Chief Economics Correspondent, bdnews24.com
Published: 2017-06-19 20:17:46 BdST
The decision is meant to ensure rice supply to local markets in the aftermath of crop losses in recent flash-floods, the central bank said in a notice on Monday.
The new rules will remain in force until Dec 31, which will allow the traders to import rice first and make the payments afterwards. The LC margin varies from bank to bank depending on relations between bankers and customers.
In a letter to the chief executives of all banks, Bangladesh Bank said the loss of crops caused by recent floods and heavy rains in parts of the country have created some instability in the market.
Rice imports by private traders slumped 58 percent year-on-year to 103,200 tonnes between July 1 and May 25 of the outgoing fiscal year.
In December 2015, the government increased customs duty on rice imports from 10 percent to 25 percent to discourage imports. But the total duty amounts to 28 percent when 3 percent regulatory duty is added.
As a result, private traders have been avoiding rice imports for the past one and a half years.
However, Bangladesh's stock of rice has also shrunk as 750,000 tonnes of rice were distributed following the loss of harvest in haor areas and as part of a project aiming to provide rice to the poor at Tk 10.
The government had some 193,190 tonnes of rice in stock until June 12, compared to 593,020 tonnes at the same time last year.
These have led the prices of rice to spiral out of control as wholesalers and millers continued the blame game.
The government initially planned to import 600,000 tonnes of rice to keep the market stable.
It has floated three tenders to buy 150,000 tonnes of rice and plans to import 250,000 tonnes of the grain from Vietnam under government-to-government deals.
The government hopes rice prices will ease once imports arrive in the market.
Government data, often lower than market prices, shows a 47 percent rise in the price of coarse rice while a fine variety saw around 20 percent rise in a year.
The fine variety is currently on sale at no less than Tk 60 per kg. Last three months were the worst period when people saw a steep rise in prices of rice of almost all varieties.
According to figures by the food ministry, the flash floods damaged Boro crops, which would have yielded around 600,000 tonnes of rice. Unofficial estimates put the number at 2.2 million tonnes.