Banks’ weakness, negligence complicating foreign trade

Clients often face harassment because of bank employees' poor understanding of foreign exchange guidelines and other related instructions issued by the central bank.

Businessmen lose much of their enthusiasm because of the complex and time consuming process, which ultimately affects the import and export trade of the country.

Bangladesh has a policy issued by the central bank to control foreign exchange transactions. Apart from this, the Foreign Exchange Policy Department of the Bangladesh Bank also gives instructions from time to time, which baffle the customers.

The central bank on Wednesday issued some cautionary instructions to the banks in this regard.

It said banks will have to dispose of applications received from customers at their own discretion as per the Foreign Exchange Transaction Guidelines 2018 and the instructions later issued by the Bangladesh Bank.

Applications which cannot be disposed of by banks should be sent to the central bank through a forwarding letter with the joint signatures of the officer-in-charge, including the branch head or department head concerned with the opinion or recommendation of the bank.

At the same time, the letter should be sent on letterhead, containing the full address of the bank's division or branch concerned.

The Bangladesh Bank circular said in the letter, the source number, date of issue, full signature, name of the signing officer, title, ID number, direct telephone number, mobile number, and email address must be written clearly.

The central bank has also called for attaching clear and legible photocopies of all the documents – including the bank's recommendation in support of the application stating the validity and the rationality of the application in detail.

Officials of the Bangladesh Bank said that according to the guidelines of this policy or other circulars issued, there is no opportunity to dispose of many applications from customers. Banks are supposed to send only such applications to the central bank for their disposal.

However, at present banks are also forwarding applications to the Bangladesh Bank which they can solve by themselves. In many cases, applications are being sent without: the opinion of the managing directors of banks, the required documents, the title of the signing bank officers, and phone numbers.

Central bank officials say that this is complicating the work and customers are being harassed.

Humayun Kabir, acting executive director of Bangladesh Bank's Foreign Exchange Policy Department, told The Business Standard, "Banks send applications without a title or even a phone number. In this case, if we have a supplementary question, it takes more time to find the officer."

"This is happening just because of negligence by banks. We are warning them through circulars at this point," he added.

Mohammad Hatem, first vice-president of Bangladesh Knitwear Manufacturers and Exporters Association, said, "Most of the bank branch officials dealing in foreign exchange do not know the law properly."

"That is why sometimes it takes more time for exporters to complete the necessary clerical work. The Bangladesh Bank needs to be strict in this regard," he continued.

Hatem thinks that if negligence by the banks is found in this case, it is necessary to cancel the licences of those branches.

In this regard, the Bangladesh Bank's Executive Director Humayun Kabir said, "Due to lack of manpower, many unskilled workers are working in authorised dealer (AD) branches engaged in foreign exchange transactions."

"For this reason, sometimes they do not understand which applications they can decide on their own and which applications have to be forwarded to the central bank," he said.

The senior official of the Bangladesh Bank hinted that if banks continue to neglect their responsibilities in this way, the regulator will be tougher in the future.