The Bangladesh bank (BB) Wednesday annulled the authority of branch offices of different banks on payment of local bills under various L/Cs (Letters of Credit).

From now on, the branch office management must obtain prior approval of the respective head offices in case of acceptance of import LCs, which linked to payment of bills through both local and foreign currencies, according to the circular.

The central bank authority said it has found in recent investigations that importers are involved in mobilising funds (cash) from banks under the provision of ‘Accommodation Bill’ by opening LCs though there are no real business transactions.

“As a result, banks are losing their liquidity strengths, ultimately posing threat to banks’ cash base,” reads the BB circular.

The Daily Sun/Bangladesh/ 12th July 2012