Bangladesh Bank on Sunday asked the scheduled banks to settle local back-to-back letters of credit by means of the US dollar instead of local currency taka in line with the guidelines for foreign exchange transactions. The BB issued a letter to managing directors and chief executive officers of all banks asking them not to use local currency in settling local export and import bills. A BB official told New Age on Sunday that majority of the banks were now settling local import and export bills using the local currency in violation of the foreign exchange guidelines. The central bank had issued a circular to all banks on May 25, 2008 asking them to settle local import and export bills by means of foreign currency, but they (the banks) frequently violated the rules and directives. The banks are now paying in the local currency to the exporters against the worth of their exported products and the exporters hold no foreign currency due to the practice. The banks, however, attach the value of imported products in the form of foreign currency with the LC form of the clients, but they (the banks) transact local currency to settle the import and export bills. The exporters usually receive loans from the export development fund of the BB and they have to repay the instalment of the loans by means of foreign currency. The exporters will find it easy to repay their EDF loans if they get foreign currency against the value of their exported products from the banks, the BB official said. Some exporters have recently filed allegations with the central bank saying that the banks paid them (the exporters) against the worth their exports by means of the local currency violating rules and regulations. Against the backdrop, the BB issued the letter to all banks to take measures in this connection, the official said. Besides, the financial corruption in the banking sector will be prevented if the banks transact the foreign currency to settle local bills. Hallmark Group and Bismillah Group embezzled huge amount of fund between 2010 and 2012 from different banks by settling local bills illegally, he said. The Groups could not embezzle such large amount of fund from the banks if they (banks) settled the bills using the foreign currency as the banks are not usually authorised to hold big amount of foreign currency.