bangladesh bank
Tk 3,700cr Embezzlement: HC wants to know steps taken against 5 Bangladesh Bank deputy governors
The High Court today asked the Anti-Corruption Commission (ACC) to inform on the steps taken by Bangladesh Bank against its 5 accused deputy governors and other officials involved in the embezzlement of Tk 3,700 crore.
The court asked the ACC to inform on the steps within October 27.
The HC bench of Justice Nazrul Islam Talukder and Khijir Hayat verbally pronounced the order, after taking a recently published report in daily newspaper ‘Kalbela’ into cognizance.
Read: Banks must display citizen charter to ensure transparency: Bangladesh Bank
Lawyer Khurshid Alam Khan represented the ACC during the hearing while Deputy Attorney General AKM Amin Uddin represented the state.
DAG Amin Uddin said the bench asked the lawyers to read the report and present their statements before the hearing began today.
According to the report, 249 officials of Bangladesh Bank, including five deputy governors, were involvement with the financial scam of Bangladesh Industrial Finance Company Ltd (BIFC) and International Leasing and Financial Services Ltd (ILFSL).
With the help of these officials of three departments of the central bank, Prashanta Kumar Halder and Major (retd) Mannan embezzled a hefty amount of money which was revealed in a report of a high-powered probe committee formed at the directive of the High Court.
Two reports in this regard have already been submitted to the central bank’s governor, it said.
Tk 3700 crore was embezzled, taking loans from 2 capital market-enlisted financial organizations: BIFC and ILFSL. Out of this, from ILFSL, Tk 3,130 crore was taken against the name of PK Halder, who is currently imprisoned in India, and his various organizations. From BIFC, Major (retd) Abdul Mannan, Secretary General of Bikalpa Dhara Bangladesh, and his organization embezzled Tk 600 crore.
This plundering was going on for several years but the insiders of these organization and the responsible officials of Bangladesh Bank remained silent about the matter, said the report.
Read:Govt securities to trial trading in secondary market next week: Bangladesh Bank Governor
Three deputy governors, 6 executive directors, 11 general managers (GMs) and 15 deputy general managers (DGMs) and 124 other officials at various levels who served in the Financial Institutions and Markets Department of Bangladesh Bank from 2009 to 2020 were held responsible in the report.
Besides, a total of 51 people including two deputy governors and executive directors of the Bank and Financial Institutions Inspection Department have been held responsible.
Also name of two deputy governors, eight executive directors, five GMs and a total of 29 officials of the financial institution inspection department came up in this report.
Bangladesh received $357.76mn remittance in first week of Oct
Bangladesh has received USD 357.76 million remittance in the first week of October (2-6), Bangladesh Bank data shows.
Despite hiking cash incentive to 2.5 percent, from 2 percent, in the current fiscal year (2022-23), the inward flow of remittance saw a fall in September. This trend remains so far in October.
Bangladeshi expatriates sent inward remittance of USD 1.54 billion in September, which is the lowest in last 7 months.
After a decline in September, remittance is showing slow pace in October as well. In the first six days of the current month, expatriate income or remittance worth USD 357.7 million came to Bangladesh, said a Bangladesh Bank official.
Bangladesh is receiving, so far, an average of USD 60 million remittance per day through banking channels. If this current trend continues, USD 1.80 billion remittance will be received by the end of this month, the official said.
The fiscal year started with a growth trend in inward remittance while the country received USD 2.09 billion remittance in July and USD 2.03 billion in August. But it fell in September.
Financial sector insiders believe that expatriate prefers Hundi for inward remittance as the exchange rate of the US dollar is Tk 8 to 14 higher in the kerb market.
Banks must display citizen charter to ensure transparency: Bangladesh Bank
Bangladesh Bank (BB) has instructed banks to ensure rigorous accountability of bank officers and employees for restoration of transparency in providing services in the financial sector.
The Banking Regulations and Policy Department of BB on Monday issued a circular in this regard and sent it to the top executives of banks for immediate action.
The circular said the banks must display a citizen charter regarding the services they are providing to the public along with instructions on what to do if the services are not received as promised.
According to the instructions, a citizen's charter should be prepared to specify the class-wise list of all the services of a bank, the qualifications and documents required to receive the services, the preparation process of the documents, the minimum required time for providing each service, the service fee and what to do if the citizen does not receive the service.
