Bangladesh Bank lowered the cash margin for opening letters of credit (LC) to import motorcars, as the country's foreign exchange flow is on an upward trend.

Banks will now be able to import fully electric and hybrid motorcars by setting the LC margin based on the banker-customer relationship.

However, lenders will still have to maintain a 50 percent cash margin to import other motorcars, such as sedans, Sport Utility Vehicles (SUVs), and Multi-Purpose Vehicles (MPVs), that are not fully electric or hybrid, according to a central bank circular issued on Thursday.

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The new rules will come into effect on February 1 this year.

Previously, banks were instructed to maintain a 100 percent cash margin for importing all kinds of motorcars.

The circular noted that the use of fully electric and hybrid vehicles is being prioritized globally due to their fuel efficiency and environmental benefits.

Such models of cars can play a significant role in reducing carbon emissions and improving the air quality index in this densely populated country, it added.

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