Bangladesh Bank Sets 270-Day Usance for Raw Materials

The Bangladesh Bank (BB) has announced a revision to the deferred payment period for imports of industrial raw materials, reducing it to 270 days. The move, aimed at easing trade operations while supporting the manufacturing sector, will come into effect from 1 January 2026.

The Foreign Exchange Policy Department of the central bank issued a circular on 29 December detailing the change. Under the new guideline, imports of industrial raw materials—including back-to-back imports, agricultural implements, and chemical fertilisers—will be eligible for a usance period of up to 270 days, applicable under suppliers’ or buyers’ credit arrangements.

The circular stipulates that the usance period will be “270 days or the cash conversion cycle, whichever is earlier.” This represents a shift from the previous temporary arrangement, which had extended the period to 360 days and was due to expire on 31 December 2025.

According to senior officials at BB, the revised limit is designed to balance the liquidity needs of industrial importers with realistic cash flow management in foreign exchange operations. Banks and Authorised Dealers (ADs) are instructed to assess the estimated cash conversion cycle based on historical operating trends and transaction records before approving such facilities.

For back-to-back letters of credit, the usance period will align with statutory export proceeds repatriation requirements. Imports financed under the Export Development Fund (EDF) are excluded from this extended facility.

The central bank’s decision follows a series of temporary policy adjustments in 2025. Earlier, FE Circular No. 08 and FE Circular Letter No. 27 had extended the usance period from 180 days to 360 days to facilitate trade amid post-pandemic market volatility.

A senior BB official explained that the previous longer usance terms were necessary during periods of foreign exchange instability after the Covid-19 pandemic. However, with the current stability of the dollar market and adequate foreign currency liquidity in banks, the authorities deemed a 360-day usance period unnecessary.

The revised policy aims to sustain smooth import operations while promoting prudent cash management for industrial importers. Analysts believe this adjustment will help maintain a balance between supporting industrial growth and safeguarding the country’s foreign currency reserves.

Summary of Usance Policy Changes