Bangladesh Bank (BB) has asked all local commercial banks to allow discount on accepted bills against import letters of credit (L/Cs).

The move is designed to facilitate foreign trade and was announced in a central bank directive dated 27 September 2010.

Directive

"This is to clarify that authorised dealers (ADs), generally known as authorised foreign exchange dealers' banks, are free to allow discount or purchase accepted usance or deferred bills against import from abroad," the directive says.

"ADs may extend such facilities to foreign owned or controlled firms," it adds.

Concerns

Some bankers are reportedly concerned about the move and think that local banks' ability to comply with the directive may be limited by insufficient supplies of foreign currency.

The central bank's move to allow local commercial banks to discount L/Cs follows an earlier one that allowed offshore banking units to allow such discounting activity.

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