Selected forex bank branches to come under BB scanner
The central bank is going to start special inspection in 152 foreign exchange branches of commercial banks soon to find out irregularities, if there is any, relating to purchase of inland bills, officials said Monday.
"We're now making preparations to launch inspection by the end of this month," a top central banker told the FE, adding that the Bangladesh Bank (BB) has taken the latest measure as part of its ongoing efforts to mitigate the risk of fraud and forgeries in the country's banking sector.
The central bank has selected 152 out 858 foreign exchange branches, officially known as authorised dealer (AD) branches, considering different indicators including their exposure to accepted bills and inland bill purchase (IBP) in both foreign and local currencies.
A meeting was held in this connection at the central bank Monday with Executive Director of the BB Ebtadul Islam in the chair, the central bank officials said.
"We've discussed the terms of reference of the inspection teams, which will probe into irregularities, if detected, in the AD branches," another BB official said after the meeting.
He also said inspection teams will be formed comprising the officials from two Departments of Banking Inspection (DBIs), Department of Financial Integrity and Customer Services (DFICS) and Foreign Exchange Inspection and Vigilance Department of the BB.
"We'll finalise the terms of reference of the inspection team soon," the BB official noted.
Besides, the central bank will form a 50-member Anti-Fraud Vigilance Squad shortly aiming to check the risk of fraud and forgeries.
The central bank has taken the latest measures against the backdrop of rising trend of large-scale irregularities in purchasing and providing acceptance of the bills against local LC (letter of credit)-denominated foreign currency by different bank braches in the recent months.
Hallmark Group, along with a few other business entities, has allegedly swindled funds worth Tk 35.47 billion from the Sonali Bank Limited involving 57 branches of 27 commercial banks using the accommodation bill against back-to-back LCs ignoring banking rules and regulations, according to the central bankers.
An accommodation bill of exchange is a bill of exchange which has been drawn for the mutual financial accommodation of the parties involved. Generally it is drawn not for the value received.
In order to oblige friends, many times bills are drawn, accepted and endorsed by businessmen without any consideration. By accepting such a bill a person becomes able to lend his name, and the other party (drawer), taking advantages of his reputation, gets it discounted with his bank.
News: The Daily Financial Express/Bangladesh/11-Sep-12