BB serves notices on nine banks for dollar rate violation

Staff Correspondent | Published: 00:14, Oct 29,2018 | Updated: 00:33, Oct 29,2018

 
 

A file photo shows Bangladesh Bank headquarters in Dhaka. The central bank on Sunday issued show-cause notices to nine banks for selling dollars at rates higher than the inter-bank exchange rate set by BB. — New Age photo.

Bangladesh Bank on Sunday issued show-cause notices to nine banks for selling dollars at rates higher than the inter-bank exchange rate set by the central bank.
BB executive director and spokesperson Md Serajul Islam told New Age that the central bank would take further course of action against the banks if the banks failed to provide satisfactory explanations in this regard.
The central bank served the notices on BASIC Bank, City Bank, Dutch-Bangla Bank, Dhaka Bank, EXIM Bank, Mutual Trust Bank, NCC Bank, Prime Bank and Trust Bank after receiving allegations against the entities.
Banks were asked to carry out dollar transaction at Tk 83.85, the inter-bank dollar exchange rate, a BB official said.
The nine banks, however, sold dollars at Tk 84.60-84.95 to the importers, defying instruction of the central bank, he said.
Although the banks sold dollars at higher rates to the importers, the banks in their accounts showed that the dollars were sold at lower rates with a view to hiding violation of rules, he said.
The BB’s Sunday notice asked the banks to explain in three days why fine would not be imposed on them for the violation and providing false statement on dollar sales.
In 2017, the central bank issued show-cause notices to 20 banks on the same ground. A number of banks, among the 20, were fined as they had failed to give satisfactory replies.
BB officials said that the dollar exchange rate had been on the rise for more than a year due to mounting pressure of import payments.
Although the central bank has been investing heavily to contain the exchange rate of the US dollar, constant increase in import payments has resulted in an increased pressure on the greenback.
To contain the exchange rate of the US dollar against the taka, the central bank injected $2.31 billion in the fiscal year of 2017-2018 against only $175 million in the previous fiscal year.
In July-August this year, the central bank injected dollars around $110 million in worth in the market.
The country’s trade deficit doubled in last fiscal year (2017-2018) compared with that of $9.47 billion in the previous fiscal year, hitting a record $18.25 billion.
The current account deficit also hit a record $9.78 billion in FY18 as import payments rose and the foreign direct investment decreased.
The trend was also reflected in the latest available central bank data of July of FY19.
As the country’s import payments continued to remain high, the country’s trade deficit trade deficit in July of FY19 increased by 12.14 per cent to $1,173 million compared with that of $1,046 million in July of FY18.

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