Bangladesh Bank Orders Minimum Cash Margin to Ease Imports of Essentials Ahead of Ramadan

Considering the rise in demand for daily essential consumer goods during the coming Ramadan, Bangladesh Bank has issued special instructions to ease the import of 10 important products, ensure their supply and keep market prices at a tolerable level.

A circular to this effect was issued on Sunday (November 8) from the Banking Regulation and Policy Department of Bangladesh Bank. The circular has been sent to the managing directors and chief executive officers of all scheduled banks in the country.

Under the central bank's new instruction, the rate of cash margin to be maintained for opening import letters of credit (LCs) for 10 essential consumer goods — rice, wheat (flour), onion, lentils, edible oil (soybean and palm oil), sugar, chickpeas, peas, spices and dates — must be kept at the minimum level, based on the banker-customer relationship.

The circular also said priority should be given to the import of these products. To ensure adequate supply in the domestic market, the central bank advised banks to give special priority to opening import LCs for these goods.

The instruction, issued under the powers given by Section 45 of the Bank Companies Act, 1991, will take effect immediately and remain in force until March 15, 2027.

Earlier, Bangladesh Bank had issued an instruction to keep the cash margin rate at the minimum for importing some essential consumer goods in view of demand during Ramadan. That instruction's term ended on March 31.

Those concerned believe the new circular will make the import process for essential goods more dynamic ahead of Ramadan.

Because demand rises during Ramadan, there is a risk of shortages and price increases for these products in the market. The central bank has therefore moved early to ease imports and secure supply.

Banks must now keep cash margins as low as possible, based on their relationship with customers, when opening LCs for these 10 products, so that the financial burden on importers is reduced.

The central bank believes that if imports arrive on time, there will be adequate supply in the market during Ramadan and prices can be kept at a tolerable level.