Verifying prices of imported goods is bank’s responsibility, says Bangladesh Bank

Concerns linger about over- and under-invoicing of imported goods

MV Songa Cheetah anchored at the Chattogram port jetty on Monday, Feb 07, 2022, was seen carrying 952 TEUs (each 20 feet long) of export load containers. Photo: Suman Babu

The Bangladesh Bank has instructed all banks to verify goods prices and acquire credit reports of suppliers before importers open a letter-of-credit or LC with them, but bankers say it is a difficult task for used products.

The central bank in a circular on Monday directed all banks sanctioned as authorised dealers to survey the global market trends before setting goods prices.

It also asked authorised dealers to comply with extended due diligence in import transactions adhering to “Import Policy Order in force, KYC [Know Your Customer] and AML/CFT [anti money laundering/combating financing of terrorism]” standards.

The central bank made the move amid concerns over money laundering through over-invoicing in imports and under-invoicing in exports.

Import expenditures have surged since the start of last year and exceeded export earnings and inward remittance to result in a deficit in offshore trade and current account balance. The dollar prices soared against the taka and the economy was hit by inflation.

In a bid to alleviate the crisis, the national bank issued a directive that importers would require its permission ahead of bringing in goods worth $30 million or more. Later several LCs were cancelled over importers showing higher goods prices.

Bangladesh is now struggling to pay up for pending LCs despite importers currently opting to open fewer than usual.

The banks are now in contact with selected international agencies to verify market prices of goods. This eases determining prices for new products but the same cannot be said for older ones, said Syed Mahbubur Rahman, managing director of Mutual Trust Bank.

“We regularly check prices of ISO-certified companies along with several others to open LCs. Pricing capital machinery is sometimes difficult. We need to raise awareness of customers for that.”