Banks' treasury chiefs seek waiver of cenbank penalty

Treasury heads of several banks, fined by the Bangladesh Bank for buying and selling dollars at above-official rates, have appealed to the central bank for a waiver of the penalty.

Confirming the matter, a senior official of the central bank, wishing not to be named, told The Business Standard, "Some of the fined treasury chiefs have submitted applications to the board of directors of the central bank seeking a waiver of the penalty. The board will decide on the appeals at its next meeting."

The treasury heads of 10 banks were fined Tk1 lakh each by the central bank on 28 September.

Stating that not all banks were fined on the same charges, the official said most of the banks were fined for collecting remittances and selling dollars to other banks or to customers at high prices. According to central bank rules, banks can apply for a waiver of penalty by explaining their position.

In their applications, banks argued that the treasury heads did not personally benefit from buying and selling dollars and therefore the fines should be waived.

Banks that have not yet applied for penalty waivers are also considering doing so.

Officials of the banks that appealed the central bank's penalty told TBS that they are concerned about the negative impact the fine will have on their employment records and future career prospects. The fine could prevent them from becoming managing directors of any bank in the future.

The central bank previously issued show-cause notices to the heads of treasury departments at 10 banks, alleging that they bought dollars at high prices and asking them why disciplinary action should not be taken.

The banks are – Social Islami bank, Al-arafah Islami bank, Mercantile bank, Modhumoti bank, Midland bank, Brac bank, EXIM bank, Premier bank, Shahjalal Islami bank and Trust bank.

The banks responded to the notice but were fined for not being acceptable to the central bank.

The central bank sent letters to the banks saying, "The reply submitted by you regarding the additional cost of buying and selling dollars could not be accepted after consideration. Therefore, as per Section 109 (7) of the Bank Companies Act, 1991, your Head of Treasury Department is personally liable and a penalty of Tk 1 lakh has been imposed."

Banks were also directed to inform the Department of Foreign Exchange Policy by depositing the penalty amount in the "General Accounts – Head Office" at the Motijheel office of the Central Bank within the next 14 days.

The deadline given to banks will end next week.