Unusual Profit from Dollar SaleBB issues show-cause notice to 6 banks

Bangladesh Bank (BB) has asked the chief executives of six banks to explain their roles in making unnatural profit in US dollar trade amid soaring dollar value in the country.

The six banks are: Standard Chattered Bangladesh, City Bank, Prime Bank, Brac Bank, Dutch Bangla Bank and Southeast Bank, according to sources at the central bank.

“The central bank served the notice to know about the role of the top executives of those financial institutions,” Serajul Islam, executive director at BB, said on Thursday.

BB issued the notice a week after it directed these banks to attach their treasury heads to the human resource departments due to alleged involvement in making excessive profit on behalf of their employers.

The central bank has taken a set of measures to stabilise the volatile foreign currency market to reduce the pressure on the government’s forex reserves, which stood at $39.59 billion at the end of July.

Bangladesh Bank has fixed the maximum price difference (spread) in trade of dollars. The spread will be a maximum Tk 1 while the difference of price will be maximum Tk 1.5 for the money exchangers for open market sales of dollar.

The central bank also served another notice on the six banks, asking them not to transfer the earnings gained from the foreign exchange market between January and May this year to their income accounts.

If any bank transfers the earnings to income accounts, it should have to revert the amount.

As per the half-yearly balance sheets of 11 banks, they made between 150-700 per cent year-on-year profits in the first six months of this year.

The banks are alleged to have purchased dollars at a lower rate from exporters but they sold the greenbacks at a much higher rate violating the banking rules.