Bangladesh Bank on Wednesday asked the managing directors of six banks to explain why they took advantage of the volatility in the foreign exchange market to make profits breaking banking norms.
The six banks are: Dutch-Bangla Bank, The City Bank, Prime Bank, Southeast Bank, Brac Bank, and Standard Chartered Bangladesh.
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On August 14, the BB directed these banks to attach their treasury heads to the human resource departments amid allegations of their involvement in gaining excessive profits ignoring rules.
The central bank on Wednesday also asked the six lenders not to transfer their profits from foreign exchange businesses between January and May to their income accounts. The profits must be kept in a separate account, according to the BB letter.
In case any of the banks have already transferred the profits to their income accounts, the action should be reverted.
Serajul Islam, spokesperson of the BB, said that the banks had been asked to reply to the BB letters in seven work days.
"We have asked them to identify the officials responsible for this. On top of that, the banks have to state the motive behind gaining of the excessive profits," he said.
In the last couple of months, a good number of banks made profits through unethical means as they purchased dollars at a lower rate from exporters and sold those at a much higher rate to importers, another BB official said.
Until August 14, importers had to purchase each dollar for up to Tk 120 while the exporters sold each dollar for as low as Tk 93. Thanks to the large gap between the buying and selling prices, the banks between January and June made up to seven times the profit they made during the same period last year, according to the data from the balance sheet of 11 banks.
On Wednesday, banks offered a greenback for Tk 105 to Tk 106 to importers.
Banks in the country have to sell and buy dollars based on the inter-bank exchange rate set by the central bank. The USD traded at Tk 95 on the platform on Wednesday.
As per the banking norms, lenders are allowed to offer Tk 1 less from the interbank rate while buying dollars from exporters. They can sell greenbacks, adding Tk 1 to the inter-bank rate. Banks have been following this norm for years until April, when instability in the forex market deepened.
BB on August 14 asked banks to follow a rational difference, not more than Tk 1, between the buying and selling rates.
The country's foreign exchange market has been facing challenges since the end of the last year because of the pandemic and the war between Russia and Ukraine.
Higher imports, lower-than-expected export receipts and falling remittance have sent the reserves below $40 billion.