Bangladesh Bank Governor Abdur Rouf Talukder has issued strict instructions to top bankers to prevent under-invoicing as part of an effort to boost import duty collection and curb hundi transactions amid a dollar crisis.
The governor conveyed these instructions during a meeting with the managing directors of all banks operating in the country on Wednesday, according to Bangladesh Bank Spokesperson Mezbaul Haque.
Hundi is an informal cross-border money-transfer system that bypasses the legal banking system.
Mezbaul Haque mentioned that during the meeting, the governor emphasised that the central bank consistently monitors imports, carefully reviewing all types of imports to ensure alignment with international market standards.
"As a result of our monitoring, over-invoicing has reduced a lot, but under-invoicing is still not being controlled," he quoted the governor as saying.
Therefore, the governor instructed the managing directors of banks to properly monitor the under-invoicing, he added.
He said the governor at the meeting also mentioned that the central bank has imposed restrictions on imports and introduced monitoring since the beginning of the country's dollar crisis.
A central bank official present at the meeting told TBS that over-invoicing has come under control by about 80%. But importers are turning to under-invoicing as one of their tax evasion tools.
"If under-invoicing is reduced, the government's import tax will increase, and the trend of hundi will also decrease. As a result, the inflow of remittances will increase," he added.
The official said in the meeting that banks sought relaxation over the mandatory fingertips of loan guarantors. But the governor referred to the High Court order and said the procedures must be complied with.
In the meeting, Abdur Rouf Talukder also instructed the top bankers to strengthen their collection of loans through other means instead of relying on courts alone, he added.
According to data from the central bank, there are 214,282 cases pending in the money loan court. Out of this, the amount of outstanding loans is Tk2.07 lakh crore. The governor has ordered the banks to pay more attention to the recovery of these loans.
At the end of March this year, the amount of defaulted loans in the banking sector stood at over Tk1.31 lakh crore. In other words, 8.80% of bank loans are now in default.
Salim RF Hussain, chairman of the Association of Bankers, Bangladesh (ABB) and managing director of Brac Bank, said that the country is facing many challenges at the moment.
"They were discussed in detail, and the governor gave instructions on how to prevent them," he told reporters after the meeting.
"Although our trade deficit has reduced significantly, the financial accounts are still negative," he said.
When asked whether the banks are facing a liquidity crisis at the moment, the ABB chairman said that there is a liquidity crisis. But some banks have this problem. Not all banks are in crisis. The governor asked the banks to take the necessary measures to solve the crisis.