Bangladesh’s external sector management has entered a phase where regulatory intent and operational reality are increasingly intersecting. Nowhere is this tension more visible than in the price verification framework for large-value imports, particularly those valued at $3 million and above. While the objective of safeguarding foreign exchange reserves, discouraging trade misinvoicing, and ensuring fair pricing is both legitimate and necessary, the manner in which price verification is currently operationalised raises questions of efficiency, predictability, and proportionality.
Under the prevailing regulatory framework as contained at foreign exchange circular of 2022, banks are required to report import transactions valued at $3 million and above through the Online Import Monitoring System (OIMS) of central bank at least 24 hours prior to opening Letters of Credit, excluding government imports. In addition, all other import-related transactions need be reported to Bangladesh Bank’s online reporting platform within eight hours of execution. These reporting requirements have enabled the central bank to build a comprehensive import database since more than decades back, containing granular information on HS codes, commodity descriptions, quantities, and unit prices. From a supervisory perspective, this is a significant institutional asset undoubtedly which needs proper utilisation.
However, the challenge lies not in information availability but in the absence of an authoritative or commonly accepted benchmark against which prices can be assessed. Import price verification, by its nature, involves judgment. Some sources often generate divergent price indications, reflecting differences in quality, contract size, delivery terms, geography, timing, and market conditions. As a result, price verification becomes an inherently subjective exercise, even when conducted diligently and in good faith.
The broader policy implication is that a framework heavily dependent on subjective price verification may unintentionally undermine trade efficiency without proportionate gains in regulatory effectiveness. Delays in opening or transmitting Letters of Credit can disrupt supply chains, particularly for industrial inputs, capital machinery, and time-sensitive commodities. For exporters and manufacturers operating on tight production schedules, translating into higher costs and reduced competitiveness. From banking perspective, prolonged processing times weaken predictability and complicate customer relationship management. From a supervisory standpoint, scarce resources may be diverted toward procedural compliance rather than genuinely risk-sensitive oversight.
It should be acknowledged that Bangladesh Bank has legitimate concerns. Large-value imports pose higher risks of over-invoicing, capital flight, and trade-based financial irregularities. The central bank cannot abdicate its responsibility to monitor such transactions, especially in a context of foreign exchange volatility and reserve management pressures. The question is how it can be delivered in a manner that is data-driven, transparent, and operationally efficient.
One possible way forward lies in better utilisation of the very data infrastructure that the central bank has already built. The import database maintained since long represents a rich repository of historical transaction prices across commodities, HS codes, quantities, and time periods. While historical prices are not substitutes for real-time market data, they provide valuable context for assessing what has been paid for comparable goods under similar conditions in the recent past. Such data can reduce subjectivity, improve consistency, and narrow the range of reasonable price expectations.
Clear regulatory guidance will be essential. Banks should be encouraged to apply a risk-based and market-oriented approach to price verification, assessing prices against contemporary benchmarks of comparable goods using their own transaction records, reliable external sources, and, where accessible, the central bank’s historical data. The database should be positioned as a supplementary reference point rather than a compliance checklist. Banks should retain reasonable records of the sources consulted and make them available to central bank upon request.
Such an approach offers several advantages. First, it promotes consistency across banks by narrowing information asymmetry. When all banks have access to the same historical context, price assessments are less likely to diverge sharply for similar transactions. Second, it reduces subjectivity by grounding verification in observed transaction data rather than purely indicative prices. Third, it enables faster regulatory decision-making, as banks and the central bank will be working from a shared informational baseline. Fourth, it allows supervisory resources to be focused on genuinely anomalous or high-risk cases rather than routine transactions caught in procedural loops.
In the final analysis, the challenge of import price verification is not unique to Bangladesh. It is a common issue in many emerging economies navigating the trade-offs between control and facilitation. What distinguishes effective frameworks is not the rigidity of rules but the quality of information, clarity of guidance, and proportionality of response. By leveraging its existing data assets and empowering banks with better tools rather than tighter bottlenecks, the central bank can achieve its regulatory objectives while supporting a more efficient and predictable trade environment.
The writer is a liaison officer in a trade finance company
