Banks warned against misrepresenting country’s trade policy
The Bangladesh Bank alleged this at a time when many global investors have been exploring options to shift their manufacturing units from China amid the mounting US-China trade war
The central bank accused banks – dealing with foreign customers – of putting the economy at stake by misrepresenting the country's liberal trade policy to potential investors.
The Bangladesh Bank, in a circular on Wednesday, said that a liberal trade policy was adopted in the 1990s and is still in place, plus the central bank has been issuing guidelines to the authorised dealers when required.
It made the allegations at a time when many global investors have been exploring options to shift their manufacturing units from China amid the mounting US-China trade war.
An official of the central bank told The Business Standard that the banks are mostly unaware of the government's policy of attracting foreign direct investment and that is why many of them fail to provide foreign customers with the required guidelines.
As a result, many of the potential investors have a wrong impression about the country's liberal trade policy, the official said, adding that this prompted the central bank to come up with the circular.
It has been observed that in recent times, the authorised dealer banks were providing confusing information to their customers without knowing the updated information about the country's foreign exchange system.
The banks were telling customers that an approval from the Bangladesh Bank would be required even for the purposes which were prioritised in its policy, the circular said.
Mentioning foreign exchange transactions as a means to connect with the global economy and act as a gateway to attract foreign direct investments, the circular said the banking system and its associates play a vital role in doing so.
Representing the country's transaction policy as controlled may damage the country's economy and hinder economic progress even after having liberalised trade.
The Bangladesh Bank instruction, issued to the chief executives of all the authorised dealer banks, also asked all concerned to keep updated and informed, and cooperate with customers and foreign investors accordingly.
Meanwhile, the central bank, in another circular on Wednesday, warned the authorised dealer banks of measures for unnecessary delays in providing acceptance of delivery documents for complaint documents and arrange payment under inland back-to-back letters of credit (LC) or usance LCs or sight LCs.
It also asked the banks to exercise best practices to effect payments within the stipulated time, against compliant documents, without making excuses.