Imports of essential baby food will no longer require a 100 percent cash deposit under import letters of credit (LCs), the Bangladesh Bank has said.

The clarification came after some banks mistakenly applied the full cash margin rule to essential baby food imports, the central bank noted in a notice issued today.

Earlier, the regulator had asked banks to collect a full cash deposit for certain food and drink items, including tinned foods, chocolates, biscuits, juices, coffee, and soft drinks, to protect the country's currency amid global financial uncertainty.

Under the new notice, essential baby foods are now exempt from this rule. Cash margins for baby food imports will instead be determined based on standard banker–customer relationships.

The new rule takes effect immediately under the Bank Companies Act, 1991.