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Lesson 15 of 39 · Part C · Level 2 · Explained

Importing on a contract, without an LC

How an importer can buy on a simple purchase/sales contract and pay later, the four checks the bank makes first, short-term borrowing from abroad, the 60-day rule for commercial imports without LCs, and why the bank keeps a maturity diary.

C-1

In Lesson 14, Closing the file, Rakib learned how an import file is matched, closed and kept. He felt he had finally seen the whole life of an import, from the LC to the last stamp.

Then Lamia, who imports pharmaceutical raw materials in Dhaka, walks in with a surprise. "My supplier has known me for years," she says. "He says: no LC this time. We sign a sales contract, he ships, and I pay him later." Rakib looks at the LC template on his screen the way a cricketer looks at a bat with no ball. "Can we even do that?"

Sadia, his team lead, smiles. "We can, but not on a handshake. Let's ask Shirin." That afternoon Shirin is teaching at the bank's training session. She has 35 years in banking, was once head of trade and foreign exchange at a large bank, and is a certified documentary-credit specialist who trains bankers at the banking institute. She listens to Lamia's story and nods. "Without an LC, no bank has promised to pay the supplier. So the bank must make its checks before the deal, not after. Let me show you what the circular asks for." And she picks up a marker.

Para C-1

Imports under purchases/sales contracts without LCs

In plain words

C-1 opens a road without an LC: the importer and the foreign supplier sign a purchase/sales contract, and payment comes later. Following the IPO in force and the foreign exchange rules, an AD may allow eligible importers to import admissible items through contracts on a usance basis, under supplier's or buyer's credit.

1. The ground rules

  • Report it. The import under the contract goes to the designated AD, which passes it on to Bangladesh Bank's online reporting portal, as per paragraph 5 of Part A (the OIMS reporting rule from Lesson 2).
  • Mind the clock. The usance period must not exceed the limit in paragraph 1 of Part D. C-1 doesn't give the number itself.
  • Four checks before the AD submits the import information:
  1. The AD is satisfied about the importer's past performance.
  2. The AD obtains a credit report on the foreign supplier, as per prevailing regulations.
  3. The importer gives an undertaking that it has the financing arrangements or cash flows to pay on maturity.
  4. If any earlier such import payment is unsettled beyond maturity, the AD must not facilitate the import.

2. Zone enterprises. Enterprises in specialized zones (EPZs, EZs, HTPs and other zones declared by the Government) may also import under contracts. The AD follows the same instructions.

3. Short-term borrowing from abroad. Importers may arrange short-term financing from external sources for admissible goods, within the cost ceiling in paragraph 2 of Part D and as Bangladesh Bank declares from time to time. The arrangement may include LCs, SBLCs or guarantees to suppliers by the external lenders. Short-term loans for import payments and financing costs may be carried out as the underlying arrangements say. Importers also get a general waiver from Section 13(1) of the FER Act, 1947, to issue non-bank guarantees (corporate, personal, third-party and so on) in favour of foreign lenders/importers for admissible imports. Bank guarantees and standby LCs are not part of this waiver.

4. Commercial imports without LCs. Within the limit in the IPO in force, these run on document against payment only, unless usance is otherwise permitted. There is a general permission for usance up to 60 days for such imports of admissible goods. The circular says this is "exclusive of" the facilities in paragraph 1(1) of Part D, which Part D of this room will cover.

5. Keep a maturity diary. The AD keeps records of contract imports, including dates of maturity and settlement, and uses them to remind importers to pay before maturity. The usual reporting routine and other foreign exchange rules still apply.

At the desk

Lamia wants to import a pharmaceutical raw material under a sales contract, paying her supplier later on supplier's credit. Before anything goes to the online reporting portal, Rakib checks her past import record, obtains a credit report on the supplier and takes Lamia's undertaking that she will have the cash to pay on maturity. Sadia also confirms that none of Lamia's earlier contract import payments is unsettled beyond maturity. Then Rakib writes the maturity date in the contract-import register, so the branch can remind Lamia before it falls due.

Key words
Supplier's credit
The foreign supplier lets the importer pay later, for example on usance or DA terms.
Buyer's credit
Finance from a foreign lender, who pays the supplier on the importer's behalf; the importer repays the lender later.
Usance
A credit period: the buyer pays a set number of days later, for example 90 days from sight or from the shipment date.
D/P (Documents against Payment)
The buyer gets the shipping documents only after paying. Also called CAD.
Read the rule as written (Para C-1)

(1) In accordance with the IPO in force and in compliance with the provisions of foreign exchange regulations, ADs may allow eligible importers to import admissible items through contracts on usance basis under supplier’s/buyer’s credit. The instructions to be followed for imports are outlined below:

(a) Imports through the relevant purchases/sales contracts needs to be submitted to designated ADs for onward submission to Bangladesh Bank online reporting portal as per paragraph 5 of Part-A;

(b) The usance period shall not exceed the limit as prescribed at paragraph 1 of Part-D;

(c) Before submission of import information in Bangladesh Bank online reporting platform,

(i) ADs shall be satisfied about past performances of importers;

(ii) ADs shall obtain credit report of foreign suppliers as per prevailing regulations;

(iii) An undertaking needs to be collected from the respective importer to the effect that they have necessary financing arrangements/appropriate cash flows for settlement of import liabilities on maturity;

(iv) ADs shall not facilitate imports through purchases/sales contracts in case of any earlier such import payment remaining unsettled beyond maturity.

