They said that motor dealers will have to close down their business as they are not in a position to pay cash up front for opening LCs to bring down vehicles.
The Monetary Board of the Central Bank imposed a 100 per cent margin deposit requirement against Letters of Credit opened with the commercial banks for the import of motor vehicles, which are generally used for non-commercial purposes, with immediate effect.
Accordingly, Letters of Credit for the importation of these vehicle categories could be done only with a minimum cash margin of 100 per cent.
The decision to impose the margin deposit requirement is based on recent developments which, if not addressed, could threaten macroeconomic stability, the Central Bank said.
The imposition of the margin deposit requirement, together with the measures already taken by the government with regard to taxes applicable on motor vehicle imports, is expected to curb non-essential imports of motor vehicles, and ease undue pressure on the current account of the balance of payments (BOP) and the exchange rate, the CB said.