The Bangladesh Bank has issued a verbal warning to several commercial banks, cautioning them against purchasing US dollars at inflated exchange rates in an effort to preserve stability in the country’s foreign exchange market.
The issue was raised during a meeting held in the capital on 9 April between the central bank Governor Md Mostaqur Rahman and leaders of the Association of Bankers Bangladesh (ABB). According to senior officials present, the central bank expressed concern that some banks had recently been buying dollars at unusually high rates, creating unnecessary volatility in the interbank and retail foreign exchange segments.
A senior Bangladesh Bank official stated that banks have been instructed to avoid both buying and selling US dollars at excessive or artificial premiums. He emphasised that exchange rates should remain fundamentally driven by supply and demand conditions, rather than competitive overbidding among banks.
The official further noted that dollar liquidity in the market remains relatively strong, while banks are maintaining a stable net open position overall. In such circumstances, aggressive purchasing of foreign currency at elevated rates risks distorting price signals and undermining market discipline.
As part of the guidance, banks have reportedly been told to purchase remittance-related US dollars from exchange houses at rates not exceeding Tk123.10, while interbank transactions should remain within a ceiling of Tk122.75. However, market participants indicated that some institutions had still been acquiring remittance dollars at around Tk123, slightly above the recommended threshold.
Several bankers also observed that interbank dollar trading has slowed in recent days following the introduction of the rate cap. Many banks, having acquired dollars at relatively higher prices from remittance channels, are now reluctant to sell at lower interbank rates, contributing to reduced liquidity and transaction volumes.
Key regulatory guidance and banking proposals
| Category | Issue | Directive/Proposal | Current Status |
|---|---|---|---|
| Foreign exchange | Dollar purchase rates | Avoid inflated buying; follow supply-demand pricing | Verbal instruction issued |
| Remittance dollars | Purchase from exchange houses | Maximum Tk123.10 | Being partially followed |
| Interbank trading | Exchange rate cap | Ceiling of Tk122.75 | Activity has slowed |
| Bank bonuses | Capital-deficit institutions | Possible relaxation under review | Under consideration |
| MD bonus limit | Tk15 lakh ceiling | Proposal to remove cap | Under discussion |
| Personal loans | Existing limit | Increase from Tk20 lakh to Tk40 lakh | Proposal submitted |
| Vehicle financing | Hybrid vehicles | Up to 90% financing proposed | Under review |
During the same meeting, the ABB also urged the central bank to revise a circular issued in December 2025 that restricts banks with capital or provisioning shortfalls from awarding incentive bonuses to employees. Bank representatives argued that easing this restriction would help maintain staff motivation and operational stability.
In response, the Governor reportedly indicated openness to revisiting the directive, suggesting that a revised framework could be considered, potentially allowing bonus payments for institutions meeting minimum provisioning requirements even if capital adequacy is under pressure.
The ABB further pressed for the removal of the Tk15 lakh ceiling on annual bonuses for managing directors, arguing that the restriction creates rigidity in compensation structures and limits competitiveness in senior banking roles.