No financial liability for banks on imports under sales contracts: BB
The directive addresses banks’ long-standing reluctance to manage such transactions
Bangladesh Bank issued a circular today (24 June) clarifying that commercial banks are not financially responsible for payments under imports made through sales or purchase contracts, aiming to ease banks' reluctance in facilitating such transactions.
In the circular, the central bank stated that banks are not exposed to any financial liability for import payments under sales contracts. They are only required to follow procedural steps to process payments using funds made available by importers.
A senior official of a private bank, speaking to The Business Standard on the issue, said, "When there was a dollar crisis earlier, banks had almost stopped opening letters of credit (LCs) under such contracts. Now some banks are opening LCs under purchase or sales contracts, but many still hesitate."
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He noted that such transactions are often not very profitable for banks, which is why some avoid them.
"The central bank issued this clarification so that banks facilitate these LCs. It's important to note that the responsibility for payment lies with the customer, not the bank," he added.
Industry insiders said a 2022 circular from Bangladesh Bank had previously instructed banks to ensure payments under sales contract-based imports, which led to confusion and hesitation among banks. The new clarification is expected to resolve this issue.
They also pointed out that facilitating imports under sales contracts can help reduce import costs, offering importers more flexibility.
