Big discount on LC margin on onion import
The central bank has given big discounts on LC margin (ratio of bank to importer financing) for onion imports.
From now on, banks have been advised to keep margins at a minimum. The minimum margin should be maintained till December 31.
A circular in this regard was issued by Bangladesh Bank on Thursday and sent to the chief executives of commercial banks. Onion prices have skyrocketed in the market as India has stopped exporting onions. The central bank relaxed LC margins to curb the rise in onion prices.
According to sources, the LC margin on onion imports was earlier 60:30 or 60:20 percent. In other words, the bank would provide 60 to 70 percent of the import price and the customer would have to pay 20 to 30 percent. Banks will now be able to keep margins of 1 or less as a result of the directive to keep this rate to a minimum. In other words, the bank will be able to provide almost 100% of the money for onion imports. You have to take a small part from the customer. This will reduce the cost of importing onions. Traders will be encouraged to import. This will increase the supply of onions in the market. Lower prices.
Earlier on March 2, the central bank had directed to keep the LC margin at a minimum for imports of some daily commodities, including onions, which remained in force till May 30. From then on it goes back to the previous state. As a result of the new circular, margins can now be kept at a minimum level. Meanwhile, the interest rate on onion imports has been maintained at 9 percent.
The Commerce Ministry had recommended withdrawal of margins as well as reduction of interest rates. But the central bank did not cut interest rates. At present, the interest rate on loans in all sectors except credit cards has been fixed at a maximum of 9 percent.