Connect with us

Bank-Insurance

Bangladesh Central Bank Surpasses IMF Benchmark, Ends 2023 with $17.7bn Reserves

Published

on

bank

As the year concluded, Bangladesh’s central bank reported net reserves of approximately $17.7 billion in December, surpassing the International Monetary Fund’s (IMF) benchmark and positioning the country favorably for the third tranche of a $4.7 billion loan package. The IMF condition targeted a net reserve of $17.48 billion by December 2023, a goal that the central bank not only met but exceeded.

Despite facing a reserve crisis, the central bank achieved this milestone while selling a record $6.7 billion to banks during the first six months (July-December) of the fiscal year 2023-24. In the previous fiscal year, the corresponding figure was $7.8 billion. The central bank’s robust dollar sales were driven by the necessity to fulfill import obligations, particularly for daily essentials such as oil, gas, and fertilizers, while simultaneously adhering to the IMF’s reserve maintenance conditions.

During this period, the central bank also managed to purchase $1.04 billion from banks, a notable increase compared to the previous fiscal year. Despite most banks experiencing a dollar shortage, the central bank strategically acquired dollars to bolster foreign exchange reserves.

To meet the IMF net reserve calculation, the central bank excluded obligations to the Asian Clearing Union (ACU) and bills due within a year. This adjustment resulted in a $4 billion difference between gross and net reserves, reinforcing Bangladesh’s adherence to international financial standards.

The central bank’s spokesperson, Md Mezbaul Haque, emphasized their commitment to maintaining forex reserves, engaging in both dollar sales and purchases from banks. The acquisition of dollars amid a shortage involved transactions with banks facing difficulties in cash transactions, facilitating the central bank’s reserve management.

As of December 28, the central bank’s foreign exchange reserves stood at $21.7 billion based on the BPM-6 standard. Over the past three years, consistent dollar sales from reserves to commercial banks have been observed, primarily to settle import bills. The central bank’s proactive measures and strategic financial management have positioned Bangladesh favorably in international financial markets.

Amidst this, the dollar rate discrepancy in banks, where dollars are sold to the central bank at Tk110 while remittance dollars are collected at Tk109.50, raises questions. Importers, facing higher dollar rates than the declared rate, add complexity to the financial landscape. The central bank’s actions, including purchasing $200 million from Islamic Bank and an additional $100 million from various banks in late December, underscore its commitment to managing the country’s forex reserves effectively. Despite challenges, the central bank’s efforts contribute to stabilizing the financial environment and fostering economic resilience.

Share this

Bank-Insurance

Cenbank Prolongs Import Payment Terms for Raw Materials Until Dec 2024

Published

on

bank

The Bangladesh Bank (BB) has announced an extension for the payment period against imports of industrial raw materials from 180 to 360 days, a measure now set to remain in place until December 2024. This policy, initially scheduled to end in June of this year, has been prolonged to facilitate trade transactions, according to a BB circular issued today.

“To support trade transactions, it has been decided to extend the policy support until December 31, 2024. The extended usance period will not apply to imports under EDF loans, as previously stipulated. All other relevant instructions remain unchanged,” the circular stated.

Share this
Continue Reading

Bank-Insurance

Banks in Industrial Areas to Open June 14-16 for Eid Payments

Published

on

cenbank Monetary Policy bangladesh bank central imf reserve BB

To ensure timely payment of salaries and bonuses to garment industry workers before Eid-ul-Azha, the branches of banks in key industrial areas will remain open on a limited basis on June 14, 15, and 16.

The Bangladesh Bank (BB) issued a notification stating that bank branches in Dhaka metropolitan, Ashulia, Tongi, Gazipur, Savar, Bhaluka, and Narayanganj will operate on these days to facilitate financial transactions for garment sector employees.

Typically, Friday and Saturday (June 14 and 15) are weekly holidays, and Sunday (June 16) will be closed for Eid. Despite these closures, the BB has mandated that banks in industrial regions stay open to manage the disbursement of wages and bonuses and facilitate the sale of export bills.

Additionally, bank branches in Chattogram metropolitan and industrial areas will also be open to support garment workers’ payments and the processing of export bills.

The BB has instructed banks to coordinate with local authorities to ensure adequate security at the branches during this period.

Eid-ul-Azha, one of the most significant religious festivals for Muslims, will be celebrated in Bangladesh on June 17.

Share this
Continue Reading

Bank-Insurance

Cenbank Mandates Real-Time Reporting of Willful Defaulters

Published

on

bank

The Bangladesh Bank (BB) has issued new instructions to banks to submit data on willful defaulters to the Credit Information Bureau (CIB) database. This directive was issued on Tuesday, requiring immediate compliance from commercial banks and non-banking financial institutions (NBFIs).

In a circular released by the CIB of the central bank, banks have been instructed to report their June data in real-time starting July 1. The circular has been sent to top executives of banks for prompt execution.

This move follows an earlier initiative by the BB, outlined in a circular on March 12, aimed at identifying willful defaulters within the banking sector. The central bank also detailed actions to be taken against such defaulters.

According to the circular, any client who takes a loan anonymously and misuses it will be classified as a willful defaulter. Banks were directed to establish a ‘willful defaulter identification unit’ by April 9 to facilitate this identification process.

The circular further stipulates penalties for non-compliance. Banks that violate these conditions will face fines ranging from Tk 50 lakhs to Tk 1 crore. Continued violations will incur additional fines of Tk 1 lakh per day.

Share this
Continue Reading