Some state-run banks and Shariah-based Islamic banks are not making import payments on time, for which Bangladesh Bank (BB) issued notice warning the banks of punitive actions.
In the notice issued on Tuesday, said delays and defaults on import payments damage Bangladesh's image on the international stage and push up import costs, eventually weighing on people who are struggling under persistent price pressures.
"The result of delayed payment is a reputational loss for Bangladesh, leading to higher costs for imports relating to confirmation charges, trade credit, etc," notice said.
However, industry insiders attributed the delayed payment of import bills by the banks to the taka and dollar crises, a lack of availability of credit lines for importers and a culture of non-payment.
Sources said, at a meeting on Monday, the issue of delayed import payments was discussed between managing directors and CEOs of seventeen banks and the Bangladesh Bank governor.
In Tuesday's notice, the banking regulator said that delays in payments deteriorate correspondent relations with counterparts and increase import costs.
Due to the reputational loss of the country's financial sector, the official said that some foreign lenders have reduced credit lines, while others are suspending them for Bangladesh. For instance, he said Dubai-based Mashreq Bank has already reduced its credit line for Bangladesh, sources said.
In the notice, the central bank also asked banks to clear unsettled import bills immediately and said that lenders must ensure appropriate credit lines are available for the respective importers before issuing letters of credit.
The BB asked banks to ensure adequate cashflow and prospective fund arrangements to cover import payments in cases of issuance of LCs on behalf of importers without underlying credit facilities.
The central bank's notice said that usance imports should be financed through buyer's credit through offshore banking operations or using the banks' own funds in terms of the foreign exchange transaction guidelines.
The banking regulator warned that failure to settle payments on time is subject to punitive actions, including personal accountability for the officials responsible for the transactions.
