BB allows exporters to use local insurance for open account exports
The central bank issued a circular today (7 October), permitting banks to arrange payment undertakings or payment risk coverage from Bangladeshi insurers.
In a major policy shift aimed at easing export procedures, the Bangladesh Bank has allowed exporters to ship goods under open account credit terms backed by insurance coverage from local insurance companies.
The central bank issued a circular today (7 October), permitting banks to arrange payment undertakings or payment risk coverage from Bangladeshi insurers.
This move builds on an earlier provision which allows open account exports only against payment undertakings from designated institutions abroad.
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Industry insiders say the new policy is likely to boost competitiveness of Bangladeshi exporters by reducing reliance on foreign institutions and enabling more flexible trade financing options.
According to the new circular, banks can now facilitate export transactions under open account credit terms through foreign currency-denominated insurance policies issued by local insurers. In case of non-receipt of export proceeds, insurance claims need to be settled in foreign currency.
Also, reinsurance coverage can be obtained from foreign sources in compliance with the regulatory framework applicable for insurance companies, as per the circular.
The circular authorises banks to offer post shipment finance to exporters against respective exports based on insurance coverage.
