Home ›› 17 Oct 2022 ›› Front
United Commercial Bank Ltd (UCB) and Bangladesh Commerce Bank Ltd (BCB) have failed to clear import bills to the State Bank of India on time, prompting an Indian exporter to seek the Bangladesh Bank’s intervention to realize the fund.
Smriti Products Private Limited (SPPL)—a dairy product manufacturer and distributor--exported two hundred metric tonnes of white gold brand skimmed milk powder to two Bangladeshi companies--Olympic Industries Ltd (biscuit and confectionery unit) and City Commodities through UCB and BCB.
The products reached Chittagong Port on April 29 of this year but the two local banks are yet to pay the import bills to SBI.
Against this backdrop on September 5 of this year, SPPL wrote to the BB seeking its intervention to settle the import bill payment.
SPPL Director Aman Goel, in the letter, said, “As per terms and conditions of the documentary letter of credit, negotiable documents were presented to our bank (state bank of India, Sadar Branch) on May 17 of this year for payment and accordingly our bank couriered the same to applicant’s bank—UCB and BCB—on May 20 and also queried about the solved date June 2 against which we have not received any payment till date.”
“We have received numerous communications from State Bank of India, Sadar branch, stating that they have not received payments from the applicant’s bank, despite fulfilling all applicable banking procedures,” reads the letter.
The Indian company has explored all possible avenues to receive payment against the mentioned letter of credit (LC), according to the letter.
“Since we have no other option left, we are writing this letter for kind attention to help us to receive payment against the mentioned LC which is long overdue,” said Goel in the letter.
Asked about the issue, BCB Deputy Managing Director Kazi Md Rezaul Karim told The Business Post that the customs authority found a higher level of radiation in the milk powder and barred importing the product. That is why we did not pay the import bills.
“We also found a discrepancy in the documents and already returned the documents to the exporter bank,” he added.
UCB Managing Director and CEO Arif Quadri said, “Basically when we found a discrepancy in the export and import documents, we delayed in making import bill payments. Otherwise, there is no scope to delay the import bills.”
He said his bank was not aware of the non-payment of import bills as claimed by the Indian company.
However, SPPL representative Mohammad AA Sardar said that the import financing lenders did not speak the truth because the radiation level is not high. “The lenders did not show any valid documents about their allegations,” he said.
The lenders received the import documents at least 45 days before reaching the products in the Chittagong Port, he said. “So how can they check the products,” Sardar questioned.
As per the rules, banks should have to pay import bills or reply to the exporter bank if any discrepancy is found within five working days after receiving import documents, according to the SPPL representative in Bangladesh.
“The local importers demanded a 50 per cent discount from SPPL but we turned down the demand. That is why the bank is reluctant to pay the import bills,” he claimed.
“Why will our company offer a 50 per cent discount after exports? This is not legal and we have sought the central bank’s support to receive the import bills,” he said.
Following receiving the SPPL’s complaint, the Financial Integrity and Customer Services Department of BB is preparing to investigate the matter, according to officials of the central bank.
Banks can delay paying import bills if it finds any discrepancy in the documents but the respective bank needs to inform the exporter bank within five working days, said Mohammed Nurul Amin, the former chairman of the Association of Bankers, Bangladesh (ABB).
“If no discrepancies are found in the documents and banks fail to pay import bills on time, it is a crime,” he said.
This is a bad practice, sending the wrong messages to the international arena about the country’s financial sector, said Nurul Amin, also the former managing director of Meghna Bank and NCC Bank.
Echoing Amin, Mutual Trust Bank Managing Director and CEO Syed Mahbubur Rahman said that foreign banks raise charges and commissions for LC settlement and reduce the credit line for import payments due to such type of bad practices by some of our banks.
Recently, some foreign banks including Mashreq Bank, Commerzbank AG, J P Morgan, ICICI Bank, Development Bank Singapore, Deutsche Bank AG, Standard Chartered Bank, HSBC, and City Bank NA raised interest and charges against credit facilities for import payments amid the forex crisis in Bangladesh.
