No more higher rate for delayed export proceeds encashment

From now on, traders will get the exchange rate for export proceeds encashment as of the date at which the proceeds should have been realised – meaning that exporters will no longer enjoy the higher exchange rate for delayed realisation.

“To bring discipline in the realisation of export proceeds, it has been decided to initiate appropriate measures in cases where export proceeds are not realised within the prescribed period,” said a Bangladesh Bank circular issued yesterday.

Explaining the circular, a senior central bank official, wishing to remain unnamed, told The Business Standard that many exporters have been delaying encashment to gain higher exchange rates amid rising dollar prices, which has now become a trend.

“However, there has been an obligation to bring export proceeds to the country within 120 days of shipment. Yet, a portion of the proceeds does not come within the period. According to the new decision, if the dollar rate has been on the rise, exporters will get the rate of the 120th day,” he added and noted that if the dollar rate falls, exporters will get the lower rate – as of the date at which the proceeds arrive.

The decision has been made following repeated complaints from banks over the delay in bringing export proceeds to the country, the official said.

“In cases of delayed realisation, banks shall apply prevailing exchange rate for encashment into Taka but shall make payments to exporters applying the rate on the date at which the export proceeds should have been realised as per regulatory instructions,” the central bank circular reads.

“The difference between Taka proceeds of the current rate and the previous rate needs to be retained in separate subsidiary ledgers of banks. Banks shall submit monthly reports with regard to the amount retained in subsidiary ledgers as per Annexure-A to Bangladesh Bank within 10 days of the following month,” it added.

Meanwhile, business leaders criticised the decision of offering lower exchange rates for delayed export proceeds encashment.

“There are many various reasons behind delays in bringing export proceeds to the country and in most cases, exporters have no choice,” Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association, told TBS.

“The new instruction is okay if we consider the present situation, but it is not good at all in the long run,” he added.

Source: TBS 

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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.