Can Non-AD Branches Issue LC In Local Currency In Bangladesh

[Mehdi]

Dear All,

Is it possible on the part of a non AD branch to issue local LC in BDT?

Appreciate comments.

Regards......Mehdi

[Md.zakir Hossen]

DEAR MEHDI,

NON AD BRANCH CAN PROCESS L/C WITH THE HELP OF AN AD.
I THINK YOUR INTENTION IS WHETHER A NON-AD CAN OPEN ONLY LOCAL L/C (INDEPANENTLY)IN LOCAL CURRENCY.
IN BANGLADESH IT IS NOT POSSIBLE.

[shahriar]

dear mehdi,

we see no problem in issuing LC in local currency by a non AD branch. an AD or authorized dealers are licensed to deal with foreign currency. it is nothing to do about letter of credit. non ADs issues letter of credit via AD branches because they involves foreign exchange transaction . the foreign exchange guide line chapter 7, paragraph 3 says, "payments against imports into Bangladesh,...." therefore it does not cover the scope of LC issued in local currency. therefore non ADs should not have any problem in issuing letter of credit in local currency.

regd

shahriar

[Md.zakir Hossen]

THANKS SHARIAR
SORRY FOR WRONG POSTING.NON-AD CAN PROCESS LOCAL L/C.I ALSO DISCUSS WITH REGULATOR.

[cparial]

Thanks to all.

I learned this new thing in opening local LC in Local currency.

We had a view that only ADs can open LCs ( local or foreign)?


Thanks

[Mehdi]

Thanks Shahriar for your nice explanation with special reference to GFET.

I would like to add that one day I came across such a question from a fellow banker. I, in reply, put a question whether the non AD could issue guarantee in local currency on behalf of his customer. He replied in the affirmative tone. I further added that no problem to issue such LC in local currency. Despite, he was not convinced; rather he would seek regulator’s comments. Let the regulator explain.


Regards.......Mehdi