Monday 5, June 2023

Notice to 6 more banks for making unusual profit

Time News Desk: The Bangladesh Bank on Wednesday sought explanations from six more banks for alleged unusual profit-making by selling dollars for very high prices amid the ongoing foreign exchange market crisis.

The six banks are United Commercial Bank, Bank Asia, Dhaka Bank, Mercantile Bank, Islami Bank Bangladesh and Shahjalal Islami Bank.

BB executive director and spokesperson Md Serajul Islam told New Age that the central bank issued the show-cause notice to the six banks on Wednesday.

He said that the banks were asked to explain their position for making unusual profits by selling dollars.

Earlier on August 17, the BB asked managing directors of six banks to explain allegation of making excessive profits from selling dollars at high rates.

The banks were Dutch-Bangla Bank, Southeast Bank, Prime Bank, City Bank, BRAC Bank and Standard Chartered Bank.

On August 8, the six banks had to remove heads of their treasury departments amid allegations of dollar price manipulation.

BB officials had said that the treasury chiefs held large amounts of dollars in order to raise the prices of the bank notes.

Banks’ primary sources of foreign currency are export proceeds, remittances, foreign currency deposits and investments in various bonds.

According to central bank’s regulations, there is a ceiling on the amount of foreign currency a bank can hold.

After July 15, no bank was allowed to hold foreign currency more than 15 per cent of its regulatory capital.

Previously, the rate was 20 per cent of a bank’s regulatory capital that was reduced amid the current volatility on the foreign exchange market.

If banks get foreign currency above the ceiling, they have to sell the currency to other banks.

The exchange rate of the dollar shot up to Tk 119 on the open market, or kerb market, on August 10 amid a shortage of the currency on the financial market.

The interbank rate of the dollar was Tk 95 on Wednesday.

There are allegations that banks buy dollars from exporters at lower rates and sell those at much higher rates to importers to make huge profits.

The Bangladesh Bank has recently limited money exchange houses’ dollar purchase-sale spread to Tk 1.5 after it set the difference at Tk 1 for banks.

Due to the BB initiatives, the dollar price on the kerb market has reduced to Tk 110 recently.


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