Banks facing cash dollar shortage

Bangladesh Bank has requested National Board of Revenue to withdraw tax on import of US dollar notes by local banks from their foreign corresponding banks as they (local banks) are now facing cash dollar crisis.
A BB official told New Age on Wednesday that the central bank had recently issued a letter to the NBR saying that banks were now facing cash dollar crisis as the hajj pilgrims recently spent a significant amount of cash dollars outside the country.
‘Under the circumstances, banks are now facing cash dollar crisis to settle their regular transactions,’ he said.
The NBR imposes around 25 per cent tax on cash dollar import by banks from their nostro accounts kept with the foreign corresponding banks.
Banks maintain the nostro accounts with the foreign corresponding banks to settle their import-related cost.
The board of directors of the central bank took the decision to issue a letter to the NBR in its meeting which was held late September. The BB requested the NBR to withdraw the tax forever.
The NBR, however, is yet to take any decision in this regard, he said.
BB executive director and spokesperson M Mahfuzur Rahman told New Age on Wednesday that the country’s banking sector had been facing cash dollar crisis for the last few months.
The central bank has recently increased the quota for cash dollar when the country’s citizens will travel abroad that is one of the key causes of the banks’ cash dollar crisis, he said.
The local banks will be allowed to bring their own dollars from the nostro accounts without giving any tax if the NBR accepts the central bank’s request, he said.
He, however, said that the country’s banking sector was not now facing any dollar crisis considering the long-term scenario.
The country’s foreign exchange reserve stood at $26.57 billion on October 8 which is all-time high, he said.
Another BB official said that the majority of the foreign exchange reserve was now invested in the foreign treasury bills, bond, sovereign bond and gold.
The BB is not allowed to cash the dollar from the foreign bills and bond to manage the cash crisis instantly before maturing the instruments.

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