Summary:
- State banks – Sonali, Agrani, Janata, and Rupali – receive $831m in the first 22 days of February
- The banks received $841m in three months through March a year ago in 2024
- Several private bank MDs attribute the surge to offering higher remittance rates
- State banks in a drive to collect dollars to pay for government imports
State-owned banks attracted a higher inflow of remittances than private banks by offering more competitive rates to settle payments for government Letters of Credit (LCs) in the absence of dollar support from the central bank.
According to central bank data, state-run banks – Sonali, Agrani, Janata, and Rupali – received $687 million in just the first 22 days of February this year, exceeding the $659 million received between January and March 2024.
As of 22 February, the country’s banking sector has received $1.93 billion in remittances, with private banks receiving $1.09 billion, according to the data.
Asked about the surge in state-owned banks, several private bank managing directors said the market is rate-sensitive, with remittances flowing to banks offering the highest rates.
State-owned banks are offering up to Tk122.70 per dollar, exceeding the central bank’s Tk122 limit, which has resulted in lower remittance inflows for private banks, they added.
A deputy managing director of a private bank said, “Discrepancies in remittance dollar rates existed before but with a different purpose. Previously, some private banks collected remittances at any price, with allegations of large sums being laundered out by major business groups.”
“Since the interim government took charge, state-owned banks have been offering higher rates, but these dollars are now being used to safeguard national interests,” he added.
A policy-level official at a state-owned bank said they had previously received dollar support from the Bangladesh Bank. After the interim government took office in August last year, it halted dollar sales to preserve reserves.
“Consequently, we now collect dollars from the market, even at slightly higher prices, to serve the national interest,” he added, speaking to The Business Standard on condition of anonymity.
A Treasury official at a state-run bank said at least $150 million is needed monthly to import liquified natural gas (LNG) and disburse a foreign company’s investment revenue.
Petrobangla pays over $100 million each month under a long-term LNG contract, while around $50 million goes to a foreign energy company, he added.
“Delays in these payments can harm the country’s credit rating, raising concerns about its reputation and financial stability. Therefore, we must secure these dollars to protect national interests,” the official told TBS.
He said overdue payments had slightly decreased due to increased settlements, adding, “We are working to clear payments, but dollar supply remains below demand, putting pressure on the exchange rate. Leaving it entirely to market forces would make controlling inflation impossible.”
Senior officials at several banks said the dollar rate rose to Tk128 in the last week of December 2024. After a few months of stability, it became unstable again. The central bank asked 13 banks to explain why they purchased dollars from exchange houses above the fixed rate.
The banks provided explanations, and in December, Bangladesh Bank Deputy Governor Zakir Hossain Chowdhury met with the treasury heads of those banks. He instructed them not to collect remittances above Tk123, later reducing it to Tk122, they continued.
A deputy managing director of a private bank said, “After the central bank’s directive, the remittance dollar rate remained around Tk122 for about three weeks.”
“However, from the last week of January, it began rising gradually, initially by 20-30 basis points, and continued to increase in February. Currently, the rate has reached a maximum of Tk122.70,” he told TBS.
