Dollar Manipulation: BB asks 10 banks to explain

The Bangladesh Bank has asked 10 banks’ managing directors why their treasury heads should not be penalised for their involvement in dollar rate manipulation this year.

The letter, which was issued on Monday, comes after BB did not accept the banks’ previous clarification on the allegation of charging more than the declared rate for the dollar.

“Your bank’s treasury head cannot avoid their responsibility in the case of foreign exchange transactions at a higher rate than the declared rate,” it said.

Subsequently, the lenders will have to explain to the central bank within five working days from the date of issue of the letter why action should not be taken against their treasury heads as per section 109 (7) of the Bank Company Act 1991.

The section states the banking regulator can impose a maximum fine of Tk 1 lakh for violations.

The banks are Social Islami, Al-Arafah Islami, Mercantile, Modhumoti, Midland, Brac, Exim, Premier, Shahjalal Islami and Trust.

“Those banks imposed higher dollar rates on their clients than their declared rates,” said Md Mezbaul Haque, the central bank spokesman.

M Reazul Karim, the MD and chief executive officer of Premier Bank, acknowledged the receipt of the letter. The bank will respond within the stipulated time, he told The Daily Star.

“We were forced to open LCs [letters of credit] at a high dollar rate in an emergency case — this was conveyed to the central bank before,” said Mati Ul Hasan, additional managing director of Mercantile Bank.

Selim RF Hussain, the Brac Bank MD and also the chairman of the Association of Association of Bankers, Bangladesh (ABB), declined to comment on the matter.

This, however, is not the first time the central bank has taken this position against banks on allegations of dollar manipulation by banks.

Last year, it sought explanations from 12 banks: Dutch-Bangla, Prime, City, Southeast, Brac, Standard Chartered, NCC, HSBC, Mercantile, Dhaka, United Commercial and Bank Asia.

The BB then asked Dutch-Bangla, Southeast, Prime, City, Brac and Standard Chartered to transfer their treasury heads to the human resources department. The central bank later walked back on this decision.

Since last year, the Bangladesh Foreign Exchange Dealers Association and ABB have been fixing the dollar rate on unofficial direction from the central bank.

On August 31, the two organisations decided to enforce a uniform exchange rate from September: they decided to buy a dollar at Tk 109.5 and sell at Tk 110.

Source: The Daily Star
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Iram Hoque

Mohd. Iramul Hoque (Iram) completed his bachelor’s degree in Industrial Engineering in 2018 from Purdue University.

He joined Deloitte Consulting LLP as a Consulting Analyst based out of New York City having previously worked in similar roles at PricewaterhouseCoopers LLP & Landis+Gyr.

Iram left consulting and returned to Bangladesh to take up the family business. Realizing the opportunity in the capital market in Bangladesh, Iram worked relentlessly to found Columbia Shares & Securities Ltd in 2021.

Md Saiful Hoque

Md. Saiful Hoque received his bachelor’s degree in Civil Engineering from Columbia University in 1986 followed by a master’s degree from Texas A&M University in 1988. Upon completion of his Graduate Degree, he joined Gulf Interstate Engineering Company in Houston, USA serving as a Project Engineer.

He returned to Bangladesh in 1992 to join Columbia Enterprise Ltd., the family business of Shipping and Freight Forwarding services. In addition, he has built flourishing businesses manufacturing Garment’s Accessories and Fast-Moving Consumer Goods.