Desk Report –
Banks want to ask the Bangladesh Bank for greater US dollar assistance to cover the expense of importing basic needs.
At least ten bankers who wished to remain anonymous said that the Bangladesh Foreign Exchange Dealers Association (Bafeda) will ask the central bank for extra dollars at a meeting scheduled for Monday.
To assist banks in making import payments for necessities, the Bangladesh Bank continues to sell dollars to banks in the interim. The market has received more than 4.5 billion so far this fiscal year.
Under the condition of anonymity, a managing director of a private bank told the regional media that banks are now extremely careful when opening import letters of credit(LCs)
The bank official continued, “Therefore, further support from the reserve is needed to overcome the hesitancy that banks experience when opening LCs for daily necessities.”
However, Md. Afzal Karim, the managing director of the state-owned Sonali Bank and the chairman of Bafeda, stated, “Sonali Bank has received sufficient assistance from the central bank to cover the costs of importing daily commodities like food and fertilizer. In this aspect, there is not much pressure on us.”
Senior central bank officials claimed that the agenda for Monday’s meeting was not yet set in stone. The International Monetary Fund (IMF) requested, however, that the country’s foreign exchange market be left to a free-floating exchange rate regime and that the existing loan rate cap be lifted at a meeting with the central bank. The central bank is considering leaving the dollar rate to the market soon.
Additionally, according to the officials, there may be a discussion on whether the banks are adhering to the dollar rate set by Bafeda and the Association of Bankers, Bangladesh Limited (ABB).
The president and chief executive officer of Shahjalal Islami Bank Limited, Mosleh Uddin Ahmed, stated, “I personally want the import of all types of luxury products to be suspended temporarily.”
Due to a scarcity of US dollars, many banks are unable to pay import LCs on schedule. In the meeting with Bafeda on Monday, banks can get another warning.
Earlier, the central bank stated in a circular that the authorized dealer (AD) license for currency transactions of the involved banks will be canceled if import payment is not completed on time.
Apart from the dollar shortage, some bank MDs and chiefs of the treasury department reported that banks now have to spend significantly more while making payments for LCs opened in the past.
A bank MD gave the price of the US dollar as an example, stating that it was Tk85 when merchants opened import LCs a year ago. They are now required to pay up to Tk105–107 for these LCs, which translates to an additional Tk20 for every dollar. He said that because of the growing size of the loss figure, merchants are no longer entirely able to make the required payments.
