Bangladesh Bank has given strict instructions to the banks not to pay more than the pre-determined rate after the verbal instruction to increase the remittance price two days ago. BB even threatened punishment for violation of this directive without giving a show cause notice.
Top officials of four banks said the central bank called them on Wednesday and verbally instructed them not to pay more than Tk 118 to buy remittance dollars.'
Another top treasury official at a leading private bank said the Bangladesh Bank has threatened to punish banks without issuing a show cause notice if they offer rates higher than the fixed rate.
According to the bankers, 'Due to the existing law, the central bank cannot give such verbal instructions.'
Earlier on Sunday, the central bank had asked banks to pay higher rates for dollars to increase the flow of remittances.
According to central bank data, remittances came in at just 1.58 billion dollars in the first 27 days of July. As a result, the remittance flow may be below 2 billion dollars this month.
Remittances were 2.25 billion dollars in May and 2.54 billion dollars in June after the dollar rose by Tk 7 earlier.
Remittance inflows declined over 10 days due to the Student Movement Against Discrimination, a 5-day internet blackout, a three-day bank closure, and a negative campaign among expatriates discouraging the use of banking channels for remittances.
The deputy managing director of a private bank said, 'On Wednesday morning, the central bank called us and instructed us not to pay more than a certain rate.' They also warned that we will be charged if we pay higher rates.'
'Following these instructions, we aimed to collect remittances from exchange houses at the fixed rate. But we did not get much remittance at this rate. Yet, just two days ago, we were directed to collect remittances at a higher rate,' he added.
Commenting on the recent volatility in the dollar market due to this policy change by the central bank, a policymaker from another bank said, 'Bangladesh Bank does not seem to understand the impact of such frequent interventions.'
Expressing concern, he also said, 'The market has become unstable as a result of repeatedly calling and giving instructions like this.' I've seen before that trying to control the money market by making frequent calls can cause problems. The central bank has forgotten that experience.'
