Letters of credit (L/Cs) are being closely monitored in Bangladesh where the authorities are concerned about cartels forcing up the prices of imported consumer essentials and foreign currency smuggling.

Officials suspect that significant amounts of goods declared on import L/Cs are not actually being brought into the country.

Documentation probe

In a wide ranging investigation, Bangladesh Bank has said that it has started to collect data on the amount of imports of essential goods against L/Cs opened, the revenues earned by the government and people involved in foreign currency smuggling.

The central bank is responding to a request from the commerce ministry, which has expressed concerns that goods itemised on import L/C documentation were not being brought into the country.

Under suspicion

Reports in the local media say Bangladesh Bank is looking into the activities of several large importers.

These include Abul Khair Group, Partex Group, Elias Brothers, TK Group, Khatunganj Trading House and Meghna Group.

Sharp rise

Data analysis of imported commodities suggests a wide gap between L/Cs opened and the actual flow of imports.

Openings of L/Cs meanwhile have recorded a sharp rise.

Discrepancies

In the four months from July to October 2006, commodity imports increased by 48.62 per cent.

During the same period L/Cs worth 58.15 billion Bangladeshi taka (Tk58.15 billion) were opened, compared with Tk38.09 billion opened in the corresponding period in the previous year.

But according to officials, importers only brought goods worth Tk44.61 billion into the country during that period.

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