Then this information should be published on the bank's website. Apart from this, it should be shown at the head office and branches.
Read: BB relaxes ICRRS to facilitate businesses’ loan
The notification further said that a Focal Point Officer and an Alternate Focal Point Officer should be appointed to comply with the citizen charter.
The relevant officer's name, phone number, and e-mail address should be published on the website. Apart from this, a business charter corner box should be placed on the website of each bank. All information related to the citizen charter should be uploaded in this box, the BB notification said.
Remittance fell in Sep due to exchange rate volatility: Bangladesh Bank
Bangladesh Bank spokesperson Md. Serajul Islam on Tuesday blamed the extreme volatility in the forex market in recent months on the global strength of the dollar against almost all currencies.
“Not only in Bangladesh but also in neighboring countries, the price of the US dollar has increased. In many South Asian countries, it is higher than it is in Bangladesh,” he said.
Serajul Islam, also executive director of the BB, said this in a briefing for a group of reporters on decreasing remittances and export earnings in the last month.
The inward remittance flow in September may have fallen due to the situation over the exchange rate, with a significant volume being diverted to the kerb market in search of a higher rate for the dollar, he believed.
Year on year, Bangladesh's inward remittances dropped by 10.84 percent to $1.54 billion in September, the third month of the 2022-2023 fiscal, from $1.72 billion in the same month last year. It was the lowest inflow of remittances in 7 months.
The drop was even steeper, almost 25 percent, in comparison to the previous month (August 2022).
It followed a decision by banks on September 11 to pay a maximum of Tk 108 for each dollar to foreign exchange houses (like MoneyGram and Western Union, through which most expats send money). Prior to that, they had offered exchange houses up to Tk 115 for a dollar.
The Association of Bankers, Bangladesh (ABB) and Bangladesh Foreign Exchange Dealer’s Association (BAFEDA) were tasked to come up with the rate by the central bank, as an alternative to Bangladesh Bank frequently intervening in the market to set the rate, usually by selling dollars to support an artificially overvalued rate for taka.
Read: Sept saw 25% drop in remittance, bankers blame fixed exchange rate
But the “strongest dollar in a generation”, witnessed over the last year or so and likely to persist well into the foreseeable future, was starting to make the prevailing system very expensive to maintain for Shapla Chattor. The new system, meanwhile, would seem to be still going through 'teething problems.'
Serajul Islam however said today that the price of the US dollar "is normalizing with the initiative of the central bank".
"Bangladesh Bank should not provide any dollar support to the market. BAFEDA and ABB are also playing a role in overcoming the dollar crisis. Currently, the volatility of the dollar has also decreased somewhat," he said.
The spokesperson said Bangladesh has to emphasize this issue by increasing export income.
“To that end, businessmen have to work to establish Bangladesh as a brand in the global market. If we can do this, this crisis will end quickly,” he added.
Bangladesh Bank yet to allow Indian rupee in foreign trade
Bangladeshi businesses cannot use Indian rupee for foreign trade as Bangladesh Bank is yet to enlist the currency to settle letters of credit (LCs).
BB spokesperson and executive director Md Serajul Islam told UNB that the central bank is yet enlisted Rupee for foreign trade.
He said that Bangladesh Bank is reviewing currency diversification in foreign trade to reduce sole dependence on the US dollar.
Read:“Use rupee, taka”: India asks exporters to refrain from trading in dollars with Bangladesh
Before allowing any foreign currency for trading, the central bank has maintained an exchange stander, and stability in line with the IMF standard, he said.
Businesses said if trade between Bangladesh and India happen in local currencies, pressure from falling US dollar reserves and associated ongoing forex market instability can be reduced.
They said India is the second largest source of imports of raw materials and other goods for Bangladesh. Industrial raw materials, capital machinery, cotton, yarn, fabrics, and chemicals worth USD 16.19 billion were imported from India in the fiscal year 2021-22.
Read:Bangladesh’s forex reserves now $36.90 billion
At the same time, Bangladesh exported goods worth USD2 billion to the neighbouring country.
On September 15, Bangladesh Bank allowed banks to open accounts in the Chinese currency yuan.
