‘Excessive profits’: BB serves notices to 6 more banks
Bangladesh Bank yesterday asked six more banks to explain why they made "excessive profits through purchase and sale of US dollars, ignoring banking norms during the volatile situation in the country's foreign exchange market".
The six banks are NCC Bank, HSBC, Mercantile Bank, Dhaka Bank, United Commercial Bank and Bank Asia.
Md Serajul Islam, spokesperson for the central bank, confirmed it while speaking to The Daily Star last night.
"The banks have been asked to reply within seven working days," he said.
Another BB official said the banks had purchased US dollars from exporters at a lower rate but sold them to importers at a much higher rate.
According to the BB letters to the banks, the six lenders gained abnormal profits in the first seven months of this year compared to the same period a year ago.
They have also maintained a high spread between the buying and selling rates of the dollar during the period.
Banks in the country have to buy and sell dollars based on the inter-bank exchange rate of the greenback set by the central bank. Each dollar traded at Tk 95 on the platform yesterday.
As per the banking norms, lenders are allowed to offer Tk 1 less from the interbank rate while buying dollars from exporters. They can sell the greenback, adding Tk 1 to the interbank rate.
As per the BB letter, the banks didn't even follow the exchange rate of the dollar against the taka, which was officially declared for importers and exporters.
According to this year's half-yearly balance sheets of several banks, profits from the foreign exchange businesses increased to 770 percent compared to that in the same period a year ago.
For instance, importers recently bought each dollar for up to Tk 112 from the banks, whereas the lenders bought it for Tk 94.
This helped the banks make a hefty profit by taking advantage of the ongoing volatility in the forex market, the central banker said.
BB has recently carried out inspections at a number of banks and found out about the anomalies.
Despite repeated attempts, none of the managing directors of the six banks could be reached for comments.
Exporters, importers and business leaders recently publicly accused banks of making excessive profits.
BB officials say the central bank is now making an all-out effort to bring back stability in the foreign exchange market by taking a set of measures. And as part of that effort, it has sought explanations from the six banks.
Higher imports, lower-than-expected export receipts and falling remittance have sent the reserves below $40 billion at present compared to more than $48 billion in August last year.
The taka lost value by 11.6 percent in the last one year against the dollar in the interbank market though the platform does not account for a major portion of US dollar transactions.
This is because the interbank exchange rate does not reflect the supply-demand of the market since BB has maintained an artificially higher rate of the taka.
If the platform were free of BB intervention, the exchange rate would have been much higher as it would be determined by demand and supply.
Importers have been forced to pay up to Tk 112 per dollar, up 30 percent from a year ago.
On August 8, the BB ordered six other banks to transfer their treasury heads to human resources departments over their role in the volatility in the country's foreign exchange market.
The banks are Standard Chartered Bangladesh, Brac Bank, Dutch-Bangla Bank, The City Bank, Southeast Bank, and Prime Bank. Back then, none of them responded to The Daily Star's requests for comments.
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