Banks are planning to request the Bangladesh Bank for providing them with more US dollar support to meet the cost of import of daily necessities.
At least 10 bankers, wishing not to be named, told The Business Standard (TBS) that the Bangladesh Foreign Exchange Dealers Association (Bafeda) will place the demand for more dollars for essential imports to the central bank at a meeting scheduled for Monday.
Meanwhile, the Bangladesh Bank continues to sell dollars to banks to help them make import payments for essential goods. More than $4.5 billion has been injected into the market so far this fiscal year.
A managing director of a private bank, on condition of anonymity, told TBS that banks have now become very cautious in opening import letters of credit (LCs).
"In the case of opening LCs other than for importing consumer goods, the ability to make future payments is also to be considered carefully because it creates a negative image in the global atmosphere if the payment is not made on time," he said.
Thus, additional support from the reserve is needed to remove the hesitation that banks go through while opening LCs for daily necessities, the bank official added.
Echoing the same, the top executive of another private bank said, "We now have a deepening dollar crisis. The main reason for this is that we now have to make LC payments for products imported during the pandemic. There was support from the reserve to some extent but it is not sufficient. We want more support to at least make LC payments for daily necessities."
Md Afzal Karim, chairman of Bafeda and managing director of state-owned Sonali Bank, however, said, "Sonali Bank has been getting adequate support from the central bank to meet the import expenses of daily necessities including food and fertilisers. We are not feeling much pressure in this regard."
Several senior officials of the central bank said the topics of Monday's meeting have not been finalised yet. However, in a meeting with the central bank, the International Monetary Fund (IMF) asked to lift the existing lending rate cap and leave the country's foreign exchange market to a free-floating exchange rate system. The central bank is considering leaving the dollar rate to the market soon.
Besides, whether the banks are following the dollar rate determined by Bafeda and the Association of Bankers, Bangladesh Limited (ABB), might also be discussed in the meeting, said the officials.
Mosleh Uddin Ahmed, MD and CEO of Shahjalal Islami Bank Limited, said, " I personally want the import of all kinds of luxury goods to be stopped for the time being."
Banks unable to make import LC payments on time
Many banks are not able to make the payment of import LCs on time due to a lack of US dollars. Banks may be warned again in Monday's meeting with Bafeda.
Earlier, the central bank in a circular said if import payment is not made on time, the authorised dealer (AD) licence for forex trade of the concerned banks will be revoked.
Several bank MDs and heads of the treasury department told TBS that apart from the dollar crunch, banks now have to spend a lot more while making payments for LCs opened previously.
Citing an example, a bank MD said, the price of the US dollar was Tk85 when traders opened import LCs a year ago. Now they have to pay up to Tk105-107 while paying for these LCs, which means paying Tk20 more for every dollar. The loss figure is becoming too large for traders and they are not fully able to make the payments, he explained.