Dhaka, Bangladesh (BBN)- The central bank of Bangladesh has taken steps to strengthen monitoring and supervision of cross-border foreign currency transactions to check fraud and forgeries in the country’s banking sector, officials said.
The central bank has taken different measures against the backdrop of rising trend of large-scale irregularities in purchasing and providing acceptance of the bills against local LC (letter of credit)-denominated foreign currency by various bank branches in recent months.
Under the measures, the commercial banks will have to submit applications to concerned offices of the Bangladesh Bank (BB) for post facto approval within 15 days of the following month since effecting the payment.
The central bank issued a directive in this connection on Monday and asked the commercial banks to abide by the provisions relating to seeking permission of the BB for settlement of payment on back-to-back LCs import.
“The commercial banks are allowed to create forced loan against the exporters if he or she fails to realize export proceeds within the stipulated timeframe, a BB official told BBN in Dhaka.
He also said the banks will have to take permission from the BB for making import payments against LCs where the export proceed is not realized timely, and realized partly or no shipment is made.
Earlier, there was no timeframe for taking such permission by the banks concerned, he said, adding it is necessary for the BB’s monitoring purposes.
Under the existing guidelines for foreign exchange transactions, cases of failure to realize export proceeds against the master LCs should also be reported to the National Board of Revenue (NBR) and the concerned commissioner of customs so that they may monitor closely the level of stocks of the goods in the bonded warehouse.
A copy of the letter to the NBR informing the export failure should be submitted to the BB along with the application for post facto approval of remittance toward back-to-back import payment, according to the guidelines.
Besides, the banks will have to report their daily foreign exchange position to the central bank online from January 1, 2013, another BB official said.
“The central bank is going to issue a circular in this connection shortly asking the banks to submit their daily foreign exchange position using only the BB’s web portal instead of e-mail and web portal,” the central banker said.
The central bank of Bangladesh on Sunday also asked the banks to submit reports on foreign exchange (forex) transactions, including inland bill purchase (IBP) through online system from January 1 next year.
Under the new reporting system, a bank will have to report all types of its foreign exchange transactions to the BB on a daily basis using BB’s web portal.
The Foreign Exchange Operation Department (FEOD) of BB earlier started monitoring export transactions through online reports submitted by the foreign exchange branches, officially known as authorized dealer (AD) branches of the banks.
Currently, some 858 ADs of 47 scheduled banks are running their businesses across the country.
BBN/SSR/AD-11Dec10-10:00 am (BST)
