Business Report 1

No exception for fertiliser
importers: BB
Asif Showkat

The Bangladesh Bank stands firm on single borrower exposure limit set for banks, but said the lenders are allowed to set limit and margin for import letters of credit on case to case basis.
The central bank gave its views in response to the finance ministry's query on the proposal of Bangladesh Fertiliser Association to make L/C terms easier for non-urea fertiliser imports, official sources said.
The association earlier appealed for higher limits and zero margin requirement for opening import L/Cs for fertilisers.
In its letter to the finance ministry, Bangladesh Bank referred to the general lending rules that prevent banks from lending more than 35 per cent of their total capital to individual borrowers.
Banks are free to decide the limit [maximum loan for an import consignment] and margin [money paid in advance] for import L/Cs on the basis of their relationship with clients or on case-to-case basis, it also mentioned.
Any commercial bank can also appeal to the central bank for offering maximum ceiling for an importer, it added.
Following an intelligence agency report, the government earlier asked the central bank to resolve the alleged deadlock over opening L/Cs with commercial banks for importing fertilisers, especially triple super phosphate, murate of potash and di-ammonium phosphate.
The intelligent agency had alerted the government to looming fertiliser crisis in the next year as complexities in opening import L/Cs almost stalled non-urea fertiliser import which could result in a shortage of fertilisers in the next cultivation season.
It also suggested that the banks should be asked to raise their limits and lower margin for import letters of credit to facilitate non-urea fertiliser imports and make them available to farmers on time.
The agency proposed that L/C limit could be slightly increased while margin be lowered to 5 per cent from the current of 10 per cent to facilitate hassle-free and timely import of fertilisers from a volatile global market.
'If the farmers use less-than-required quantity of fertilisers because of their unavailability, it will lead to a fall in production and threaten the country's food security,' the intelligence agency report cautioned.
Prices of di-ammonium phosphate surged to $1,065 a tonne from $450, triple super phosphate to $1,400 from $ 550 and murate of potash to $1,000 from $425 in the global market.