BB extends payment period for industrial raw material imports

The Bangladesh Bank (BB) has extended the usance (deferred payment) period to 270 days for imports of industrial raw materials, aiming to ease trade and support the manufacturing sector.

The Foreign Exchange Policy Department of the central bank issued a circular to this effect today (29 December) to improve cash flow management for importers. 

According to the directive, industrial raw materials, including back-to-back imports, agricultural implements, and chemical fertilisers, will now be importable for a usance (deferred payment) period of up to 270 days. This applies to imports under suppliers' or buyers' credit.

The circular specifies that the usance period shall be "270 days or the cash conversion cycle, whichever is earlier". This marks a shift from the previous temporary extension of 360 days, which was set to expire on 31 December 2025.

This decision follows earlier policy supports (FE Circular No. 08 and FE Circular Letter No. 27) that had temporarily extended the usance period from 180 days to 360 days to facilitate trade during 2025.

The central bank has instructed Authorised Dealers (ADs) to ensure that the estimated cash conversion cycle reflects a "realistic position" based on the customer's historical operating and transaction trends before allowing these facilities.

For back-to-back letters of credit, the usance period will be determined in alignment with the statutory export proceeds repatriation period. But, as per standard policy, this extended usance facility will not apply to imports financed under the Export Development Fund (EDF).

The new 270-day limit aims to balance the needs of industrial importers with the necessity of maintaining a realistic cash conversion cycle in the country's foreign exchange management.

A senior official of the central bank told TBS that after the Covid-19 pandemic, the Bangladesh Bank allowed banks to extend the usance period to support imports. At that time, the dollar market was volatile, and the central bank eased the import process to manage the situation. The usance period was gradually increased from 180 days to 360 days.

However, the official said the dollar situation is now stable, and banks have adequate foreign currency liquidity. As a result, the authorities believe that such a long usance period is no longer necessary for importing raw materials. Therefore, the central bank has set the usance tenure at 270 days, effective from 1 January 2026.