Friday, 30 September, 2022
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BB’s Directives to Surrender Excess Dollar Needs More Clarity

Nironjan Roy

BB’s Directives to Surrender Excess Dollar Needs More Clarity
Nironjan Roy

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. 

How to enforce: Now question arises how this directive will be enforced because as per country’s foreign exchange regulation and subsequent circular thereof, there is no scope of legally bringing dollar or foreign currency exceeding the ceiling of ten thousand dollar in Bangladesh. The term legal arises because returning Bangladeshi must have to submit declaration to the customs authorities if he or she carries foreign currency more than ten thousand dollars. Declaration is not required for any amount not exceeding ten thousand dollars ceiling. So, any Bangladeshi national when returning from abroad is entitled to bring any amount of foreign currency not exceeding ten thousand dollars cap without declaration. However, if amount of foreign currency in possession of returning Bangladeshi exceeds the ceiling of ten thousand dollar, the concerned person must have to declare that amount to the customs authorities. If anybody brings foreign currency exceeding the limit without any declaration to the customs authorities, the fund then becomes illegal money what can neither be sold to the bank or money changer nor can be deposited to the resident foreign currency account with bank. Because of this regulation, whenever we go to Bangladesh from abroad, we are mandatorily required to fill up and sign declaration form and then hand over to the authorities to get cleared from customs. In that declaration form there is specific field for mentioning whether the returning Bangladeshi is in possession of foreign currency exceeding ten thousand dollar and if so, actual amount has to be mentioned. This declaration form containing the amount of foreign currency exceeding the allowable limit must be endorsed by the on-duty customs officer as a proof of bringing money legally in Bangladesh. Whenever we, after returning from abroad, go to bank for either selling or depositing foreign currency any amount more than ten thousand dollars, the bank first asked two types of documents of which one is passport while the other one is proof of declaration. Without these two valid documents, banks or money changer will not accept foreign currency exceeding the allowable limit nor will allow to deposit in the person’s RFCD account. Detailed information as provided in the declaration form must be available with customs authorities. So, Bangladesh Bank in collaboration with the customs department can directly reach out to the concerned person to confirm whether they have either sold or deposited their excess dollar and if not they can be asked to do so immediately. General directive issued by BB with this objective may not produce desired result in this regard. Letter directly issued by customs authorities will magically perform as people will be scared and will try to immediately comply with. Action from customs authorities is more effective and produces desired result than the general directive of BB. Moreover, this is the responsibility of customs authorities as well.

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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