IMF has recognized five countries’ currencies as “high-value”. The Chinese yuan was admitted to IMF’s high-value currency basket in 2016. Since then, the yuan has become stronger than ever as per a currency review by the IMF.
Read Sri Lanka hopes to reach initial agreement with IMF for help
Bangladesh’s forex reserves now $36.90 billion
Bangladesh’s forex reserves are now down to USD 36.90 billion, despite the central bank’s move of curbing imports, and currency diversification in foreign trade.
According to the data of Bangladesh Bank, forex reserves on Wednesday (September 21, 2022) stood at USD 36.90 billion, which was USD 37.08 billion last Monday.
In the first week of this month, the reserves fell to USD 37.06 billion as the Asian Clearing Union (ACU) cleared its July-August arrears of USD 1.74 billion. As of August 25 last year, the reserves were USD 48.60 billion. According to that, the reserve has decreased by USD 11.5 billion in one year.
This is happening due to the selling pressure of US dollars for import LCs and the surge of individual demand to meet travel, medical treatment, and tuition fees for foreign universities.
On September 1, 2022, the forex reserves of Bangladesh were USD 39.05 billion.
Bangladesh Bank has been selling dollars from the reserves in continuation of last fiscal year to bring 'stability' to the forex market. In total, the central bank has sold USD 2.57 billion from reserves in two months (July-August) and of the current FY 2022-23.
Former Bangladesh Bank governor Atiur Rahman said that despite the increase in remittance, the forex reserve fell due to the continued sale of dollars.
"There is no problem even if the reserves fall to USD 38 billion in the current global context. Because, with this reserve, it is possible to meet the import expenses of more than six months,” he added.
Also read: Forex reserves below $38 billion despite tightened imports
Explainer: What it means to let taka float
We are in the middle of the first full working week since Bangladesh’s declared adoption of a floating exchange rate for taka against the US dollar, paving the way for the forces of demand and supply - in a word, the market - to determine the rate going forward.
Bangladeshi officials however, have a history of such utterances, without the necessary follow up actions. Most famously perhaps, there is even a formal commitment from 2003 (Bangladesh Bank. Exchange Rate Circular No. 01, 2003 – still available on the BB website), that the central bank subsequently abandoned.
As a result, for almost its entire existence as a sovereign currency, taka’s value has been artificially set by the country’s monetary authority, i.e. Bangladesh Bank, and then allowed to float within a certain band - the so-called managed or ‘dirty’ floating exchange rate.
Read: Banks reschedule loans worth nearly Tk 6000 crore, waive Tk 2800 crore in interest in first 6 months of 2022
In order to maintain the rate at or near its preferred level, the central bank would intervene in the currency markets to buy or sell dollars as the intervention currency. Maintaining an artificially overvalued rate in comparison to the market value, as Bangladesh Bank has almost always done, necessitates selling dollars from its foreign exchange reserves.
Why now?
But the “strongest dollar in a generation”, witnessed over the last year or so and likely to persist well into the foreseeable future, was starting to make the dirty floating system very expensive to maintain for Shapla Chattor, rapidly depleting its reserve of dollars.
In the 2021-22 fiscal, that ended on June 30, Bangladesh Bank spent $7.62 billion from the country’s foreign exchange reserves as it scrambled to slow down taka’s slide against what some are calling “the hideous strength of the dollar.” In the first two months of the current fiscal, July-August, that coincided with a period in which even the government was forced to recognise the impacts of a range of worrying signs for the economy, it escalated dangerously.
Read: Bangladesh received over $1 billion remittance in Sep 1-15
During this period, the central bank spent a further $2.85 billion on shoring up its preferred, overvalued rate, or rates, as it kept stretching to hold on, for taka against the dollar. If you annualise that, you’re looking at spending over $15 billion over the course of the fiscal. Probably more, with all the signs being that US Federal Reserve policies are likely to strengthen the greenback further over the foreseeable future.
At a time when the quite rapid depletion of the forex reserves from its peak of $48.1 billion in August 2021 to some $37 billion at the moment has become a matter of concern (and the IMF
credibly contending that effectively it is a further $7 billion less), the central bank has been forced to realise it is unsustainably costly to hold on. It has to let taka float.
Read Uniform rate: Tk 108/dollar max for remittance, Tk 99/dollar for export income from tomorrow
Does it mean BB will not sell dollars again?
