Bangladesh Bank on Wednesday asked the managing directors of six commercial banks to explain why they took advantage of the volatility in the foreign exchange market to make profits breaking banking norms. Recently, the central bank directed the six banks — Dutch-Bangla Bank, The City Bank, Prime Bank, Southeast Bank, Brac Bank, and Standard Chartered Bangladesh — to attach their treasury heads to the human resource departments amid allegations of their involvement in gaining excessive profits ignoring rules.
The central bank on Wednesday also asked the six lenders not to transfer their profits from foreign exchange businesses between January and May to their income accounts. In case any of the banks have already transferred the profits to their income accounts, the action should be reverted. None of the managing directors of the six banks responded to the media when they were contacted for comments.
In the last couple of months, a good number of banks made profits through unethical means as they purchased dollars at a lower rate from exporters and sold those at a much higher rate to importers. Until August 14, importers had to purchase each dollar for up to Tk 120 while the exporters sold each dollar for as low as Tk 93. Thanks to the large gap between the buying and selling prices, the banks between January and June made up to seven times the profit they made during the same period last year.
Banks in the country have to sell and buy dollars based on the inter-bank exchange rate set by the central bank. The USD traded at Tk 95 on the platform on Wednesday. They can sell greenbacks, adding Tk 1 to the inter-bank rate. Banks have been following this norm for years until April when instability in the forex market deepened. The unethical practices by the banks’ management should be checked and professionalism should be restored in the country’s banking system.
