27 banks asked to explain credit card rule violation

The Bangladesh Bank has directed 27 banks to explain why they allowed 71 credit card users to spend more than $12,000 each – which is the banking regulator’s annual limit for card-based USD transactions abroad.

It sought explanation in this regard from managing directors and chief executive officers (CEOs) of those lenders in multiple phases last month, insiders say.

Speaking to The Business Post, Bangladesh Bank Executive Director and spokesperson Md Serajul Islam said, “The central bank found that 71 credit card users of 27 banks transacted USD well over the annual limit.

“After Bangladesh Bank inspection teams found such irregularities, we sought explanations from the MDs and CEOs of those lenders about this violation.”

Serajul however declined to name the banks that had allowed the violation of the credit card transaction limit. BB inspection teams’ findings show those 71 credit card users spent up to $20,000 each through their cards outside the country.

Amid the forex crisis, the Bangladesh Bank in July began carrying out inspections at banks and found several ones taking advantage of the volatility in the foreign exchange market to make abnormal amounts of profit.

Later on August 8, the Bangladesh Bank ordered six banks to transfer their treasury heads to human resources departments over their role in the volatility in the country's foreign exchange market.

The central bank also sought explanations from managing directors of six private banks – Dutch-Bangla Bank, City Bank, Prime Bank, Southeast Bank, BRAC Bank and Standard Chartered Bangladesh.

The banking regulator took such initiatives during a period when the country’s foreign exchange reserves were decreasing day by day due to the growing import payments triggered by a supply chain disruption – a ripple effect of the Russia-Ukraine war.

The forex reserves stood at $38.91 billion on Sunday, down by around $9 billion when compared year-on-year, according to the latest data from the Bangladesh Bank.

Importers are paying banks up to Tk 109 – Tk 110 per USD, whereas banks are buying it for Tk 95, central bank officials said.