What that basically means is to adopt a hands-off approach. To refrain from using its intervention tools. Importantly though, it doesn’t give up its authority to do so. It may become interventionist again, at any point - unless it gets to a point where you are charged as a ‘currency manipulator’, as the US did with China in 2019, there is nothing really to give you pause even, once you decide to do it. There is nothing to bind you to ‘letting it float’.
And central banks can be clingy. There are no purely floating currencies, it’s all a bit relative. Canada has had a floating exchange rate for longer than any other country. The Canadian national bank has not interfered with its dollar’s price since 1998. The US dollar is a close second. By contrast, Japan and the UK intervene to a greater extent, and India has medium-range intervention by its national bank, the Reserve Bank of India.
What kind of exchange rate regime a country maintains over a given period is actually a call that can only truly be made after the event, when you have the data to tell you to what extent there may or may not have been intervention. It’s a bit like assessing whether you’ve been faithful in a relationship or not - you cannot have it up front. You have to look back.
Read ABB, BAFEDA will meet tomorrow to set uniform dollar rate for banks
But a commitment can be important, and the closest thing resembling such a commitment for Bangladesh Bank that suggests it is preparing to go further this time than it has gone before to letting the currency float came last week: for the first time, Shapla Chattor appeared to accept a suggested rate from the market, along with a mechanism for determining it on a regular basis going forward.
What is the market rate?
The task for coming up with the market-determined exchange rate had been left to the Bangladesh Foreign Exchange Dealers' Association (Bafeda), in consultation with the Association of Bankers Bangladesh (ABB). After months of meetings between the three parties, last week (September 11), the rate put forward by them, along with a mechanism - a weighted average based on actual transactions over the previous 5 working days - was accepted by Bangladesh Bank in a meeting, and subsequently announced.
Since September 13, this rate has been published on the BB website as the nominal rate for the dollar, along with the following note: “Exchange rates of Taka for inter-bank and customer transactions are set by the dealer banks, based on demand-supply interaction and indicative rates suggested by Bangladesh Foreign Exchange Dealers' Association. Bangladesh Bank is not in the market on a day-to-day basis, and undertakes USD purchase or sale transactions with dealer banks only as and when needed to maintain orderly market conditions.”
Read Foreign exchange rate stable after Bangladesh Bank tightens spending
Note the phrase "as and when needed" - it tells you that should the need arise (most likely if the government perceives taka has depreciated too much), the central bank still reserves the right to intervene and effectively override what it has committed to.
There will be teething issues - reports suggest Bangladesh Bank is still selling dollars, but if it stays the road, this will taper down. There are criticisms of the agreement entered into with BAFEDA, in particular how it creates three different dollar rates - one for exporters, one for remitters and one for importers. And leaving the exchange rate to the market while holding on to a fixed interest rate regime (interest rate on lending is currently capped at 9%) goes against conventional wisdom in economics. These are issues we will get to explore in future.
Explainers related to the economy are vetted by economists.
Read BB eases outward remittance rules for foreigners
Small traders can open bank accounts without trade license: Bangladesh Bank
Bangladesh Bank has simplified the bank account opening process for small traders, dropping trade license requirements.
The name of the account will be 'Personal Retail Account' or 'Private Retail Account'. This account can be opened in banks, mobile financial services (MFS), e-wallet service providers, and payment service providers (PSP).
Individual small entrepreneurs can transact through such an account for commercial purposes, said Bangladesh Bank.
Also read: Tax return document not needed for loans up to Tk 20 lakh: NBR
The central bank revealed this information in a discussion with Asian Development Bank on Saturday.
A personal retail account can be opened only after submitting the documents required for e-KYC in bank account opening. There is no cost to open this account. Besides, loan will also be available on the basis of transaction. Even if the account is in MFS, the cash-out cost will be less.
Director of the Payment System Department of Bangladesh Bank, Masbaul Haque, told UNB that there is opportunity to open a ‘personal retail account’ without a trade license.
Also read: Takes 6-12 months to identify a share market manipulator in existing system: BSEC Chairman
The central bank has issued such a directive to encourage the growth of small business sector.
According to Bangladesh Bank’s circular, no trade license will be required to open an ‘individual retail account’.
