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Bangladesh Bank has spotted several incidents of ‘under-invoicing’, which its officials believe is used to smuggle money out of the country, reports bdnews24.com.
The revelation was made during the quarterly meeting, chaired by Bangladesh Bank Governor Abdur Rouf Talukder, with the top executives of commercial banks in Dhaka on Wednesday.
While speaking to reporters after the meeting, the central bank’s spokesperson Md Mezbaul Haque said they had detected some ‘serious’ cases lately and concluded that Bangladeshi importers have been doing this to avoid customs duties and tariffs.
"Importers are using Hundi [illegal channels] to pay the product’s real value and evade import tariff. As a result, the state exchequer is losing millions in tariff it is entitled to,” Mezbaul, an executive director, said.
Commercial bank executives were asked at the meeting to increase monitoring during the letter of credit, or LC, opening process, said Selim R F Hussain, CEO and managing director of BRAC Bank Ltd.
He attended the meeting also in his capacity as chairman of the Association of Bankers, Bangladesh , or ABB .
It was Selim who, in May this year, during the unveiling of Banking Sector Outlook - 2023, drew attention to the issue and accused large conglomerates of being involved in under-invoicing.
FINANCIAL ACCOUNT DEFICIT MAJOR CHALLENGE
Issues like foreign trade deficit, mismatch of exchange rates among banks, an alarming increase in defaulted loans and the general lack of confidence of customers in banks were discussed in the meeting.
Although Bangladesh has been able to reduce the foreign trade deficit, as recent data suggests, the deficit in the financial account is getting larger, which happened only a few years ago.
At the end of the fiscal year 2022-2023, a financial account deficit of $2.14 billion was reported.
Quoting the governor, BRAC Bank’s Selim said the central bank had assured the commercial bankers of bringing down the deficit to a tolerable level.