Bangladesh Bank moves to ensure timely encashment of export proceeds

The central bank has tightened rules so that exporters realize their export proceeds within the stipulated period, a move that may increase the supply of the US dollar in the foreign currency market.

In 2018, exporters were asked to realize their export proceeds within four months.

Now, in order to bring discipline in the realization of export proceeds, it has been decided to initiate appropriate measures in the cases where export proceeds are not realized within the prescribed period, said the Bangladesh Bank in a notice.

In the cases of delayed realization, banks will apply the prevailing exchange rate for encashment into the taka. But banks will make payments to exporters applying the rate on the date at which the proceeds should have been realized as per the BB instruction.

There is a tendency among a group of exporters to sell their export proceeds when they get a better rate of the US dollar, creating indiscipline in the foreign exchange market.

An exporter gets Tk 104 per USD now. Owing to the dollar shortage, the foreign currency reserves of Bangladesh fell to $32.30 billion on March 1 from $45.99 billion on the same day a year earlier, BB data showed.

Yesterday’s decision will be applicable in the case of adverse exchange rate differences between the due date and the realized date during the period.

The difference between the taka proceeds of the current rate and the previous rate needs to be retained in separate subsidiary ledgers of banks, said the notice.

Banks will submit monthly reports with regard to the amount retained in subsidiary ledgers to the central bank within 10 days of the following month.

This process will, in case of delayed realization, equally be applicable for the encashment of unused value-added portion of export proceeds.

The value-added portion refers to the export proceeds that are available to exporters after their import bills for back-to-back letters of credit have been met.

Banks have been asked to use the amount held in the subsidiary ledgers in accordance with the instructions from the BB.