Dhaka, Bangladesh (BBN) – The supply of wastepaper fraudulently, instead of edible oil, provided an eye-opener for the central bank of Bangladesh, as it asked the commercial banks to be extra cautious about opening of letter of credit (LC) for import.
The Bangladesh Bank (BB), the country’s central bank, in a review meeting recently asked the banks to collect henceforth credit reports on exporters before opening import LCs to avoid any such financial risk, as a Chinese company recently supplied waste paper instead of soybean oil.
The central bank has taken the latest measure against the backdrop of rising fraudulent practices pertaining to LCs, particularly for import of edible oils in the recent months.
In the most recent incident, a local company – HIK CAR AGENCY – opened an LC for import of 25 tones of refined soybean oil worth US$25,250 from a Chinese company – Qingaohaijia Import & Export Co. Ltd–on June 12 last.
The Chinese company has supplied wastepaper instead of the soybean oil in two containers, Abdul Hannan Dhali, proprietor of the local importing company, said.
“Our C&F agent – Comacreation – has found the wastepaper when testing the imported item in presence of Jewel Ahmed, joint customs commissioner of Chattagong and informed me immediately,” Mr. Dhali said, adding: “I went to my bank and sought their cooperation to stop payment against the import.”
Finally the importer was able to stop payment against the import after filing a case with a court, he said, adding that the Chinese company, however, said ‘sorry’ for that.
Mr Dhali also said another importer had faced a similar problem with import of soybean oil from China.
“The banks will have to collect credit reports on exporters from reputed credit rating agencies before opening any import LC in line with the existing foreign exchange rules and regulations,” a BB official said, adding that the central bank has taken the measures aiming to improve its off-site supervision through collecting accurate information on imports.
BBN/SSR/AD-12Oct12-8:05 pm (BST)