DHAKA, Oct 18: The Bangladesh government has recently reduced by half the margin requirement on opening of letters of credit (LCs) for importing 56 commodities, mostly luxury items, fulfilling an International Monetary Fund conditionality agreed earlier for access to its ‘concessional’ loan.

The government is also working on a proposal that sought waiver of import duty on onion as a contingency measure to bring down the price level of the essential commodity that recently marked a sharp rise.

A Bangladesh Bank circular directed the commercial banks to reduce the LC margin to 50 per cent from 100 per cent for the 56 items.

The items include perfume, soap, toothpaste, imitation jewellery, chocolate, refrigerator, biscuit, dry fruits, ceramic table wares and so on, according to the Bangladesh Bank circular.

Meanwhile, the commerce ministry at a meeting proposed zero duty on import of onion, drastically cutting it from 29 per cent.

This measure, if taken finally, will remain effective only for Ramazan, sources said.

Chaired by Commerce Minister Amir Khosru Mahmud Chowdhury, the meeting further recommended relaxing the LC margin for import of onion, making it half at 25 per cent from present 50 per cent.

The ministry of commerce convened the meeting, with other agencies concerned, to review the price situation in the wake of price hike of onion in the retail markets.

However, the Bangladesh Bank in November 2001 had imposed 100 per cent margin on most of the imported items, to reduce pressure on dwindling foreign exchange reserve amid import surge of the non-essential items.

In February 2002, the central bank slightly relaxed the restriction on some industrial inputs, giving the banks the liberty to fix the margin based on bank-client relationship.