Now PCBs to get state guarantee against LCs to import essentials

Like state-owned commercial banks (SoCBs), the government has decided to issue state guarantees in favour of private commercial banks (PCBs) too to facilitate import of essential commodities, aiming to ensure smooth supply of such items in the local market, sources said.

However, such security will be provided in local currency only to the banks with good ratings, they added.

The ministries of power, energy and mineral resources, food, commerce, industries, and agriculture can take the next course of action to open letters of credit (LCs) with private banks for importing rice, LNG and fertiliser.

The decision came at a meeting held on February 3, with Finance Adviser Salehuddin Ahmed in the chair.

Under this move, The Bangladesh Agricultural Development Corporation (BADC) and Bangladesh Chemical Industries Corporation (BCIC) are expected to open LCs with private commercial banks for fertilizer imports. In this case, the finance division will issue necessary guarantees, if needed, according to the meeting note.

Currently, the state-run commercial banks enjoy the guarantee against LC payment on import of different items, including fertiliser, food items, LNG, fuel oil, etc.

On behalf of the government, the finance ministry generally issues such guarantees to the state-owned commercial banks.

At present, some private commercial banks have been extending support to the Pertobangla and Bangladesh Petroleum Corporation (BPC) for importing different petroleum products, especially fuel oil and LNG, without such guarantee.

According to a senior official at the finance division, in recent times, imports of fertiliser, food items, LNG, fuel oil and some other essential items are affected due to state-owned banks' holding insufficient foreign currency.

The banks were also facing difficulties in making outstanding payments of the independent power producers (IPPs).

As a result, more add-confirmations are required against the LCs, increasing the import cost. On the other hand, growth of the country's production sectors were affected, he added.

He said the most important import products include different petroleum products and essential kitchen items. The local private commercial banks are expected to come forward in providing foreign currency support to keep supply of the essentials stable in the local market.

In September 2024, the government issued different state guarantees involving Tk 1.17 trillion - more than Tk 769 billion and Tk 409 billion against foreign loans and internal loans respectively.

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