Written by The Banking Post
In a firm regulatory push, Bangladesh Bank Governor Ahsan H Mansur has instructed all banks to convert unpaid import-related Letters of Credit (LCs) into forced loans in cases where clients fail to make timely settlements.
The directive was issued during a high-level meeting on 8 July, attended by managing directors of both state-owned and private commercial banks.
Presiding over the session, Governor Mansur emphasized that failure to enforce the forced loan provision—despite being a regulatory requirement—would no longer be tolerated. He warned that such lapses compromise financial discipline and directed banks to immediately align with the central bank’s guidelines.
Syed Mahbubur Rahman, MD and CEO of Mutual Trust Bank, said the governor highlighted concerns that some banks were bypassing forced loan creation to present healthier Net Open Positions (NOP) or to remain within the Single Borrower Exposure Limit.
“The governor made it clear—these practices must end,” Rahman stated.
Additional guidance during the meeting included:
- 💰 Treasury Bill Promotion: Banks were encouraged to increase treasury bill purchases at the client level to reduce reliance on government savings certificates.
- 🌐 Foreign Exchange Discipline: Banks with exchange houses abroad were directed not to buy foreign currency above prevailing market rates.
- 📱 Push for Cashless Economy: The governor called for ramping up digital transactions and expanding mobile banking apps, aiming to strengthen financial inclusion.
- 📦 Export Pricing Oversight: Institutions were instructed to rigorously analyze historical pricing data for export products, despite complexities in verifying contract-based export values.
Mohammad Ali, MD and CEO of Pubali Bank, reiterated industry commitment to supporting the central bank’s digital and regulatory reforms.
