The Bangladesh Bank (BB) has relaxed import procedures for raw materials and capital machinery to boost business activity and ensure a steady supply of essential goods.

The central bank issued a circular yesterday stating that improved foreign exchange reserves prompted the decision.

Under the new rules, banks can now determine the margin levels for opening letters of credit (LCs) for imported goods based on their client relationships. This provides greater flexibility to businesses in securing imports.

However, the 100 percent advance payment requirement for opening LCs on luxury goods and import substitutes remains. Items subject to this rule include motor vehicles, electronics, home appliances, gold, jewelry, and other non-essential items.

In 2022, the BB enforced stricter requirements on LC payments, asking businesses to make up to 100 percent advance payments for luxury and non-essential goods to stabilize foreign exchange reserves. The list included products such as cars, leather goods, toiletries, and processed food. For all other goods, importers were required to pay 75 percent upfront.

The easing of these restrictions is expected to support local industries by facilitating easier access to raw materials and machinery while still maintaining a check on imports of non-essential luxury items.