In a significant turnaround, the overdue import bills of several Bangladeshi banks have decreased dramatically from US $ 445 million to US $ 88 million over the past five months, thanks to rigorous monitoring efforts by the central bank.
A recent report from the Bangladesh Bank indicated that several banks had long-standing issues with settling their import payments to foreign lenders. However, following intensified oversight and intervention, the situation has markedly improved.
In a circular issued on 13th April, the central bank mandated all banks to closely track the settlement of overdue import bills, both foreign and local. Banks are now required to submit monthly reports on overdue bills through the Online Import Monitoring System (OIMS).
The circular emphasised the negative impact of untimely payments on the reputation of the banking system and warned that delays could hinder favourable foreign trade conditions by raising costs. It cited the Guidelines for Foreign Exchange Transactions (GFET) 2018, stipulating that authorized dealer (AD) banks must settle both foreign and local import bills promptly, with non-compliance potentially leading to the cancellation of the AD branch’s license. The circular also stated that individuals involved in delayed transactions might face personal accountability.
A senior official from the central bank noted, “At the end of November last year, the total overdue amount for foreign import bills was US $ 445 million. We conducted regular monitoring and follow-up meetings with banks that had high overdue payments. Following each meeting, we provided clear instructions to the concerned banks along with deadlines for corrective actions.”
As of 31st January 2024, the overdue foreign accepted bills had already decreased to US $ 200 million, and the latest figures show that they have dropped further to US $ 88 million. Progress has also been observed in clearing local bills under bank-to-bank letters of credit (LCs), which have fallen from US $ 311 million in November to US $ 153 million.
In a separate statement, the central bank spokesperson announced the decision to hold bi-monthly meetings with deputy managing directors and other officials from the ten banks with the highest volume of overdue bills. Additional directives call for these banks to develop integrated action plans to address overdue amounts, with branches holding larger outstanding payments required to implement special monitoring mechanisms.
Furthermore, banks have been advised to inform suppliers’ banks in cases where bills are under legal proceedings and cannot be settled. Any discrepancies related to import bills flagged by AD branches must be documented and reported to the bank’s head office monthly.
