Banks asked to duly provide inland LC data

Bangladesh Bank yesterday asked banks to appropriately provide relevant data of inland letters of credit (LCs) to the online import monitoring system (OIMS).

Although the central bank had earlier asked the lenders to submit the data on a regular basis, some have not followed the instruction.

Under the inland back-to-back LCs, local businesses import raw materials from exporters staying within the country.

The businesses import the items to produce goods, which are usually exported abroad.

The lenders now grant "acceptance" to corresponding banks in favour of inland LCs without placing the data on the OIMS.

Acceptance means a bank takes responsibility of an importer to pay the worth of the imported items to the corresponding bank, through which the products are exported.

On receiving the acceptance, the corresponding bank pays the cost of exported items to the exporters without realising the funds.

The central bank says that the corresponding banks also do not verify the local or inland bills using the OIMS while purchasing those in order to settle the LCs.

This has created complexities in settling the bills, according to a central bank notice.

The central bank has asked banks, which purchase the bills, to make payments to exporters after ensuring that the inland bills were available on the OIMS.