Sonali Bank has to pay other banks the undisputed overdue bills it has given acceptance to. The decision was taken at a meeting on Sunday by the Bangladesh Foreign Exchange Dealers' Association (BAFEDA) which has some quasi-legal power in the inter-bank foreign exchange market.

BAFEDA took the decision after it was instructed by the central bank last week to deal with the issue of unsettled bills among the banks.

“Sonali Bank has to pay the money against genuine bills in 15 days,” said SM Aminur Rahman, chairman of BAFEDA.

A seven-member arbitration committee of BAFEDA has been formed to settle the disputed bills, said Rahman, also the managing director of Janata Bank.

The Hall-Mark Group loans will get the priority among the disputed bills, he said.

Sonali has been declining to pay those payments during the last 4-5 months and banks wanted the Bangladesh Bank (BB) to intervene in the issue.

According to BB, the Hall-Mark Group swindled more than Tk 2,600 crore by selling inland letters of credit (ILC) -- accepted by Sonali Bank's Ruposhi Bangla Hotel branch -- to other banks, mostly the private ones.

A number of banks on several occasions had accepted foreign and local bills against letters of credit, but did not pay the dues of other banks in time.

The amount of such unpaid bills stood at $363 million or Tk 2,976 crore, as of June 30 2012.

Of the overdue bills, around Tk 700 crore is of the Hall-Mark Group's, a BB official said.

Banks said they bought Hall-Mark Group's bills based on Sonali's acceptance of them.

When the fraudulence was detected in May this year and it became newspapers' headlines Sonali stopped honouring those bills.

“Disputed bills will go to arbitration committee of Bafeda and Sonali has to pay other overdue bills in 15 days,” said Nurul Amin, vice-chairman of Bafeda and the managing director of NCC Bank.

“Bafeda has some quasi legal power that the member banks are bound to follow,” said Amin, also a member of the arbitration committee.

At present, of 47 banks, 44 are members of BAFEDA.

News: The Daily Star/Bangladesh/26-Sep-12