Non-AD banks likely to get BB permission

The Bangladesh Bank is likely granting permission to non-authorised dealer banks for buying and selling foreign currency in a bid to curb the dominance of illegal money changers.

According to central bank officials, the regulator’s Foreign Exchange Policy Department (FEPD) has taken the policy decision and will issue letters to the scheduled banks on August 14 in this regard.

The banking regulator plans to meet with the Association of Bankers, Bangladesh (ABB) and Bangladesh Foreign Exchange Dealers Association (BAFEDA) on August 14 to discuss this matter, and also the ongoing volatility in the foreign exchange market.

Currently, around 1,200 authorised dealers’ branches of banks and 235 licensed money changers have the central bank’s authorisation for trading foreign currency with travelers. Around 600 money changers are buying and selling foreign currency illegally, officials say.

At the end of June of this year, 10,980 bank branches are in operation. If the central bank allowed non-AD bank branches to transact foreign currency, all the branches will be able to buy and sell those.

On Thursday, the USD price stood at a record high Tk118 to Tk120 per dollar in the kerb market, while banks are selling the American greenback at Tk105 to Tk110 per dollar to travelers.

The BB official said after the BB’s grants permission, non-AD banks will also be able to buy and sell foreign currency to travelers.

As per the central bank rules, a money changer is permitted to hold a maximum of $25,000 at the close of each business day. Central bank officials said the cash beyond this limit would have to be deposited in their respective bank’s foreign currency account.

The balance of that account must not exceed $50,000 at any point in time, said Bangladesh Bank officials.

But, central bank inspection teams recently found that the money changers were maintaining several books for the transaction of foreign currency. In most of the cases, the money changers are keeping USD beyond the regulated limit, he added.