BB permits exporters to use local insurance for open account exports

Bangladesh Bank (BB) has allowed exporters to use local insurance to ship goods under open account credit terms.

To this end, the central bank issued a circular on Tuesday, permitting banks to arrange payment undertakings or payment risk coverage from Bangladeshi insurers. 

According to the circular, banks can now facilitate export transactions under open account credit terms through foreign currency-denominated insurance policies issued by local insurers. In case of non-receipt of export proceeds, insurance claims need to be settled in foreign currency. 

Also, reinsurance coverage can be obtained from foreign sources in compliance with the regulatory framework applicable to insurance companies, as per the circular.

The circular authorises banks to offer post shipment finance to exporters against respective exports based on insurance coverage.