Current account deficit narrows to $890m 

Highlights 

• Deposits with Islami Bank are safe
• BB investigation into lending irregularities on 
• Banks asked to facilitate LC opening for essential imports 

The country's current account deficit decreased to $890 million at the end of November from $3.61 billion in September, according to the central bank, as the authorities attributed the development to different belt-tightening measures.    

"We have been restrained in opening LCs [letter of credits]. Besides, several measures have been taken… we have almost equalised the export and import," Md Mezbaul Haque, spokesperson and executive director of the Bangladesh Bank, told journalists after the bankers' meeting on Sunday. 

A current account deficit occurs when a country sends more money abroad than it receives from abroad. If the nation receives more money from abroad than it sends, it has a current account surplus.

At the meeting, Bangladesh Bank Governor Abdur Rouf Talukder instructed bankers to ensure a smooth supply of daily essentials during the upcoming Ramadan. 

Banks were asked to keep the margin rate at a minimum level for imports of Ramadan essentials such as edible oil, gram, lentils, onions, dates, fruits and sugar. The central bank said it would provide the banks with all the policy support.  

Md Mezbaul Haque said the prime minister has instructed them to provide the agri sector with maximum credit support. "Banks must fulfil their agri loan targets."   

He said the Bangladesh Bank will formulate a policy guideline in this regard soon.

Md Mezbaul Haque said banks in the meeting were instructed not to harass the clients while they come to banks for depositing money. 

"Any customer who is going to deposit up to Tk10 lakh should not face too many questions. If they want to deposit more than this, they then will have to submit required documents," he noted.

The spokesperson said the central bank is taking maximum precautions to stop hundi – an illegal money transaction channel to home from abroad. Besides, they are also working to prevent over-invoicing and under-invoicing in external trades.

While replying to queries about reported lending irregularities by Islami Bank, Mezbaul Haque the Bangladesh Bank is still investigating the matter. He, however, said that deposits with the bank are safe and there is nothing for customers to panic.

Regarding the lifting of the interest cap, he said that the central bank will inform everyone through a circular if such a thing happens.

More than 90% of banks are following Tk107 per dollar rate for remittances fixed by the Bangladesh Foreign Exchange Dealers Association, according to the central bank, as the spokesperson said a few banks might have been offering slightly higher rates for remittances in other currencies other than dollars. 

He said the meeting noted that banks should not compete with each other on exchange rates.

The central bank spokesperson said they have noticed some issues about banking apps for the disabled, and instructed banks to make those applications equally accessible to all.

Though the central bank spokesperson said there is no development about lifting interest rate cap, Chairman of Association of Bankers Bangladesh (ABB) Selim RF Hussain said the Bangladesh Bank has verbally allowed them to raise interest rate up to 12%. 

"We have already implemented it," he said after the meeting.

Selim RF Hussain, also the managing director and CEO of Brac Bank, said, "Depositors were withdrawing money a month ago. But they are now depositing again after confidence recovery. Besides, the trade deficit has come down significantly." 

He expressed optimism that the macro-economic situation will end soon.