Bangladesh Bank (BB) has recently issued a directive urging all people who have returned from abroad with foreign currency exceeding maximum ceiling of ten thousand dollar to surrender to the bank or licensed money exchange house or alternatively deposit in their resident foreign currency deposit (RFCD) account with a dealer bank within September 30, 2022. BB directive has warned that failure to comply with this directive will invite punishment. News on this issue as appeared in the local media was a kind of concerning measure. However, BB has subsequently published notification in a section of newspapers wherein they have tried to provide some clarity on this directive. Now, it is mostly clear that this directive will specifically apply to those who have returned from abroad with foreign currency exceeding the maximum cap of ten thousand dollar. The notification clearly states that those who have returned from abroad with foreign currency over ten thousand dollars must have to sell those excess amounts to the dealer bank or licensed money changer or deposit in their resident foreign currency account. So, it is now clear that this directive will not apply to the non-resident or expatriate Bangladeshis who stays longer period in Bangladesh and maintains foreign currency account.
Not new but existing measure with reminder: It is obvious that people under any circumstance should not hold large amount of foreign currency in cash although they after returning from abroad are entitled to retain any amount not exceeding ten thousand dollars. If any exchange rate fluctuation is apprehended, that risk can be mitigated by maintaining resident foreign currency account with any dealer bank and depositing that foreign currency therein. So, there is no apparent reason of retaining foreign currency in the form of cash in the possession of returnee Bangladeshi. In this context, Bangladesh Bank has taken right decision by issuing directives. Since the beginning of Russia-Ukraine war, global financial crisis has engulfed the whole world and Bangladesh is also passing through this financial crisis what has created tremendous pressure on dollar in this country. Bangladesh has been facing dollar crisis what is not improving in spite of taking some measures, instead excessive pressure on demand of dollar is persisting. Besides, turmoil in the dollar curve-market has been attributing to the persistent devaluation of local currency, Taka. Under this situation, BB’s measure seems to be an appropriate action and undoubtedly, they have taken right decision in right time. To speak the truth, BB’s directive of surrendering excess dollar is not new measure at all. As per foreign exchange regulation and subsequent circular issued in this regard, this provision is already in force and all people while returning from abroad with cash foreign currency have to abide by this regulation. Bangladesh Bank has reminded the concerned people of this regulation and its consequences if fail to abide by. In fact, BB has given opportunity to the people who have returned from abroad with foreign currency exceeding the limit of ten thousand dollar and retained in their possession so that they can avail this opportunity for selling or depositing excess amount within September 30, 2022, otherwise they will be penalized.
Specific instruction for receiving excess dollar without declaration: If the target group of this BB directive is the people who have returned from abroad with foreign currency exceeding allowable limit without any declaration, there is unlikely possibility that this objective will be achieved. Because those who have brought excess dollar or foreign currency without declaration are now in possession of illegal dollar which they will not be able to either sell to the banks or licensed money changers or deposit in their RFCD account. No dealer bank or licensed money changer will accept illegal dollar or foreign currency from people returning from abroad. Alternatively, if an implicit objective of the BB directive is to offer a kind of general forgiveness to those who have returned from abroad with dollar or foreign currency exceeding the allowable limit without valid declaration, then the directive must be made very specific. The directive should conspicuously state that returning Bangladeshis in possession of excess dollar will be allowed to sell or deposit in their RFCD account without proof of declaration within the given time and those who will fail to take this opportunity will be brought under punitive action. Similarly, dealer banks and licensed money changer will be specifically instructed to accept excess dollar or foreign currency from returning Bangladeshis without asking any proof of declaration within the given time period. BB directive containing specific instruction can only produce desired outcome, otherwise general instruction will not serve the ultimate purpose.
One more important aspect related to non-resident Bangladeshi must be made very clear although directive states about resident Bangladeshi. Because we have previously experienced customers’ harassment and suffering due to misinterpretation of circular and unnecessary audit objection. Even, some of my known persons, including a close relative, have been victim of misinterpretation of foreign exchange regulation and unnecessary BB audit objective. So, it has to be made very clear that this directive will no way apply to expatriate Bangladeshis who stay long in Bangladesh and there must be clear instruction that Non-resident Foreign Currency account will not be impacted at all with this directive. Foreign exchange subject is very complicated and sensitive as well, so the content of circular/directive and action plan must be made very specific and to the point. Likewise, current BB directive related to surrendering excess dollar must contain more clarity and conspicuous instruction.
The writer is a Banker, Toronto, Canada.
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