Dhaka, Jan 09, (V7N) - In a significant move to streamline foreign currency transactions and reduce procedural complexities, Bangladesh Bank has allowed banks to issue guarantees on behalf of foreign suppliers for deferred imports of products or services in the power and energy sectors. Prior approval from Bangladesh Bank is no longer required for such guarantees.

A circular issued by Bangladesh Bank on Wednesday communicated the new directive to all banks, emphasizing its intent to simplify trade processes and minimize delays.

Simplified Process for Deferred Payments:
Previously, products and services in the power and energy sectors were often imported on credit terms of three to six months. To ensure payment to foreign suppliers within the agreed timeframe, banks would issue guarantees, known in banking terms as "bank guarantees" or "standby letters of credit (SBLC)."

A Bangladesh Bank official told Voice7 News that obtaining prior approval for such guarantees was a time-consuming and cumbersome process, requiring submission of detailed information. With the new directive, this requirement has been eliminated, allowing banks to proceed independently within the framework of existing foreign exchange policies.

Conditions for Bank Guarantees:
The circular specifies that banks can now issue guarantees on behalf of foreign suppliers for imports in the power and energy sectors. However, certain conditions must be met:

Importers must secure prior approval from the relevant ministry.

Banks must verify that the imports align with government procurement contracts (sales-purchase contracts).

All other instructions related to import trade remain unchanged.

This change is expected to facilitate smoother foreign transactions and strengthen the operational efficiency of the power and energy sectors.

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