Banks asked to submit inland LC data to monitoring system properly

The Bangladesh Bank today asked banks to submit the required data of inland letters of credit (LCs) to the online import monitoring system (OIMS) appropriately.

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

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

The businesses import the items to produce and export goods.

The lenders now give acceptance to their 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.

After getting the acceptance, the corresponding bank pay the cost of the exported items to the exporters without realising the funds from exporters.

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.

Against the backdrop, this has created a complexity to settle the bills, according to a central bank notice.

The banking regulator has asked banks, which purchase the bills, to make payments to exporters after ensuring the inland bills available on the OIMS.