Foreign exchange market volatility: BB asks MDs of 6 banks to clarify position

Foreign exchange market volatility: BB asks MDs of 6 banks to clarify position

Bangladesh Financial institution on Wednesday requested the managing administrators of six banks to clarify why they took benefit of the volatility of the international change market to make earnings by flouting banking norms.

The six banks are: Dutch-Bangla Financial institution, The Metropolis Financial institution, Prime Financial institution, Southeast Financial institution, Brac Financial institution and Normal Chartered Bangladesh.

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On August 14, the BB directed these banks to carry their treasury chiefs nearer to human sources departments amid allegations of their involvement in making extreme earnings by ignoring the foundations.

The central financial institution additionally requested the six lenders on Wednesday to not switch their earnings from international change corporations between January and Could to their earnings accounts. Earnings have to be stored in a separate account, in accordance with letter BB.

In case any of the banks have already transferred the earnings to their earnings accounts, the motion needs to be reversed.

Not one of the managing administrators of the six banks responded when this correspondent contacted them for remark.

Serajul Islam, spokesman for the BB, stated banks have been requested to reply to the BB’s letters inside seven working days.

“We ask them to determine these accountable for this. Additionally, the banks need to state the rationale for making the extreme earnings,” he stated.

Within the final two months, a great variety of banks have made earnings by means of unethical means by shopping for {dollars} at a decrease charge from exporters and promoting {dollars} at a a lot greater charge to importers, one other BB official stated.

Until August 14, importers had to purchase every greenback for as much as Tk 120, whereas exporters bought every greenback for as little as Tk 93. Because of the massive distinction between the acquisition and sale costs, the banks between January and June reached seven. instances the revenue they earned in the identical interval final yr, in accordance with the steadiness sheet knowledge of 11 banks.

On Wednesday, banks provided a dollar of Tk 105-106 to importers.

The nation’s banks need to promote and purchase {dollars} primarily based on the interbank change charge set by the central financial institution. USD was quoted at Tk 95 on the platform on Wednesday.

As per banking norms, lenders can supply Tk 1 lower than the interbank charge whereas shopping for {dollars} from exporters. They will promote bucks, including Tk 1 to the interbank charge. Banks had been following this rule for years till April, when volatility within the international change market deepened.

BB on August 14 requested banks to comply with a rational distinction, no more than Tk 1, between shopping for and promoting charges.

The nation’s international change market has been going through challenges because the finish of final yr due to the pandemic and the battle between Russia and Ukraine.

Larger imports, lower-than-expected export earnings and falling remittances pushed reserves under $40 billion.

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