Strict timeline for import payments: What the new directive means for businesses

The common modes of payment in international trade are letters of credit (LC), prepayment, and payment against contract. Among these, documentary collection – used for payments against contracts – offers a cost-effective alternative to the more rigid and expensive LC system. These also include deferred payment for a certain period.

Bangladesh Bank, the central bank, regulates the transaction of foreign exchange (FE). It issued FE Circular No 33, dated 14 August 2025, regarding import transactions. The circular provided detailed explanations on payment against supplier's credit.

Clause 29 (2) under the heading "Submission of the authenticated copies of Bill of Entry and Certified Invoices" mentions that regarding the Bill of Entry against import on supplier's credit (usance/DA) terms, the prescribed period of four months for submission of the Bill of Entry will be calculated from the date of acceptance of import documents. Regarding the Bill of Entry against import on buyer's credit/external credit, Clause 29 (3) states that submission of documentary evidence in support of imports will also be four months from payment by foreign lenders.

Clause 34 (1) on "Imports under purchases/sales contracts without LCs" mentions that in compliance with the provisions of foreign exchange regulations, banks or Authorised Dealers (AD) may allow eligible importers to import admissible items through contracts on a usance basis under supplier's/buyer's credit. The instructions to be followed for imports outlined in Clause 34 (1)(a) state that imports through the relevant purchases/sales contracts need to be submitted to designated ADs for onward submission to the Bangladesh Bank online reporting portal.

Regarding international trade, Clause 3 instructs that ADs shall observe best practices in accordance with applicable international trade rules such as Uniform Customs and Practice (UCP), Uniform Rules for Collections (URC), Incoterms, etc. ADs are required to follow the rules of prevailing UCP for issuing LCs against import trade. While executing admissible import transactions under sales contracts on a documentary collection basis, ADs are advised to observe the latest version of URC. For the use of Incoterms, ADs shall consult with the Import Policy Order (IPO) in force.

The central bank is also careful about payment behaviour and has issued a framework for timely import payments. Clause 42 (1) mentions that ADs need to adhere strictly to their commitments with regard to import payments. Accordingly, ADs shall follow the payment behaviour framework as outlined below: (a) Before issuing LCs, ADs shall ensure appropriate credit lines are available for the respective importers; (b) Issuance of LCs on behalf of importers without underlying credit facilities is subject to adequate cash flows and prospective fund arrangements to cover import payments; (c) Usance imports should be financed through buyer's credit by offshore banking operations, or by the own fund of ADs in terms of paragraph 38 of this circular.

Clause 42 (2) reminds ADs that failure to settle payments on time is subject to punitive actions, including personal accountability for the officials responsible for the transactions. The central bank believes that non-payment of import bills on time tarnishes the image of the country's banking system and disrupts a conducive environment for foreign trade by increasing its cost.

In Clause 43 regarding "Payment of overdue accepted bills (foreign or local)", it has been said that considering these issues, banks shall take the following measures to ensure prompt payment of overdue accepted bills. A comprehensive action plan shall be taken after a detailed review of overdue accepted bills, including analysis based on factors like ongoing litigation, presence of realisation clauses, and classification as large industrial enterprises.

Branch-wise performance should be evaluated during the review. Branches with a high volume of overdue unpaid accepted bills shall be brought under special monitoring arrangements. If any bill under litigation is not payable, the supplier's bank shall be informed accordingly. While submitting the monthly report on overdue accepted bills, data shall be verified through the Online Import Monitoring System (OIMS) before submission.

In special cases, the central bank may extend the time limit for submission of the Bill of Entry. Section 30 states that applications for extension beyond four months in cases of genuine difficulties – such as delay in the arrival of the ship or difficulties in clearing the goods already landed at a port in Bangladesh – shall have to be forwarded to the Foreign Exchange Operation Department (FEOD), Bangladesh Bank, Head Office or other offices for consideration, clearly mentioning the concerned IMP Form number and LC/contract number.

Clause 34 (5) specifically mentions that 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 routines and other applicable regulations. Regarding reporting to the central bank under Clause 44 (Documents to head offices/principal offices), all bills (foreign or local) submitted to the AD branch, along with discrepancies and details of payments made, shall be preserved and sent monthly to the relevant department at the head office.

Regarding imports on supplier's credit/deferred payment basis, Clause 35 (1) states that subject to compliance with other conditions laid down in this part and in the IPO in force, import is allowed on supplier's credit/deferred payment/usance basis in cases of industrial raw material imports for the own use of industrial importers. The central bank has a strict policy as specified in Clause 34 (1)(iv) that ADs shall not facilitate imports through purchases/sales contracts in case of any earlier such import payment remaining unsettled beyond maturity.

The liability of the AD has been specified in Clause 41 on "Payment of import liability", stating that ADs shall make payment of import liabilities as per their exposure/acceptance on the due date/maturity. Payment delayed beyond four months from the date of Bill of Lading is considered an offence under FE regulations, and both the banker and the importers will face different punishments. Failure in the settlement of import liability may result in punitive actions including revocation of the AD license by Bangladesh Bank. Importers will not be allowed to import by keeping pending payments beyond the maximum four months.

M S Siddiqui is a legal economist and the CEO of Bangla Chemical.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.