Home Business 6 banks apologize for dollar overcharging

6 banks apologize for dollar overcharging

The Bangladesh Bank on Thursday ordered six banks to spend half of the profits they earned from their forex businesses unethically between May and June for corporate social responsibility (CSR) programs.

The six banks — Brac Bank, Dutch-Bangla Bank Ltd, The City Bank, Southeast Bank, Prime Bank, and Standard Chartered Bangladesh — have also sought an apology from the Bangladesh Bank for their actions.

On August 17, the central bank asked the lenders to set aside the profits in a separate account.

As per a central bank probe, the banks sold the American dollar at an excessively high rate and purchased them at a much lower rate from exporters, cashing on the volatility in the forex market.

For instance, many banks bought each dollar for Tk93-Tk 94 in May and June but sold them at Tk110-Tk 112.

According to the half-yearly balance sheets of a dozen banks, profits from their foreign exchange businesses surged 770% year-on-year.

The Bangladesh Bank, in its letters to banks, said the lenders can make a profit by complying with banking rules, policies and ethics.

It is not expected that a lender will make excessive profit unethically, harming the economy, it also said.

The central bank initiated a probe after receiving allegations that banks were making excessive profits by taking advantage of the dollar shortage.

After reviewing the feedback from the banks, the central bank said it was the first time excessive profits were made.

It said banks will be able to transfer the rest of the profit earned from the foreign exchange business to their income accounts after setting aside 50% of the funds for CSR activities.

It also allowed banks to reinstate the treasury chiefs, who were removed on August 8 for their roles in the volatility of the forex market.

The banks have sought an apology from the central bank and gave their word that they would not breach banking rules in the future, said Md Serajul Islam, spokesperson of the central bank.

This prompted the central bank to take the latest decision, he added.


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