Bangladesh Bank has urged banks to keep a minimum cash margin rate for settling letters of credit (LC) for fertiliser imports.

The central bank yesterday issued a circular to this end considering the importance of fertilisers in agricultural production and to keep the prices of fertilisers at a tolerable level and ensure necessary supplies to the market.

The banking regulator said instructions have been issued to keep the cash margin rate at a minimum level on the basis of banker-customer relationship for opening letters of credit for fertiliser imports.

The cash margin rate varies depending on the type of goods being imported and the relationship between the bankers and customers. The LC margin can be up to 100 percent for some goods.

Bangladesh Bank also asked the banks to give the highest priority to the LC settlement of fertiliser imports.

This directive, which would come into effect immediately, will remain in force until December 31, 2025.