Authorities in Bangladesh concerned about the use of letters of credit (L/Cs) in fraudulent imports say they have already seen falling L/C openings since introducing measures to curb this type of fraud (DC World News, 11 & 14 April 2004).

According to the Bangladesh Bank, the trend of L/C openings fell in the first few weeks since the central bank ordered banks to submit paperwork related to imports and suspended the licenses of branches of several banks.

Trends

Central bank statistics say the value of L/Cs opened in the first two weeks of April fell by more than 15 per cent to US$457 compared with the US$538 million recorded in the same period last year.

By September 2004 the value of L/Cs opened had soared to US$1.31 billion, up from US$984.33 million in the same month in the previous year. By March 2005 a record value of US$1.39 billion was reached.

L/C availability

Central bankers anticipate the value of L/Cs opened is expected to fall to US$1billion in April compared with the US$1.19 billion of L/Cs opened in March.

Even though 19 branches of 13 commercial banks in Bangladesh have had their licenses to open L/Cs suspended, there are still 660 such branches providing normal L/C services.

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