Banks asked to ensure timely repatriation of export proceeds

The Bangladesh Bank has directed banks to ensure that export earnings are brought into the country at specified times to overcome the dollar crisis and reduce the ballooning trade gap.

BB Governor Abdur Rouf Talukder came up with the directive at a meeting with the Association of Bankers, Bangladesh (ABB), an organisation of managing directors of banks, held at the central bank's office in Dhaka on Wednesday.

According to officials concerned, the central bank held the meeting to discuss issues related to instability in the dollar market, inflation and the increase in the interest rate of bank loans. The governor suggested proper implementation of the recent policy changes to overcome the crisis.

After the meeting, Bangladesh Bank Executive Director and Spokesperson Md Mezbaul Haque told reporters that the bank MDs were asked to comply with the BB instruction. "Controlling the country's inflation is the biggest challenge now. Several policy changes have been introduced to control it but are yet to be fully implemented. MDs of banks have been instructed to implement them."

The bank MDs assured the governor that they will implement the instructions, the BB spokesperson said.

"Many of the traders are not bringing the export proceeds into the country. Rather, they are extending the payment period of the goods for the foreign buyers. As a result, dollar deficiency is being created. We have noticed these issues and are trying to resolve them.

"According to the data of Bangladesh Export Development Bureau, goods worth $55 billion were exported last year. But $46 billion came to the country. That means there is a deficit of $9 billion. 

"We have already taken several steps to stop hundi (an illegal cross-border money transfer system). More than 50 online sites [involving hundi trade] have been shut down. All these activities of ours are ongoing.

The BB spokesperson said treasury officials of 10 banks were fined for buying and selling the dollars at higher prices. "If any bank violates the law in future, they will also be fined." He, however, said the Board of Directors of Bangladesh Bank will reconsider the issue of the 10 treasury officials who have recently applied for the penalty waiver. 

After the meeting, ABB Chairman and BRAC Bank Managing Director Selim RF Hussain said that two issues were discussed in the meeting. One of these is access to change CIB information at the branch level and the other is the interest rate on the loan.

"It is observed that due to increase in interest rate of loans, there is a pressure on liquidity. But it is a practical decision of the Bangladesh Bank to control inflation. Apart from loans, interest rates on deposits will also increase, but this is not unusual," he said.

Selim RF Hussain said that it is not possible to control those who trade dollars with illegal money. "Because if we now offer a dollar rate at Tk130, they will buy at Tk140. Since they have illegal money, they will launder the money anyway."

"There is no justification for matching the formal rate of the dollar with hundi. The dollar transaction in the kerb market per year stands at $30-40 million, which is very insignificant compared to the overall transaction."