The Financial Express

Banks can't withdraw letter of commitment: BB

| Updated: October 14, 2021 09:58:57

Banks can't withdraw letter of commitment: BB

From now on, the country's scheduled banks cannot withdraw the letter of commitment for a bank's undertaking for the line of credit (LOC) - provided to participate in procurement tender as proof of financial capability - without approval from the procuring authority.

According to a circular of the Bangladesh Bank (BB) - issued on Wednesday, the parties participating in procurement tenders must submit letter of commitment for the bank's undertaking for the LOC as per PW3-7 form of Standard Tender Document (National) for Procurement of Works.

The letter has validity until the work concerned is completed.

The BB circular said it has been observed that some banks withdraw the letter of commitment before the tender process ends.

"As a result, a scope is created, where the higher bidder might be awarded," the circular noted, adding that it hinders the government's procurement process and the government incurs financial loss.

"So no bank can withdraw the letter of commitment during tender process without approval from procuring authority," it added.

The circular was issued as per clause 45 of the Bank Company Act 1991 - to ensure transparency, prevent financial loss, and expedite the government's procurement process.

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