BB allows exporters to use local ins for open account shipments

In a major policy shift, Bangladesh Bank (BB) has allowed exporters to ship goods under open account credit terms backed by insurance coverage from local insurance companies, aiming to ease the country's export procedures.

To this effect, the central bank issued a circular on Tuesday permitting banks to arrange payment undertakings or payment risk coverage from Bangladeshi insurers.

The move builds on an earlier provision that allows open account exports only against payment undertakings from designated institutions abroad.

According to the new circular, banks can now facilitate export transactions under open account credit terms through foreign currency-denominated insurance policies issued by local insurers.

In case of non-receipt of export proceeds, insurance claims need to be settled in foreign currency, said the circular.

As per the circular, reinsurance coverage can be obtained from foreign sources in compliance with the regulatory framework applicable for insurance companies.

The BB in its circular authorised banks to offer post shipment finance to exporters against respective exports based on insurance coverage.

Industry insiders, however, said the facility is expected to enhance competitiveness of Bangladeshi exporters by reducing reliance on foreign institutions and enabling more flexible trade financing options.

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