20 banks suffer from dollar crunch, unable to make LC payments

Dollar crisis has come to the fore again as 20 banks are unable to make payment of import LCs.

According to data of Bangladesh Bank of October 25, dollar crunch has intensified to such an extent that the banks are unable to pay debts and LC.

The banks are struggling to make the payments with allegedly ‘poor remittance’ and import earnings.

In the wake of dollar crisis, the banks are refraining from opening new LCs, even those for import of essential items.

The forex interbank market has become dysfunctional.

As many banks are failing to make LC payments, those are suffering from reputation crisis abroad. Therefore, foreign banks have started to limit credit line for Bangladesh.

Dollar crunch may be intensified due to remittance fall in the days to come and foreign banks may stop taking Bangladesh LCs totally.

Sources said some Bangladeshi banks have failed to pay Standard Chartered Bank, Mashreq Bank, Abu Dhabi Commercial Bank, Commerz Bank, and Axis Bank.

About 30 percent of the remittance comes through Islami Bank which is also at the top of foreign earning. Yet the bank has failed to make payment to foreign banks. 

Apart from Islami, state-owned Sonali Bank, Agrani Bank, Janata Bank and Rupali Bank have allegedly failed to pay Standard Chartered Bank and Commerz Bank.

Social Islami Bank, EXIM Bank, among others, are facing similar trouble.

The chief executives of the leading banks at a meeting with two deputy governors of Bangladesh Bank on Sunday highlighted the grim picture of dollar market. They asked for assistance of the central bank to resolve the crisis.  Kazi Saidur Rahman, deputy governor, outright rejected the request of the bank executives.

GM Abul Kalam Azad, executive director and spokesperson of Bangladesh Bank, said the central bank has taken various steps for stability of the dollar market.

He said LC opening has reduced by 40 percent and a competent team of Bangladesh Bank is monitoring the situation.

The Bangladesh Bank is making dollar assistance to the commercial banks for import of essential items.