The authorities in Bangladesh have issued new orders saying banks must submit copies of import letters of credit (L/Cs) for food imports and importers of knit yarn must use back-to-back L/Cs in all transactions.

The orders are part of the authorities' continuing efforts to clamp down on the illegal siphoning of hard currency.

L/C checks

In respect of food imports, shipments will no longer be unloaded without special audits and banks will have to send copies of import L/Cs to customs houses. Banks will also have to inform the customs houses if there are any changes to a credit.

Banks along with the National Board of Revenue (NBR) have been asked to set up a data bank where all types of information relating to imports will be archived. The data bank will help revenue officers check for malpractice.

The authorities have also made it mandatory for businesses to submit an import registration certificate and business identification numbers in order to open a L/C.

Currency siphoning

According to top officials, some importers have opened L/Cs to import expensive rice, but bring in cheap rice instead. This enables foreign exchange to be siphoned off but the authorities have no way of detecting such scams under current arrangements.

In another move to prevent what the authorities describe as 'revenue leakage', the NBR has directed customs officials to ensure that the imports of knit yarn are transacted with back-to-back L/Cs.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.