Bangladesh Bank is taking various initiatives to reduce the import cost. As part of this, a new policy on post-import financing was issued last week. The new policy has been issued to sustain the country’s overall import activities, in the long run, to consolidate the national economy through sustainable development of agriculture and other essential sectors. This news was given by Bangla Tribune quoting Bangladesh Bank as the source.
Definition:
All types of funded loan facilities such as LTR / LATR / MTR / MPI etc. provided for payment of import obligations in various sectors including daily necessities or trading goods, industrial raw materials, etc. will be termed as ‘Post-Import Financing’. However, the EDF sector will not be covered by financing. In this case, the relevant policy regarding EDF will be followed.
Sector and duration:
The duration of financing will be determined on the basis of the banker-customer relationship keeping in view the needs of the customer, the nature of the product concerned, and the production/marketing cycle. However, this duration shall not be more than 90 days from the date of creation of financing in the case of daily necessities (e.g. rice, pulses, onion, garlic, spices, edible oil, etc.).
Apart from this, in the case of trading products other than daily necessities, the financing will not be more than 120 days from the date of creation. No more than 180 days from the date of creation of financing for imported agricultural products (eg: fertilisers, seeds, pesticides, etc.) and agricultural machinery and imported products for the livestock sector (e.g., essential nutrients for poultry, including fish, vaccines, medicines, etc.). In addition, the financing provided for the raw materials of the industry shall not be more than 210 days from the date of creation.
Loan Approval:
A financing facility given in favour of any customer cannot be given. However, if the financing facility is overdue for any reason beyond the control of the new financing facility is required to be given in favour of the customer before default, it has to be approved by the Board of Directors of the bank.
The Board of Directors may delegate special powers to the Managing Director of the Bank in granting new financing facilities for special needs during the intervening period of the Board Meeting of the Bank. However, in this case, the Managing Director will present the rationale for providing the said financing facility at the next board meeting.
In the case of foreign banks operating in Bangladesh, the approval of the local highest authority is required instead of the Board of Directors. In addition, the financing facility provided against local bonds cannot be provided. Moreover, financing facilities cannot be provided in case of purchase and sale through a banking system within the same group or interest-related organisation.
Restructuring and rescheduling:
A. Subject to the approval of the Board of Directors after verification of its validity in case of restructuring or extension of a given financing facility, the term may be extended for a maximum of one time in case of special need during the intervening period of the board meeting of the Bank.
The term can be extended:
The term can be extended to a maximum of 30 days in case of daily necessities. Maximum 30 days for trading products other than daily necessities. Maximum 60 days for imported agricultural products and agricultural machinery and imported animal products. Maximum 60 days for industrial raw materials.
