Bangladesh tightens financial management requiring all scheduled banks to inform a central monitoring authority of entire money-market transactions at the day's close.
Officials said the latest direction from the central bank is meant for ensuring proper liquidity management in the banking system as well as keeping track of money movements in and out of the market.
Under the new provisions, the banks will be required to submit information on short-term loans or placements with name of the clients to the Department of Offsite Supervision (DOS) of the central bank by 5:00pm each working day.
The instructions came in a confidential letter issued by the Bangladesh Bank (BB) Thursday, in the wake of current moves by the regulator to straighten accounts of the stakeholders in financial matters, including justifying bank lending and deposit rates.
The banks normally submit their overnight inter-bank call-money- market transaction reports to the central bank on a daily basis.
The central bank also asked the banks to send their daily reports on their own, subsidiaries and others' net exposures on the capital market in line with a prescribed format within the stipulated timeframe.
Actually, the BB has sought such information on markets to know the inflow and outflow of funds to and from the money market.
A three-page reporting format was sent to all managing directors (MDs) and chief executive officers (CEOs) of banks on the day in this connection.
The Financial Express (FE) obtained a copy of the reporting format.
"Yes, we have received a letter with the reporting format from the central bank," a senior executive of a leading private commercial bank (PCB) told the FE while replying to a query.
He also said that his bank will start to submit the required information using the format to the central bank from the next working day.
The central bank's latest moves came against the backdrop of issuance of a forewarning as part of a precautionary measure to avert possible 'asset bubble' with a note for the banks to check diversion of funds into unproductive sectors.
Also, the commercial banks have been instructed to ensure right end-use of the funds through conducting necessary inspections by their internal audit departments.
The BB had already found a portion of funds under the stimulus packages being diverted and used for unproductive purposes instead of proper utilization in the selected respective sectors.
In some cases, borrowers have adjusted his/her other credits with loans under the low-cost funds, the BB said in its two-page letter conveyed to the banks on July 25.
Prime Minister Sheikh Hasina has so far announced 28 stimulus packages worth Tk 1.35 trillion to offset the impacts of the pandemic on various sectors.
The packages, which account for 4.9 per cent of the country's gross domestic product (GDP), are now being executed under the supervision of the central bank and the finance ministry for mitigating the adverse impacts of the pandemic coronavirus on the economy and facilitating faster economic recovery of Bangladesh.
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