Industries allowed to import raw materials without opening LCs

Business establishments can import products for industrial and commercial purposes without having to open letters-of-credits (LC) with banks, according to the new import policy.

The new regulation would ease imports of raw materials and capital machinery and accelerate trading activities.

On Sunday, the Bangladesh Bank sent a circular in this regard to the authorised dealer banks, issuing guidelines for implementing the Import Policy Order (IPO) 2026-2029. The IPO was issued by the Ministry of Commerce on 24 August.

Industrial and commercial units can import products for their business and production operations only using the purchase contract signed with the seller, without any transaction value limits. Under the policy, the foreign exporter ships the product first, and then waits for the payment for a specified period agreed to earlier with the Bangladeshi importer.

Within the pre-agreed period, the Bangladeshi importer deposits the money directly to the bank account or other accounts of the exporter, without opening any additional account with a bank or other financial institution.

The mechanism is known as “open account,” and unlike LCs, there is no painstaking bank scrutiny involved – thereby, allowing for smooth and fast trading activities.

In an LC, the authorised dealer bank scrutinises every step of the trading and transaction process, and collects all the relevant documents from both parties. The bank can decide to halt an import upon noticing a single “typo” in a document.

However, in an open account, a bank may only review the final wire transfer by the importer.

The open account transaction process is nonetheless subject to international financial crime regulations, and violations could lead to official or non-official blacklisting of the importing company in the international market.