Some banks charge over Tk93 per dollar for LCs, flouting central bank’s verbal instruction

A number of commercial banks on Wednesday showed on paper that they were settling import letters of credit (LCs) at Tk93 per dollar as per the central bank's verbal instruction, but in reality, they were charging more than the specified amount.

The head of the treasury department of several banks told The Business Standard they could not collect dollars at Tk93, so they had to charge more for the LCs.

A policy-making official of a private bank told TBS, "We have to collect dollars from the money exchange houses at a rate above Tk95. Today (Wednesday) one exporter did not sell it even at Tk95.50 per dollar as he wanted more. Due to these reasons, we have to charge more for the LCs."

Last Tuesday, the Bangladesh Bank verbally instructed the commercial banks to keep the LC settlement rate at Tk93 for importing goods as some banks on Monday charged a slightly higher rate.

At a virtual meeting held a few days ago, the heads of treasury departments of all the banks in the country decided not to give more than Tk93 per dollar to the exchange houses. However, most of the banks are not abiding by that decision.

Meanwhile, the central bank sold $64 million on Wednesday.

The price of the dollar reached Tk92.80 yesterday. On Tuesday, the dollar price reached Tk92.80 from Tk92.50 on Monday.

As the forex reserve in the country has been declining, the dollar reserve in the country stood at $41.44 billion on Tuesday, which was $48.06 billion in August.

For the last three days, the call money rate in the banks has been the highest in the last two years.

Banks lent money among themselves at 5.02% on Wednesday – the same as Monday and Tuesday.

Previously, the call money rate reached Tk5.03% on 16 June 2020.

Generally, the rate at which one bank pays interest on the money borrowed from another bank is known as "call money rate".