BB streamlines drawing arrangement rules with overseas exchange houses
Wednesday, 10 October 2007
FE Report
The Bangladesh Bank (BB) has streamlined its guidelines relating drawing arrangements with overseas exchange houses through increasing their security deposits to avoid any financial risks.
The central bank took the move against the backdrop of First Solution Money Transfer Limited financial scam, official sources said.
"We have taken such measures to check any incident like that of First Solution Money Transfer Limited in London," the BB Governor Salehuddin Ahmed told reporters Tuesday.
He also said the central bank tightened its earlier guidelines to ensure smooth inflow of remittances.
In July last, the London-based company closed down all of its branches after allegedly misappropriating 1.7 million UK pound starling remitted by the expatriate Bangladeshis living in the United Kingdom.
Under the amended guidelines, the overseas exchange houses must have licences from authorities concerned to run their money transfer business properly.
The exchange house will not be able to use the monogram of the central bank of Bangladesh and not to right words 'the Bangladesh Bank approved.' They will also not be able to write word 'bank' but can write money transfer, exchange, remittance.
The houses have to ensure deposit of all remittances to local banks through their NOSTRO account within 24 hours following the receipt of the deposits.
The central bank raised the security deposit to US$50,000 from $25,000 in cash or bank guarantee in Non-Resident Dollar Account (NRDA) for draft-drawing. But the amount will be Tk 1.0 million for Non-Resident Taka Account (NRTA).
For electronic fund transfer (EFT), the amount has been re-fixed at $25,000 from $10,000 earlier for NRDA and that for NRTA at Tk 0.5 million from Tk 0.20 million.
The security deposit has been fixed at $50,000 for money transfer using pin code system for NRDA while equivalent to $25,000 will be deposited for NRTA to minimise risk for such fund transfers.
The amended guidelines imposed a bar on the exchange houses to appointing sub-agents for collecting remittances from non-resident Bangladeshis. The exchange houses will have to obtain approval from authorities concerned if they run their businesses in more than one country.
"The exchange house must follow the exchange rates, which will be sent by the local banks to remit their funds," the central bank said in its amended guidelines that were sent to all commercial banks Tuesday for taking necessary measures.
The local banks will not be allowed for giving any overdrawn and lead time facilities to the overseas exchange houses, according to the guidelines.
The central bank gave approval to establish 258 exchange houses and for setting up 723 drawing arrangements at abroad to expedite the flow of inward remittances since June 30, 2007.
The Bangladesh Bank (BB) has streamlined its guidelines relating drawing arrangements with overseas exchange houses through increasing their security deposits to avoid any financial risks.
The central bank took the move against the backdrop of First Solution Money Transfer Limited financial scam, official sources said.
"We have taken such measures to check any incident like that of First Solution Money Transfer Limited in London," the BB Governor Salehuddin Ahmed told reporters Tuesday.
He also said the central bank tightened its earlier guidelines to ensure smooth inflow of remittances.
In July last, the London-based company closed down all of its branches after allegedly misappropriating 1.7 million UK pound starling remitted by the expatriate Bangladeshis living in the United Kingdom.
Under the amended guidelines, the overseas exchange houses must have licences from authorities concerned to run their money transfer business properly.
The exchange house will not be able to use the monogram of the central bank of Bangladesh and not to right words 'the Bangladesh Bank approved.' They will also not be able to write word 'bank' but can write money transfer, exchange, remittance.
The houses have to ensure deposit of all remittances to local banks through their NOSTRO account within 24 hours following the receipt of the deposits.
The central bank raised the security deposit to US$50,000 from $25,000 in cash or bank guarantee in Non-Resident Dollar Account (NRDA) for draft-drawing. But the amount will be Tk 1.0 million for Non-Resident Taka Account (NRTA).
For electronic fund transfer (EFT), the amount has been re-fixed at $25,000 from $10,000 earlier for NRDA and that for NRTA at Tk 0.5 million from Tk 0.20 million.
The security deposit has been fixed at $50,000 for money transfer using pin code system for NRDA while equivalent to $25,000 will be deposited for NRTA to minimise risk for such fund transfers.
The amended guidelines imposed a bar on the exchange houses to appointing sub-agents for collecting remittances from non-resident Bangladeshis. The exchange houses will have to obtain approval from authorities concerned if they run their businesses in more than one country.
"The exchange house must follow the exchange rates, which will be sent by the local banks to remit their funds," the central bank said in its amended guidelines that were sent to all commercial banks Tuesday for taking necessary measures.
The local banks will not be allowed for giving any overdrawn and lead time facilities to the overseas exchange houses, according to the guidelines.
The central bank gave approval to establish 258 exchange houses and for setting up 723 drawing arrangements at abroad to expedite the flow of inward remittances since June 30, 2007.