added.

Source: BSS