Banks are asked to encash the value-added portion of export proceeds within the next working day to help improve supply of foreign exchange to the money market, officials say.
The central bank also directs all the authorized dealer (AD) bankers to encash the value-added portion of repatriated export proceeds in local currency -Bangladesh Taka (BDT) -before parking the eligible portion in a single pool for back-to-back payments.
The instructions are conveyed through notification issued by the Bangladesh Bank (BB) Sunday, in the wake of strains on the country's foreign-exchange reserves following higher import payments amid a global inflation as well as lower inflows of the greenback.
The encashment of the value-added portion and the parking of the remainder in a single pool will be executed within the following business day on receipt of export proceeds in nostro accounts of designated authorized dealer (AD) banks, it adds.
The same day, the BB also issued another notification directing the banks regarding the process of export proceeds received through banks other than exporters' banks.
"We've issued two circulars in line with the Association of Bankers, Bangladesh (ABB) and the Bangladesh Foreign Exchange Dealers' Association (BAFEDA) proposals to help improve supply of the greenback to the country's foreign-exchange market," a BB senior official told the FE Monday.
He also said it will also help ease the ongoing pressure on the forex market slightly.
Earlier on Sunday, the ABB and BAFEDA said in their proposals that all export proceeds to be converted to local currency with the designated exposure-taking AD bank handling, negotiating the export documents and receiving the export proceeds.
They also said transfer through Foreign Demand Draft (FDD) or any other transfer mode in the foreign currency (FC) would not be allowed from the designated export-handing AD bank to another AD bank for conversion to local currency.
"Also to be noted that the unencumbered part of the value-added portion of the export proceeds in FC to be converted to local currency with the designated/ exposure-taking AD bank by the following business day upon receipt of the proceeds in the nostro accounts of the respective AD bank," they noted.
Talking to the FE, a senior member of the BAFEDA said it would help stop speculative higher rates of the foreign currency on the market by the exporters.
"Such practice influenced upward movement of the greenback in the market," the BAFEDA member explained.
Market operators, however, say most of the banks purchase value-added portion of the export proceeds from other banks' clients by offering higher rates bypassing the existing regulations.
They also indentified two major causes-offering higher rates to the overseas exchange houses engaged in remitting money alongside encashment of export proceeds of other banks' clients- which were mainly responsible for creating volatility on the country's forex market in recent months.
Sources, however, say the central bank started inspection into alleged unusual movement of the US dollar in two more leading private commercial banks on Monday.
The BB has already completed similar on-site inspections into 16 banks, including four state-owned commercial banks (SoCBs), to find out alleged 'distortion' on foreign-exchange rate by the banks concerned.
Rate distortion means banks charge higher price of the US currency bypassing their announced rates particularly for BC (bills for collection) selling and TT (Telegraphic Transfer) clean.
The teams have been assigned to check the allegation of quoting higher rates to the overseas exchange houses engaged in remitting money alongside encashment of export proceeds of other banks' clients, they added.
However, the proceeds-repatriating banks have been instructed to transfer the funds into FC to exporters' banks designated for export transactions.
In case of payment against export bill discounting or early payment arrangement in FC by other banks or offshore banking operations, the FC fund shall be transferred into designated banks.
"Export proceeds repatriated through banks of buying agents shall also be transferred into FC of exporters' banks," it notes.
According to the notification, designated banks will convert the encashable portion of foreign currency in BDT and make that available to exporters' accounts maintained with them.
Conversion of export proceeds is to be executed through designated banks within the following business day on receipt of the funds in their respective accounts, it adds.
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