BB asks banks to smooth out LC process ahead of Ramadan

The Bangladesh Bank has instructed banks to ensure a smooth letter of credit (LC) opening process to better facilitate the imports of essential commodities ahead of the upcoming Ramadan – a month of self-restraint.

This directive came at a bankers’ meeting held at the central bank headquarters on Sunday.

Bangladesh Bank Governor Abdur Rouf Talukder presided over the meeting. Association of Bankers, Bangladesh (ABB) leaders and other senior officials of the central bank were present there as well.

After the meeting, the central bank’s new Executive Director and spokesperson Mezbaul Haque told reporters, “The regulator has instructed banks to open letters of credit as per the requirement ahead of Ramadan.

“We also instructed banks to step up agriculture loans to boost food production. We have already achieved 33 per cent of agri loans target during the first four months of this fiscal year.”

Replying to a question about the recent loans irregularities in Islami Bank Bangladesh, Haque said, “The Islami Bank is a factor in our economy because it is the largest private bank in Bangladesh. We are always monitoring their activities as a regulator.

“The central bank started an inspection on the bank after the alleged loans irregularities came to light, and the inspection is yet to be completed.”

‘No reason to panic’

Commenting on the recent deposit withdrawal trend from IBBL, the central bank spokesperson said, “The depositors have no reason to panic. Depositors’ money with the bank is fully protected and safe.”

ABB Chairman Selim RF Hussain said, “This is very good news that the trade deficit has largely gone down.  We hope that the ongoing stress on foreign currency will ease soon.”

Commenting on the deposit withdrawal trend in the banking sector, he said, “Some money has been withdrawn from banks, but the clients are now coming back to the banks.”

Replying to another question on the interest rate cap withdrawal, Hussain – also the Brac Bank managing director – said “The central bank verbally instructed us to set the interest rate at maximum 12 per cent on consumer loans.

“We have already implemented the recent verbal instruction of the central bank, and imposed a 12 per cent interest rate.”

However, the central bank spokesman pointed out, “The regulator has yet to take any decision to withdraw the interest rate cap or reset the cap.”

Mezbaul added, “The central bank instructed banks not to ask the depositors too many questions when they deposit up to Tk 10 lakh, because the banking regulator has learned that sometimes, the depositors are being held accountable by bankers.”

The Managing Directors of the City Bank, Trust Bank, Dhaka Bank, Meghna Bank, National Bank, Janata Bank, Islami Bank and others were present in the meeting.