BB asks banks to expedite

The central bank has asked the commercial banks to take effective measures for expeditious realisation of their export proceeds to help meet the growing demand for liquidity in the market. The advice came at a bankers meeting held in the central bank Wednesday with Bangladesh Bank (BB) Governor Atiur Rahman in the chair. The central bank has taken the latest move against the backdrop of a big gap between export shipments and receipts, involving nearly US$2.0 billion, officials said. "We've requested the top bankers to make sure the officials at the export desks work more aggressively in the collection of export proceeds," Senior Deputy Governor of the BB Nazrul Huda told reports after the meeting. It is not irregularity, he said, adding that the existing Foreign Exchange Regulation Act allows up to four months for export proceeds repatriation. However, due process of collection of export bills payable at sight should normally take not more than a month. "The banks themselves can and should do much more to improve market liquidity further, just taking steps for quicker repatriation of proceeds of booming exports of their clients," the BB Governor Atiur Rahman said while speaking at the meeting. He also urged the chief executive officers of the banks to make sure that export desk staffs of their foreign exchange branches, officially known as AD branches, are active in timely collection of export bills from abroad as the import desk staffs do for meeting the import bill payments. Regarding credit-deposit ratio (CDR) of the banks, the deputy governor said nine banks have over 85 per cent CDR which is now declining. "We're hopeful that the banks will be able to bring down their CDR within 85 per cent by the end of June 30," Mr Huda said. The central bank earlier asked the commercial banks to bring down their CDR at a safe limit by June 30 this year. The conventional commercial banks will have to bring down their CDR to 85 while Sharia-based Islamic banks to 90 within the timeframe, set by the BB on February 20 last. Average CDR of all banks is now 82 per cent, the deputy governor added. The central bank has ruled out liquidity crunch in the banking sector saying that there is no liquidity crisis in the banking system. "There is no liquidity crisis in the banking system but there is a pressure," Mr Huda said while replying to a query. He also said there exists some pressure on liquidity because of the higher growth in the export and import businesses in line with the overall economic activities. The deputy governor also warned the banks to stop unhealthy competition among themselves for avoiding risk saying that the BB is monitoring their activities closely. "The banks will have to maintain the BB's rules and regulations properly for reflecting the real financial position in their balancesheets," Huda said adding that the central bank will take hard line in this connection. The warning came when it was detected that some banks were not following the BB's rules and regulations relating to classification, declassification and rescheduling of loans. Chairman of the Association of Bankers Bangladesh (ABB) K Mahmood Sattar told reporters that there is no liquidity crisis in the banking system but some banks have mismatched between their liabilities and assets. "The liquidity shortfall has eased gradually. It will improve by June this year," Mr Sattar said adding that the central bank has advised them to encourage importers for importing essentials items including edible oil to increase supply of the essentials in the month of Ramadan.