Bangladesh Bank eases rules on encashment of export proceeds
The Bangladesh Bank today eased rules on the encashment of the value-added portion of repatriated export proceeds in order to bring flexibility to trade transactions.
On May 29, the central bank asked banks to convert major export earnings of businesses into the taka immediately as it looks to increase the supply of US dollars in the economy.
The value-added portion refers to the export proceeds that are available to exporters after their import bills for back-to-back letters of credit have been met.
"It has been decided that banks may, on applications from exporters, retain the value-added portion of export proceeds in foreign exchange for a maximum period of 15 days," said the BB in a notice today.
The retained fund will be used through the same banks for the settlement of other import obligations payable by the same exporters within this period.
Many exporters used to sell their export proceeds to banks that offer the higher rate, creating indiscipline in the foreign exchange market. This prompted the BB in May to instruct exporters to sell their export proceeds to the banks through which they ship goods.
In case of the fund remaining unused, banks will have to encash the receipts in the local currency just after the expiry of 15 days, said the BB notice today.
However, the unused fund can, on request from exporters, be encashed before this allowable time.