Most commercial banks in Bangladesh are averse to opening letter of credit (LC) under Export Development Fund (EDF), Usance Paid At Sight (UPAS) and deferred-payment systems in view of dollar shortages even as the textile sector of the country is bracing for some hard times amidst declining stocks of raw materials even as fears are abound such a scenario will hit adversely Bangladesh’s export-oriented readymade garment sector.
According to reports, the Bangladesh Textile Mills Association (BTMA) recently sent a letter to the central bank (Bangladesh Bank) seeking its direction for the commercial banks to open deferred LCs and LCs to be settled by the EDF finance even as the textiles and apparel manufacturers have, reportedly, said they were facing trouble in opening LCs which will be settled by EDF and UPAS LC or deferred LC in most of the banks in recent time.
They further, reportedly, added the stock of raw materials for four to five months was needed for ensuring smooth production even if with the current stock the textile sector could continue its production for two to three months.
