Governor of Bangladesh Bank (BB), Ahsan H. Mansur, has given correspondent banks assurances that, in the upcoming five to six months, the nation will settle all past-due payments pertaining to letters of credit (LCs).
This pledge was made on Tuesday during a virtual meeting between the correspondent banks and the Bangladesh Bank.
In the context of international trade, correspondent banks work as third-party financial entities that mediate transactions between domestic and foreign banks.
Bangladesh’s commercial banks, both state-owned and private, are currently dealing with substantial past due amounts related to letters of credit that need to be paid to correspondent banks.
Following the discussion, correspondent banks enquired about how the government and state-run banks would pay the past-due amounts, according to Husne Ara Shikha, executive director and spokeswoman for the central bank.
She referenced Mansur’s claim that Bangladesh had settled US $ 800 million in outstanding balances with the correspondent banks.
Bangladesh Bank is now gathering foreign exchange from the interbank market and supplying it to banks that are owned by the state. Then, Shikha stated, “those state-run banks are processing LC payments for priority industries like electricity, gas, and fertiliser.”
She said that Mansur had declared Bangladesh had never been in arrears and would never be again.
BB authorities revealed that, despite Shikha not providing any figures, the total amount of past due payments against LCs is likely between US $ 12 billion and US $ 13 billion.
Bangladesh Petroleum Corporation has the highest amount of past-due LC payments, per statistics from Bangladesh Bank.