Bangladesh Bank has canceled the transfer of funds from normal banking channels to offshore units and asked banks to bring back the funds already transferred within the current year.
In such a backdrop, banks can no longer use dollars borrowed from various foreign banks. The new system will allow them to deposit dollars with the central bank and collect local currency in exchange. They will be able to distribute loans with this money, while the central bank will strengthen its foreign exchange reserves. It’s like a win-win situation for both parties.
Syed Mahbubur Rahman, managing director of Mutual Trust Bank, said that if the taka-dollar swap system is introduced, export earnings that enter the country but customers do not want to encash can be used. This will strengthen the foreign exchange reserves in the central bank and everyone will benefit.
In the current system it is possible to sell surplus dollars to the central bank or other banks, but there is no guarantee of their repurchase. The swap system guarantees the return of dollars within the agreed time frame.