Banks have been given strict instructions by the Bangladesh Bank to promptly clear past-due letters of credit payments for both general and back-to-back imports. If they don’t comply, the bank threatens to take punitive action. Representatives from at least 25 banks attended the 37th meeting of the Bangladesh Bank Authorised Dealer’s Forum today, where the instruction was issued.
Senior officials from a number of banks who attended the meeting said that in addition to giving instructions to take the required actions to pay past-due invoices, the central bank has also asked numerous banks for explanations for why they have not made import payments on time.
Every quarter, the Import Trade Division of the Foreign Exchange Operation Department keeps an eye on the settlement of past-due domestic and foreign-accepted invoices. The central bank said during the meeting that the explanations were requested in light of this monitoring procedure. “Among the many reasons, delays often occur in settling back-to-back import LCs because these payments are made after receiving export proceeds,” stated a deputy managing director of a private bank, who asked not to be named. Export proceeds can occasionally take a month to arrive, which causes delays in clearing payments when they become due. The central bank has been notified of this.
Senior Bangladesh Bank officials reaffirmed the “Guidelines for Foreign Exchange Transactions (GUET)-2018” rules, which mandate prompt settlement of import payments, during the meeting. Additionally, they reminded the banks of earlier circulars that required them to adhere to payment deadlines.
The central bank also issued a warning about the potential effects of non-compliance with the directive, including the suspension of the authorised dealer (AD) licenses of non-compliant branches and the possibility of both institutional penalties and personal liability for officials involved in such transactions.
During the discussion, bank representatives gave the central bank their word that they would promptly settle past-due payments in accordance with directives and legal obligations. “The dollar liquidity in our banking sector is currently stable, and the country’s foreign exchange reserves have also been steady for several months,” Husne Ara Shikha, executive director and spokesperson for Bangladesh Bank, told The Business Standard. Banks are being repeatedly told to settle past-due payments because there isn’t a severe dollar crisis right now. We anticipate that these payments will be paid shortly.
Source: The Business Standard
