Bangladesh Bank has made several policy changes in a bid to ease the pressure on the country's foreign exchange reserves amid a global economic crisis.
As part of the import monitoring framework, banks will now be required to report all types of foreign exchange transactions, including those of offshore banking operations.
They must also submit a report to the Bangladesh Bank 24 hours before opening letters of credit for customers for imports, reports bdnews24.com
The reporting is required for transactions valued at $5 million and above. The new rules exclude imports by the government, according to a notice issued by the central bank on Thursday.
Banks have also been instructed to encash 50 per cent of the total balance held in exporters’ retention quota (ERQ) accounts in the names of relevant exporters.
The retention limit of realised export proceeds has also been reduced to 7.50 per cent, 30 per cent and 35 per cent from 15 per cent, 60 per cent and 70 per cent, respectively.
The revised limit will remain valid until Dec 31.
Meanwhile, the limitations on the transfer of funds between offshore and onshore banking units have also been eased.
Offshore banking units will now be able to place up to 25 per cent of the banks' total regulatory capital in domestic units for a period of six months to settle the import payment of capital machinery, industrial raw materials and imports by the government. The policy will remain in effect until Dec 31.
The new measures come as the country's forex reserves dropped below $40 billion for the first time in two years after the authorities paid import bills of the Asian Clearing Union.
Rising prices and shipping costs amid the recovery from the effects of the coronavirus pandemic and the Russia-Ukraine war have also put pressure on Bangladesh’s reserves, with the dollar prices soaring against the taka.
The authorities have taken a slew of measures, including restrictions on the imports of luxury products, to save dollar reserves. The government has also suspended spending on low-priority projects and foreign tours of officials.