Garment makers urge Muhith to ease bill purchase conditions
Garment makers urged Finance Minister AMA Muhith on Friday to ease conditions for inland bill purchase (IBP) at a time when the country's largest state bank, Sonali Bank, is tainted with a loan scam.
IBP is essentially a credit facility that takes place when a bank gives guarantee to its client for purchase of goods and services from the local market.
Bangladesh Bank in a circular on July 11 reduced the power of purchasing IBP by the branches of banks as the banking regulator detected irregularities in disbursement of loans against opening of letters of credit.
The regulator found a significant rise in collecting funds through preparing accommodation bills against LCs, without any real business transaction.
The trend of bill purchase increased as those transactions were handled at branch level, with the principal branch kept in the dark.
So, the regulator asked the scheduled banks that the branches have to take permission from their principal branch before purchasing such accommodation bills.
But the leaders of Bangladesh Garment Manufacturers and Exporters Association and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and Bangladesh Textile Mills Association urged Muhith to withdraw the circular, as they are facing problems in garment exports.
The circular has been creating troubles in export businesses, said Mohammad Hatem, vice-president of BKMEA, at the meeting with the minister at the latter's residence.