Bangladesh Bank on Thursday lifted the requirement for exporters to retain 10 per cent of advance export payments from overseas buyers, allowing them full access to funds.
The central bank issued a circular on Thursday, saying the move is intended to help exporters procure raw materials and maintain production, particularly small businesses struggling with thin profit margins.
Previously, exporters were required to keep aside a portion of their advance proceeds with banks until the shipments were completed.
With the new directive, banks can now release the entire advance payment to exporters, subject to conditions ensuring genuine transactions and accountability.
According to the guidelines, exporters must have a confirmed letter of credit (LC) or valid contract, satisfactory past export performance, and the proven capacity to fulfill the order.
The advance payment must also be interest-free, and shipments must be executed within one year of receiving funds.
The one-year condition, however, does not apply to advances linked to performance bonds or standby letters of credit.
If an export is not executed, banks will refund the advance payment, first from the Exporters鈥� Retention Quota account and then from the exporter鈥檚 taka account.
Banks are also tasked with monitoring compliance and notifying clients about the changes.
Advance payments are a common international trade practice where buyers pay part or all of the invoice upfront before goods are shipped, lowering the exporter鈥檚 risk of non-payment.
BB officials said that quicker access to funds will allow exporters to manage costs more efficiently, maintain smoother supply chains, and continue operations without cash flow bottlenecks.