BB allows onion import under 90-day credit to increase supply

Staff Correspondent | Published at 09:59pm on September 21, 2020

The Bangladesh Bank on Monday allowed import of onion on the 90-day deferred payment basis under supplier’s or buyer’s credit with a view to facilitate uninterrupted supply and to stabilise the price of the essential commodity.

The Bangladesh Bank has issued a circular in this regard on the day amid the ongoing onion export ban imposed by India, the major supplier of the commodity to Bangladesh.

Under the latest instruction, authorised dealers of banks which deal in foreign currency were allowed to open letters of credit for importers of onion on the 90-day deferred or usance basis under supplier’s or buyer’s credit terms, the BB circular said.

An official of the central bank said that the interest rate will be calculated by adding 3.5 per cent to the six-month London interbank offer rate.

‘The six-month LIBOR rate now is 0.27 per cent. So the total interest will be 3.77 per cent approximately,’ the official said.

On Thursday, the BB instructed the banks to open LCs for importing onion with a minimum margin from the importers.

The official said that the importers were generally supposed to deposit 10 per cent of a product value as margin while opening LCs.

For importing onion, however, the banks were instructed to impose the minimum margin.

The minimum margin can be as low as 1 per cent so that the importers can invest the rest of the money in other sectors, the BB official said.

The price of onion has been on the rise recently on the world market, leading to a price hike on the local market.

Last year, the price of onion saw a huge hike on the local market as the price of the commodity rose as high as Tk 300 a kilogram after India imposed an export ban on the good.

Last week, people went on a panic buying spree after the imposition of an export ban on onion by the Indian authority on September 14.

In an attempt to contain the price surge of the commodity, the government has already withdrawn 5 per cent customs duty on imported onions.

The Trading Corporation of Bangladesh has also started to sell onion at Tk 36 per kilogram through e-commerce platforms to mitigate the onion crisis.