In international trade and the Bangladesh RMG export sector, the Letter of Credit (L/C) is the primary instrument of payment security. Opening an L/C, however, involves complex commercial bank fees, government stamps, and insurance premiums that increase procurement overheads. Sourcing managers and trade finance officers must calculate these charges to estimate net material import costs. This guide details standard bank commission structures in Bangladesh.
1. Quarterly Bank Commission Tariffs
Under Bangladesh Bank regulations, commercial banks charge L/C opening commissions on a quarterly basis. A quarter represents 90 days. The commission rate is charged upfront on the face value of the L/C:
- Import L/C (Sight / Usance): Standard opening commission ranges from 0.15% to 0.40% per quarter. Importers must pay for a minimum of 1 quarter, even if the L/C validity is 30 days.
- Back-to-Back L/C (BTB): Opened locally against an export order to purchase raw fabrics/yarn. Because the risk is low, banks charge a discounted commission of 0.10% to 0.15% per quarter.
2. The Breakdown of Additional Charges
Beyond the core opening commission, banks and government regulators charge the following fees:
L/C Opening Fees Summary (Bangladesh Banks)
| Fee Component | Standard Charge (BDT / %) | Nature of Fee |
|---|---|---|
| SWIFT Transmission Fee | BDT 1,500 to 3,500 | Flat charge for sending SWIFT L/C message |
| Stationery & Transmission | BDT 500 to 1,000 | Flat charge for handling and printing |
| Stamp Duty | BDT 500 to 1,500 | Paid on government non-judicial stamp sheets |
| Marine Insurance Cover Note | 0.10% to 0.25% of L/C value | Paid to insurance company for transit risks |
| NBR VAT | 15% of bank service fees | VAT on Commission + SWIFT + Transmission |
3. Step-by-Step L/C Cost Calculation
Let us calculate the bank fees for opening a standard Import L/C worth USD 80,000 for a tenor of 180 days (2 quarters) at a rate of 0.25% per quarter, with a SWIFT fee of BDT 2,500, stamp duty of BDT 1,000, and marine insurance rate of 0.15%:
- 1Bank Commission: USD 80,000 × 0.25% × 2 quarters = USD 400.00.
- 2SWIFT fee: USD 22.73 (approx. BDT 2,500). Stationery charge: USD 4.55 (approx. BDT 500).
- 3Marine Insurance Cover Note: USD 80,000 × 0.15% = USD 120.00.
- 4Stamp Duty (Government): USD 9.09 (approx. BDT 1,000).
- 5NBR VAT (15% on Bank Commission + SWIFT + Stationery): (USD 400.00 + USD 22.73 + USD 4.55) × 15% = USD 64.09.
- 6Total Opening Cost: USD 400.00 + USD 120.00 + USD 22.73 + USD 4.55 + USD 9.09 + USD 64.09 = USD 620.46 (~0.78% of L/C Value).
4. References and Standards
This guide is based on foreign exchange policy guidelines published by Bangladesh Bank, the NBR VAT Act 2012, and standard customer service tariff schedules of leading commercial banks in Bangladesh. All documentary credits follow UCP 600 rules issued by the International Chamber of Commerce (ICC).