6 more banks investigated for price gouging dollars

An investigation has begun to delve deeper into alleged forex misdealing by six more commercial banks that added fuel to volatility in the market.

Six teams of Bangladesh Bank (BB) have been sent out to conduct fresh inspections against five private commercial banks (PCBs) and one foreign commercial bank (FCB) in this connection, officials said.

The teams got down to doing on-site inspections on Monday, to investigate alleged higher exchange gains through unethical practices during the January-July period of the current calendar year, they added.

The investigators have 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 during the period under review.

The inspectors have also been advised to examine the authenticity of exchange gains considering the volume of foreign trade, which has increased significantly in recent months, according to the officials.

On August 17, the central bank served show-cause notices to top executives of six banks for their alleged involvement in fuelling volatility on the forex market through unethical exchange gains, locking their profits.

The central bank issued the notices after more than a week of taking action against treasury heads of the six banks for their alleged involvement in gaining excessive profit through unethical practices in foreign-currency exchange.

Earlier on August 8, the central bank had asked managing directors (MDs) and chief executive officers (CEOs) of the same banks to relegate their treasury heads to human resources (HR) department immediately on allegation of fuelling up the foreign-exchange mark recently through quoting 'unusual' higher prices of the greenback.

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 for 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.

Meanwhile, the Bangladesh Bank continued to provide its foreign-currency support to scheduled banks for managing the forex-market volatility.

Under the ongoing moves, the central bank sold $67 million more directly to three SoCBs on Monday 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.

The central bank has so far injected $1.92 billion from the reserves directly into commercial banks as liquidity support for import payments in the current fiscal year FY23.

In FY22, the central bank sold $7.62 billion from the reserves to the banks for the same purpose.