Bangladesh Bank on Thursday eased regulations for commercial imports, permitting industrial imports through contracts without the need for Letters of Credit (LCs) for amounts up to $500,000 per year.

The central bank issued a circular on the same day, providing banks with guidance on how to facilitate imports under these contracts.

The new circular contains guidance in details, which will promote import under contracts and will lessen the exposure of banks, BB officials said.

Banks will not facilitate imports through contracts in case of any earlier such import payment remaining unsettled beyond maturity, the circular said.

The instructions of the circular are applicable to industrial imports under contracts for enterprises operating in specialised zones (EPZ/EZ).

Short-term external borrowing for imports of permissible goods is permitted within the cost ceiling as prescribed from time to time by the Bangladesh Bank.

Importers may arrange short-term financing from external sources at such cost, the circular said.

The financing arrangement may include LCs/SBLCs/guarantees to suppliers by external lenders.

According to the circular, short-term loans for import payments and financing costs may be effected as per underlying arrangements.

The central bank provided general waiver to importers for issuance of corporate guarantee, personal guarantee, third party guarantee favouring foreign lenders/importers against admissible imports.

Credit facilities up to 60 days have also been given against commercial imports of admissible goods without LCs, the circular said.

BB officials said that the new rule would open the door to imports under sale contracts.

It will remove the confusion regarding ‘third country import/third country LC’, they said.

The circular will help to import under contacts from suppliers having good relations, they said.