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Margin requirements for Letters of Credit (Vehicles)

Circular no. 35/01/005/0010/07 of 31 Oct 2008

Commercial Banks were informed that the margin requirements against the letters of credit for the importation of vehicles imposed by the circular no 35/01/005/0010/01 are increased from 100% to 200% with immediate effect.

Instructions issued on 07 Nov 2008- Imports of Motor vehicles on DA terms

All LCB were requested to adhere to the following requirements on the importation of motor vehicles or related items given in the schedule A on DA terms with immediate effect

  • A 200% margin deposit on the invoiced value which are imported under DA term should be placed by the importer at the time of release of documents and acceptance of bills by the importer
  • A 200% margin requirement is on the total value of the invoice, even if the same invoice includes items which are not subject to margin requirement
  • Bank should endorse the invoice to effect that margin deposit had been obtained
  • Margin deposit should release on the production of documentary evident
  • Bank should not grant any advance to enable importers to place the margin deposit
  • Margin deposit will be subjected to statutory reserve requirement
  • The bank may pay interest on such margin deposits
  • The bank should submit monthly returns on the details of margin deposit to the CBSL


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