Banks asked to pay beneficiaries only after getting forex funds

FE Team | Published: July 09, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

FE Report
The Bangladesh Bank (BB) has asked the commercial banks to make payments to beneficiaries only after receiving equivalent foreign currency funds from the overseas exchange houses to avoid any financial risks.
The central bank has taken the step against the backdrop of financial scam involving London-based First Solution Money Transfer Limited, official sources said.
"We have asked the banks to make payment only after receiving their foreign currency funds from the overseas exchange houses through NORSTRO account," a BB senior official told the FE Sunday.
He also said the central bank has asked the banks to make it sure that the overseas exchange houses do not use BB monogram and refrain from writing the words 'the BB approved.'
Regarding the First Solution Money Transfer Limited financial scam, the BB official said the Bangladesh High Commission in London is closely watching the overall situation.
The central bank also asked the banks, which had drawing arrangements with the First Solution Money Transfer Limited, to clear the payments to the beneficiaries on the basis of the 'cover funds'.
The cover fund is the amount of foreign currency, which has been deposited or to be deposited as per drawing arrangement by the overseas exchange houses to the NOSTRO accounts of the local commercial banks.
"The local bank concerned is undertaking credit risk as well as exchange risk," a senior treasury official of a commercial bank told the FE.
He also said the BB's instructions will help keep stability in the country's inter-bank foreign exchange market as the banks will quote almost uniform exchange rates for the exchange houses aboard.
The state-owned banks may be able to attract more remittances from the United Kingdom after the privately-owned First Solution Money Transfer Limited financial scam, the treasury official observed.
The London-based company reportedly closed down all of its branches after misappropriating a large amount of money remitted by the expatriate Bangladeshis living in the UK.