Leaders of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) have urged the central bank to extend the repayment period for deferred letters of credit (LCs) liabilities from six months to 15 months, reports The Business Standard.
They made the demand during a meeting between a FBCCI delegation and Bangladesh Bank Governor Ahsan H Mansur on Sunday.
At the same time, they recommended controlling inflation, stablising interest rates, maintaining normal flow of dollar supply, and policy support for involuntary defaulters.
"A request has been made to keep interest rates stable to control inflation in order to maintain the competitiveness of Bangladeshi products and investment in the global economic situation," Md Hafizur Rahman, administrator of FBCCI, said after the meeting.
"We have asked for steps to be taken to gradually reduce the interest rate."
A loan becomes default after six months from the date on which the installment of the outstanding loan is scheduled to be paid, he said.
"It is heard that this period will be reduced to three months very soon. We have appealed to the governor, and proposed to increase the period from three months to nine months."
A senior official from the relevant department of the central bank said, "It is very difficult to extend the deferred LC period from six months to 15 months. In some cases, banks have to pay the foreign banks immediately, while in other cases, the time is six months."
He said in this case, there is a risk for the customer. "For example, the rate at which a customer imported the dollar may increase significantly at the time of payment. So, deferred LC for six months is reasonable."
Preferring not to be named, the managing director of a private bank said while extending the deferred LC period would provide some benefits to importers, there are several problems.
"If the LC amount is not received on time, the bank faces a cash flow crisis. In addition, the payment risk and risk premium of the importers also increase. Later, they have to face repeated problems to return this amount."
FBCCI Administrator Hafizur Rahman further said at the meeting, the central bank has been urged to initiate necessary steps to ensure a business-friendly environment in the country, including providing policy support to affected industries, helping entrepreneurs to cope with foreign exchange losses, paying export bills on time, and expanding special credit facilities for SMEs and the agricultural sector.
Bd-pratidin English/Tanvir Raihan