E-KYC and necessary documents to open a bank account have to be submitted. It will be managed like a current account. This account can be used for commercial purposes, Bangladesh Bank sources said.
Read Export Development Fund loans can be repaid in instalments from now on
However, a maximum of Tk 10 lakh per month can be transacted through this account. The one-time status of this account will be maximum Tk 5 lakh.
Micro and small traders such as grocers, floating food vendors, bus-CNG-rickshaw drivers, street vendors, sellers of various products and services on Facebook, or service providers engaged in various marginal professions can open this account.
A copy of the national identity card and proof of profession are required to open the account. Trade license is not mandatory for professional credentials. A valid document issued by the local public representative or the relevant business association is required. All banks, MFS, and PSP service providers in the country will open this account free of cost, said the central bank.
Read How to Get a Trade License in Bangladesh?
Export Development Fund loans can be repaid in instalments from now on
Bangladesh Bank has introduced an instalment facility to repay loans from the Export Development Fund (EDF).
From now on, the entire loan liability can be paid in three instalments, which had to be paid at once earlier.
The Foreign Exchange Policy Department (FEPD) of Bangladesh Bank issued a guideline in this regard today (September 15, 2022) and sent it to all authorized dealers engaged in foreign exchange transactions.
Read:Like Singapore, Bangladeshi traders can now buy goods and export directly to third countries
According to the Bangladesh Bank directive, exporters can partially repay the EDF loan liability. A maximum of two partial repayments can be made during the loan tenure.
The circular stated that the remaining liability is to be repaid in one go during the loan tenure. That means exporters can pay the entire debt in three instalments.
Sector insiders say that exporters had to face issues with the repayment at once, as export income is not available at the same time.
Read:300,000 VAT collecting machines to be installed in Dhaka, Ctg by pvt firm
In such a situation, the exporters will be able to partially pay the EDF liability in instalments only after receiving the export proceeds under the new directive.
The central bank provides foreign currency support to exporters for the import of manufacturing raw materials, under EDF. The tenure of an EDF loan is 180 days. Subject to the approval of Bangladesh Bank, this period can be extended by another 90 days.
Bangladesh Bank holds workshop on ‘Trust Fund cum Settlement Management’ for Nagad officials
Bangladesh Bank organized an awareness workshop for the officials of the Bangladesh Postal Department’s mobile financial service Nagad, aiming to provide an overview of the Bangladesh Bank-authorized financial institutions.
The workshop titled ‘Guidelines for Trust Fund Management in Payment and Settlement Services’ was led by Hafia Tazrean, Joint Director of the Bangladesh Bank's Payment System Department which was held at a city hotel in Dhaka recently.
Read: Nagad offers Tk50 cashback on 'add money' from banks
Hafia Tazrean and Tanvir A Mishuk, Founder and Managing Director of Nagad Limited, distributed certificates to the participants at the end of the session.
Besides, Mohammad Aminul Haque, the Executive Director of Nagad Limited, Sheikh Aminur Rahman, the Chief Business Officer, and Md. Nurul Alam, FCS were present from Nagad Limited.
Postal Attaché of Postal Department Masud Khan and Additional Post Master General Al Mahbub represented the Bangladesh Postal Department during the session.
Tanvir A Mishuk, Managing Director of Nagad, thanked Bangladesh Bank at the end of the workshop and said, “Nagad always believes in preserving utmost transparency. We are dedicated to adhering to all Bangladesh Bank policies as the regulating authority. With this in mind, we attended the program to gain more knowledge about Trust Fund.”
The session was conducted to provide information about the financial institutions that have been approved by Bangladesh Bank. Hafia Tazrean, Joint Director of Bangladesh Bank, discussed digital transactions, starting from the initial commodities trade and gold exchange system to banknotes. Throughout the workshop, she emphasized the obligations and duties of non-banking financial organizations.
Read:Nagad to disburse allowances under govt’s employment generation program
The joint director also spoke about Nagad's obligations as an MFS institution and how MFS business can safeguard its customers' funds and the Bangladesh Bank's regulations in this respect. She later discussed what a "Trust Fund" is, how it is administered, and the guidelines for utilizing the Trustcom Settlement Account.
Following the successful completion of the program, certificates were handed to all attendees.