Bangladesh Bank has directed commercial banks to maintain a minimum cash margin rate for letters of credit (LC) specifically for fertilizer imports to stabilize fertilizer prices and ensure sufficient market supply.

Yesterday, the central bank issued a circular on this matter, emphasizing the essential role of fertilizers in agricultural productivity.

According to Bangladesh Bank, the directive allows banks to set the cash margin rate for LC settlements at a minimum level based on the banker and customer relationship. Typically, LC cash margin rates vary depending on the type of goods being imported and can go as high as 100 percent.

However, the central bank’s latest instruction is designed to make fertilizer imports financially accessible and support stable pricing for farmers and consumers alike.

In addition to the reduced cash margin rates, Bangladesh Bank has urged banks to prioritize LC settlements for fertilizer imports. This directive is effective immediately and will remain in force until December 31, 2025.