(2) Imports are also admissible under purchases/sales contracts for enterprises operating in specialized zones (EPZs, EZs, HTPs, and other zones declared by the Government). ADs should observe relevant instructions stated above against such imports by enterprise of specialized zones.

(3) Short term external borrowing for imports of admissible goods is permitted within the cost ceiling as per paragraph 2 of Part-D and declaration from time to time by Bangladesh Bank. Importers may arrange short term financing from external sources at such cost. The financing arrangement may include LCs/SBLCs/guarantee to suppliers by external lenders. Short term loans on account of import payments and financing costs may be effected as per underlying arrangements. General waiver from Section 13(1) of the FER Act, 1947 is hereby given to importers for issuance of guarantees (other than bank guarantee/standby LC) such as corporate guarantee, personal guarantee, third party guarantee, etc. favoring foreign lenders/importers against admissible imports.

(4) Commercial imports without LCs within the prescribed limit of the IPO in force will be executable only on document against payment basis, unless otherwise permitted on usance basis. General permission is hereby given for usance facilities up to 60 days, exclusive of eligible facilities as outlined at paragraph 1(1) of Part-D, against commercial imports of admissible goods without LCs within the provision of the IPO in force and subsequent notifications.

(5) ADs shall maintain records of import through contracts with relevant information including dates of maturity and settlement. Based on the records, ADs will notify importers to settle the liabilities before maturity. As usual, ADs shall comply with relevant instructions of foreign exchange transactions including reporting routine and other applicable regulations.

Source: Bangladesh Bank, FEPD-1 Circular No. 30, 13 August 2026, Part C, paragraph 1 (page 18). The original circular is the authority.

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Putting it together

So far: an AD may let eligible importers bring in admissible items on a purchase/sales contract, paying later under supplier's or buyer's credit. The deal is reported through the designated AD to Bangladesh Bank's online portal, the usance stays within the Part D limit, and the AD first checks the importer's past performance, gets a credit report on the supplier, takes the importer's undertaking and refuses if an earlier such payment is overdue. Zone enterprises may use contracts too, importers may borrow short term from abroad within the cost ceiling and give non-bank guarantees, commercial imports without LCs run on D/P unless usance is permitted, with a general permission for up to 60 days' usance, and the AD keeps a maturity diary and reminds importers before payments fall due.

That completes Part C of the Import room.

Next: Part D, on imports on supplier's and buyer's credit, starts in Lesson 16, Buy now, pay later: supplier's credit.

Check yourself

30 questions, in 3 sets of up to 10. Nobody sees your answers but you.

Set 1 of 3

1. Under C-1, on what basis may ADs allow eligible importers to import admissible items through contracts?
2. Where does an import through a purchase/sales contract need to be submitted?
3. Which paragraph sets the maximum usance period for imports through contracts?
4. Before submitting the import information, whose past performance must the AD be satisfied about?
5. Which rule book decides what may be imported, and the limit for commercial imports without LCs?
6. Which enterprises in specialized zones may also import under purchases/sales contracts?
7. Within what cost limit is short-term external borrowing for imports of admissible goods permitted?
8. Under C-1(3), what may the external financing arrangement include?
9. Which guarantees are covered by the general waiver from Section 13(1) of the FER Act, 1947?
10. Commercial imports without LCs, within the prescribed IPO limit, are executable on which basis?

Set 2 of 3

11. For commercial imports of admissible goods without LCs, general permission is given for usance of up to how long?
12. Which records of contract imports must the AD keep, and what does it do with them?
13. What does document against payment mean for the importer?
14. What is supplier's credit?
15. When must the AD complete the checks in C-1(1)(c), such as the supplier's credit report and the importer's undertaking?
16. True or false: An AD may facilitate a new import through a purchase/sales contract even if an earlier such import payment remains unsettled beyond maturity.
17. True or false: For contract imports by enterprises of specialized zones, ADs should observe the same instructions that apply to other contract imports.
18. True or false: Short-term loans on account of import payments and financing costs may be effected as per the underlying arrangements.
19. True or false: The general waiver under C-1(3) lets importers issue a standby LC to a foreign lender without anyone's permission.
20. True or false: Once an AD keeps records of contract imports, it no longer needs to follow the usual foreign exchange reporting routine.

Set 3 of 3

21. Lamia's supplier is new to Sadia's branch, and she wants to buy from him under a sales contract on supplier's credit. What must Rakib obtain on the supplier before submitting the import information?
22. One of Lamia's earlier contract import payments is three weeks past its maturity date and still unsettled. She asks Sadia to process a new contract import. What should Sadia do?
23. Rakib is about to report Lamia's contract import to the online portal. Sadia stops him: one paper from Lamia is still missing. Which one?
24. Lamia's draft contract gives a usance period longer than the limit in paragraph 1 of Part D. What should Rakib tell her?
25. A commercial importer wants to bring in admissible goods without an LC, within the IPO limit, and pay 45 days after. Is this covered by the general permission in C-1(4)?
26. The same commercial importer now asks for 75 days' usance on an import without an LC. What is the accurate answer?
27. A foreign lender financing Lamia's admissible import asks her company for a corporate guarantee. Rakib wonders if this needs special permission. What does Shirin explain?
28. An enterprise inside an Economic Zone asks Sadia's branch to handle its import under a purchase contract, without an LC. What should Sadia do?
29. Lamia's contract import payment falls due in ten days. What does C-1 expect Sadia's team to do?
30. A lender abroad offers Lamia short-term import financing at a cost above the ceiling in paragraph 2 of Part D. What is the right view?
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