The Bangladesh Bank has sought explanation from six more banks over their alleged involvement in capturing excessive profits from questionable dollar dealings, which hit all in knock-on impact, officials said on Wednesday.
Managing directors (MD) and chief executive officers (CEOs) of five private commercial banks (PCBs) and one foreign commercial bank have been asked to submit the explanation to the department concerned of the Bangladesh Bank (BB) within seven working days.
The central bank issued a letter seeking explanations about alleged irregularities relating to foreign-exchange feelings that fueled volatility on the market recently.
The central bank made the latest moves after completing a special inspection into the banks for detecting alleged irregularities related to foreign exchange that fueled volatility on the market during the January-July period of the current calendar year.
Six teams began on-site inspections into the banks on August 22, focusing alleged higher exchange gains through 'unethical' practices during the period under review.
During the probe, the teams had also been assigned to the task of collecting information on corporate deals, inter-bank transactions, customer forward, net revaluation gains and regular gains from customers.
Locking their profits, the central bank on August 17 served show-cause notices to top executives of six banks for their alleged machinations fuelling volatility on the forex market through unethical exchange gains.
The central bank issued the notices after more than a week of taking action against treasury heads of the banks for their alleged involvement in netting windfalls through unethical practices in foreign-currency exchange.
On August 8, the central bank had asked MDs and CEOs of the same banks to relegate their treasury heads to the human resources (HR) department immediately on the same ground.
In May 2022, the central bank 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 prices of the US currency bypassing their announced rates particularly for BC (bills for collection) selling and TT (Telegraphic Transfer) clean.
The teams had found that the banks did not show their foreign exchange deposited with overseas accounts, officially known as Nostro account, in their net open position (NOP) properly.
A Nostro account is an account that a local bank maintains with an overseas bank in foreign currency.
On August 14, the central bank asked bankers at a meeting for a review of the spread between sale and purchase rates of the greenback, limiting the margin to Tk1 to help bring stability in the country's forex market.
Meanwhile, the central bank is providing the US dollar as foreign-currency liquidity support to scheduled banks continuously for managing the forex-market volatility.
As part of the ongoing moves, the central bank sold $40 million more directly to three state-owned commercial banks Wednesday to help them meet a growing demand for the greenback as global price rises have led to import-cost escalation with its resultant pressures on reserves of Bangladesh, as also of many other countries.
It has so far injected $2.68 billion from the reserves directly into commercial banks as liquidity support for import payments in the current FY23.
In FY22, the central bank sold $7.62 billion from the reserves to the banks for the same purpose.
