Bangladesh Bank has reduced the cash margin requirement for opening letters of credit (LC) to import motorcars, reflecting the country’s improving foreign exchange reserves.

Under the new directive, banks can now determine the LC margin for fully electric and hybrid vehicles based on their banker-customer relationships.

However, a 50 percent cash margin will still apply to the import of other motorcars, such as sedans, Sport Utility Vehicles (SUVs), and Multi-Purpose Vehicles (MPVs) that are not fully electric or hybrid, according to a circular issued by the central bank on Thursday.

The revised rules are set to take effect on February 1. Previously, a 100 percent cash margin was required for importing all types of motorcars.

The circular highlights the growing global emphasis on fully electric and hybrid vehicles due to their superior fuel efficiency and environmental advantages. Such vehicles have the potential to significantly reduce carbon emissions and improve air quality in densely populated countries like Bangladesh.

Source: The Daily Star