No reduction in loan exposure, foreign banks claim

A number of foreign banks have assured the Bangladesh Bank that they did not reduce loan exposure with local banks, and did not suspend any transactions either.

Representatives from those banks made the disclosure to Bangladesh Bank Governor Abdur Rouf Talukder at a meeting, held at the central bank headquarters in Dhaka on Tuesday.

Several local banks had recently claimed that they faced problems while opening letters of credit (LCs), as foreign banks raised interest and charges against credit facilities amid the USD crisis in Bangladesh.

A leading newspaper had also reported that some foreign banks have suspended new credit facilities to local banks.

Under the circumstances, the banking regulator organised a discussion with the representatives of foreign banks and financial institutions on Tuesday regarding import financing by external sources.

Bangladesh Bank governor Abdur Rouf Talukder presided over the meeting.

The representatives of Mashreq Bank, Commerzbank AG, J P Morgan,  ICICI Bank, Development Bank Singapore,  Deutsche Bank AG,  Standard Chartered Bank, HSBC,  City Bank NA, Bangladesh Foreign Exchange Dealers Association (BAFEDA) and the Associations of Bankers (ABB) were present there as well.

Representatives of the Foreign Exchange Investment Department and Forex Reserve and Treasury Management Department were also present at Tuesday’s meeting.

Speaking to The Business Post, a senior official of the central bank said the foreign lenders have assured the BB governor that they did not raise interest and charges against the credit facility amid the forex crisis.

Meanwhile, Bangladesh Foreign Exchange Dealers Association (BAFEDA) Chairman Afzal Karim said, “The meeting discussed the present condition of the country’s foreign exchange market.”

The local banks help businesses import goods with support from foreign lenders. A foreign bank provides a credit facility to local banks and entrepreneurs to pay import bills. The foreign lenders take commissions and interest against the credit facility, central bank sources said.