Bangladesh Bank on Monday set interest rate on loans for onion import at 12 per cent till December 31 to increase supply of the vegetable amid soaring prices on the local market.
The central bank in a circular to the managing directors and chief executive officers of all scheduled banks also asked them to set the margin on letters of credit for onion import at a minimum level on the basis of the customer-banker relationship.
The BB circular said that the onion prices on local market was unstable due to its soaring price on the international market.
The commerce ministry on Sunday urged the BB to set the interest rate on loans for onion import at a rate not more than 10 per cent for the next one month to increase import of the product ahead of the Eid-ul Azha, which will be celebrated in mid-October.
The ministry also requested the BB to set a lower LC margin, the amount paid by an importer while opening the LC, for the onion imports.
Till Monday the importers paid 100 per cent LC margin while importing onion and the banks generally imposed 18 per cent to 20 per cent interest rate on loans, said a BB official.
Earlier in March 2011, the central bank had imposed a cap of 12 per cent interest rate on loans for import of onion, sugar, dates, rice, wheat, edible oil and pulse considering the global recession.
The BB, however, withdrew the cap on the interest rate in January, 2012 allowing the bank to charge as high as 20 per cent rate for such loans.
‘Onion traders have recently requested the commerce ministry to take measures to lower the loan rate for onion import considering the high import cost of the commodity,’ said another BB official.
Onion prices have doubled to Tk 80-95 a kilogram over the last one and half months as traders are blaming the shortage of product in India.
India, one of the major sources for Bangladesh’s onion import, raised the export price of the item to $900 per tonne from $650 on Thursday.
The Awami League-led government has become worried about the skyrocketing onion price on local market ahead of its end of the tenure in October, said commerce ministry officials.
The ministry in the last few days held a series of meetings with traders and stakeholders and Trading Corporation of Bangladesh went for open market sales of onion at Tk 48-55 per kg.
The ministry on Sunday said that the local traders had already signed agreement to import 5,000 tonnes of onion from Myanmar and first consignment of the product reached the country.
The government has also encouraged traders to import onion from China and Pakistan as well.
-With New Age input
