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Banks
Md Mehedi Hasan
Wed Sep 20, 2023 12:00 AM
Last update on: Wed Sep 20, 2023 11:02 AM

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Banks

Dollar Manipulation: BB asks 10 banks to explain

Md Mehedi Hasan
Wed Sep 20, 2023 12:00 AM Last update on: Wed Sep 20, 2023 11:02 AM
Refrain from transacting with US sanctioned Burmese banks: BB

The Bangladesh Bank has asked 10 banks' managing directors why their treasury heads should not be penalised for their involvement in dollar rate manipulation this year.

The letter, which was issued on Monday, comes after BB did not accept the banks' previous clarification on the allegation of charging more than the declared rate for the dollar.

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"Your bank's treasury head cannot avoid their responsibility in the case of foreign exchange transactions at a higher rate than the declared rate," it said.

Subsequently, the lenders will have to explain to the central bank within five working days from the date of issue of the letter why action should not be taken against their treasury heads as per section 109 (7) of the Bank Company Act 1991.

The section states the banking regulator can impose a maximum fine of Tk 1 lakh for violations.

The banks are Social Islami, Al-Arafah Islami, Mercantile, Modhumoti, Midland, Brac, Exim, Premier, Shahjalal Islami and Trust.

"Those banks imposed higher dollar rates on their clients than their declared rates," said Md Mezbaul Haque, the central bank spokesman.

M Reazul Karim, the MD and chief executive officer of Premier Bank, acknowledged the receipt of the letter. The bank will respond within the stipulated time, he told The Daily Star.

"We were forced to open LCs [letters of credit] at a high dollar rate in an emergency case -- this was conveyed to the central bank before," said Mati Ul Hasan, additional managing director of Mercantile Bank.

Selim RF Hussain, the Brac Bank MD and also the chairman of the Association of Association of Bankers, Bangladesh (ABB), declined to comment on the matter.

This, however, is not the first time the central bank has taken this position against banks on allegations of dollar manipulation by banks.

Last year, it sought explanations from 12 banks: Dutch-Bangla, Prime, City, Southeast, Brac, Standard Chartered, NCC, HSBC, Mercantile, Dhaka, United Commercial and Bank Asia.

The BB then asked Dutch-Bangla, Southeast, Prime, City, Brac and Standard Chartered to transfer their treasury heads to the human resources department. The central bank later walked back on this decision.

Since last year, the Bangladesh Foreign Exchange Dealers Association and ABB have been fixing the dollar rate on unofficial direction from the central bank.

On August 31, the two organisations decided to enforce a uniform exchange rate from September: they decided to buy a dollar at Tk 109.5 and sell at Tk 110.

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