To ease the dollar crisis, bankers have been asked to bring to the country export proceeds of nearly $2 billion that remain in their nostro accounts with foreign banks.
A nostro account is one that a bank holds in a foreign currency in another bank abroad.
The instruction came at a meeting held by the Bangladesh Bank with top executives of all commercial banks at its headquarters on Monday (25 July).
It was the central bank's first meeting with bankers after Abdur Rouf Talukder joined the central bank as governor.
The meeting mainly focused on the dollar crisis and clarification of a newly issued circular on loan rescheduling.
Md Serajul Islam, spokesperson and executive director of the Bangladesh Bank, later told reporters that if export proceeds are repatriated, it will be a big support in resolving the ongoing dollar crisis.
The Bangladesh Bank has sold around $7 billion to the commercial banks so far to reduce the volatility of dollar rate.
Currently, a large amount of export proceeds in the commercial banks' nostro accounts remains unrepatriated even after the due time. In this situation, the central bank asked bankers to take initiatives to repatriate those export proceeds, said a senior executive of a bank.
At the meeting, bankers raised the issue of the dollar crisis, saying the inter-bank exchange rate is unrealistic compared to the market rate, according to sources present at the meeting.
Selim RF Hussain, chairman of the Association of Bankers, Bangladesh (ABB), said the inter-bank exchange rate of dollars is Tk94 when the market rate is above Tk104, which is unrealistic.
He raised a demand to recognise the market rate to ease the dollar crisis, said sources present at the meeting.
In response to that, the governor assured the bankers that the central bank will work to make the inter-bank exchange rate realistic in line with market demand.
At the meeting, City Bank Managing Director Mashrur Arefin proposed to allow customers to open bank accounts from abroad through mobile apps to increase dollar inflow.
He said if banks have links with the passport database, then they can easily verify customer information and allow them to open bank accounts digitally.
In response to that, the Bangladesh Bank governor said the central bank will have a passport portal soon to introduce this option of opening accounts from abroad.
At the beginning of the meeting, the central bank governor clarified the loan rescheduling circular saying that the central bank's job is to make policy and banks will take the responsibility to reschedule their customers' loan.
Previously, the loan rescheduling proposals were sent to the central bank for approval which was not a good practice. The Bangladesh Bank has set the upper limit of the rescheduling period and banks will make their own policy.
The central bank governor asked bankers to let him know if they face any pressure from the board about rescheduling loan unduly.
Bankers appreciated the governor for letting banks to take decisions about rescheduling loans.
Mashrur Arefin told TBS the meeting was very positive. The new circular on loan rescheduling will establish corporate governance and transparency as bankers know their customers and who should be given the rescheduling facility.
He said it is the banks' job to reschedule loans, not the central bank's duty.
After the meeting, ABB Chairman Selim RF Hussain told TBS, "Reforms in the banking sector have started with this circular. There will be other reforms in phases."
He said the loan rescheduling process will be smoother and easier as the power of rescheduling loans will be transferred to the banks' boards. From now on, the full responsibility of default and loan rescheduling will be on the bank.
Sonali Bank Managing Director Ataur Rahman Prodhan told TBS that the circular on loan rescheduling has been issued at an appropriate time. As a result, the banks will regain their working speed.
"It will reduce defaulted loans at banks. The Bangladesh Bank is not actually responsible for rescheduling loans. The banks give loans, so it is their responsibility. So, if there is any problem, the banks will take responsibility," said Ataur Rahman Prodhan, who is also the chairman of Bangladesh Foreign Exchange Dealers' Association.
He also expressed his hopes that the volatility in the dollar market will pass soon.
At the meeting, bankers also demanded to raise the duty of luxury items like cars and stop sight LC (letter of credit) to discourage their imports.
A sight letter of credit refers to a document that verifies the payment for goods or services, payable once it is presented along with the necessary documents.