Bangladesh Bank issues show-cause notice against PCB


Siddique Islam | Published: December 28, 2017 10:19:57 | Updated: December 30, 2017 13:18:50


Collected

The central bank issued a show-cause notice against a leading private commercial bank (PCB) on Wednesday for allegedly providing misleading information on foreign exchange rate, particularly for exporters.

The PCB, headquartered at Tejgaon Industrial Area in Dhaka, was also asked to explain their position on differentiate reporting of foreign exchange rate - particularly TT (Telegraphic Transfer) clean to the Bangladesh Bank (BB) by December 31.

In the notice, the central bank asked the Managing Director (MD) and Chief Executive Officer (CEO) of the third-generation bank as to why the BB should not take actions against the bank in line with the existing Banking Companies Act.

Earlier on Tuesday, the bank reported on their BC (Bill for Collection) selling rate Tk 83.20 while TT clan was Tk 82.20 to the central bank, using 'web-link' by 11 am on the day.

The bank, however, purchased the US dollar at Tk 83.35 in the name of 'corporate purchase' from exporters of other two PCBs, according to the market insiders.

The rate was not reported to the central bank, they added.

"We've issued the show-cause notice to the bank on the basis of allegations, submitted by the two PCBs to the central bank," a BB senior official told the FE.

He also said the central bank will take the next course of action after receiving clarification from the bank.

"The bank has breached its previous commitment through providing misleading information on foreign exchange rate, particularly for TT clean to the central bank," the central banker explained.

Earlier on November 30, the PCB gave formal commitment to stay alert in this regard in future.

The central bank earlier served show-cause notices to 26 banks including the PCB in three phases, asking them to explain their positions on differentiate reporting of foreign exchange rates -particularly BC (Bills for Collection) selling to the BB within two working days.

The demand for the US dollar is gradually increasing, mainly due to higher import payments pressure -particularly of capital machinery, petroleum products and consumer items, including food grains, according to the market operators.

The central bank has provided its foreign exchange support continuously through selling the US dollar to the banks for settlement of the import bills.

As part of the move, the central bank directly sold US$ 45 million at market rate to three commercial banks on Wednesday to meet the growing demand for the greenback. The US dollar was quoted at Tk 82.70 in the inter-bank forex market on the day unchanged from the previous level.

"Such liquidity support may continue in line with the market requirement," another BB official hinted.

The BB has resumed providing the foreign exchange support in the recent months through selling of the US currency to the banks directly to keep the market stable.

A total of $1.02 billion was sold since July 01 of this fiscal year, 2017-18, to the commercial banks as part of its ongoing support, according to BB's latest data.

siddique.islam@gmail.com

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