Dhaka: Bangladesh Bank has imposed check clearance fee secretly without publicly notifying clients for their transactions in all commercial banks through cheques.

From now on bank clients will have to pay Tk 20 to Tk 50 depending on amount of transaction for each cheque clearance through Bangladesh Bank clearing house. And the central bank has done it secretly without making any public announcement for the bank clients. The BB only issued a letter to notify the commercial banks about the fee, not the clients who will have to bear the brunt.  

Economists, businessmen and general bank clients have expressed their dismay and astonishment over imposition of charge by central bank for cheque clearance as it is part of its regulatory task and responsibility. They all unequivocally said this decision would make people disinterested to banking and banks too as clients will have to pay more for banking services like double taxation at source. Such a decision is really suicidal and unprecedented as no such charge is imposed by any central bank in any country.   

Bank clients are already in peril as commercial banks have been deducting money from clients’ accounts in the name of various service charges and commissions and the banks have been deducting the money from small savers principal amount and the central bank itself start charging for its duty then the commercial banks would get its rationale for charging clients more and more for services those are meant for, but still will charge clients for everything. 

As part of its regulatory role the central bank has been formulating various policy and guidelines for reducing various charges of commercial banks and if it itself start charging for its responsibility then commercial banks would get their rational for charging high their clients which will add salt to injuries of bank clients, said financial analysts and banking sector experts.

How much the charges are?

Bangladesh Bank will charge Tk 20 for each cheque amounting upto Tk 5 lakh or less and Tk 50 for cheque amounting above Tk 5 lakh for clearing through its clearing house. And the amount would be deducted from the clients’ accounts. The BB has imposed the fee from January 1 without making any public announcement. As per BB directive, the commercial banks would deduct the amount from clients accounts for each cheque transaction and later deposit the amount to central bank account.

As per existing rules, VAT has been imposed on any fee, service charge and commission of commercial banks and if VAT is also imposed on this charge too then the commercial banks would deduct more money from clients’ accounts.

Such fee is being imposed for the first time in Bangladesh

The Bangladesh Bank has imposed for the first time such fee on bank clients in the country’s history for passing cheques through its clearing house. Central bank as per its responsibility monitors activities and charges imposed by commercial banks and press those banks for reducing charges and ensure quality services.

The cheque clearing houses of the central bank sit in its all branches and regional offices. As per the BB order the charges will also be applicable for cheques clearing through Sonali Bank Clearing Houses and the bank clients will have to pay extra charges for cheque clearing.

BB faces storm of criticism

From the very beginning of the grand alliance government, the Bangladesh Bank has been facing severe criticism for many of its controversial decisions. At the end of 2009 and in the beginning of 2010, the central bank faced a wave of criticism for its policy changes on the share market. At that time BB enhanced capital investment of commercial banks in the share market for boosting the market, but it turned out to be boomerang for the share market and it crashed.  

The central bank in yet another controversial decision relaxed readjustment policy for default loans and also relaxed industrial default loans that drew flak for the BB as the commercial banks suffered from serious liquidity crisis at the end of 2010 due to faulty and imprudent BB policy. The liquidity crisis has still been continuing shrinking fresh investment loans for the private sector. At the same time the BB also suffered from foreign exchange crisis though that crisis had gone by this time.

The central bank has failed to face the inflation successfully putting its capability and relevance of existence into question due to failure in its fiscal management and ineffective measures to check inflation.

The central bank detected the Hall-Mark loan scam much earlier, but failed miserably to act in containing the biggest ever loan scandal and embezzlement of around Tk 4000 crore. Instead of getting tough to check the scam the BB itself tried its best to cover up the scandal exposing the whole financial discipline at risk of crumbling down and putting into question its authority and justification of its existence.

The Bangladesh Bank yet again created another controversy by succumbing to pressure of the ruling party in issuing fresh bank licences on political consideration creating ground for more and more financial scandals like Hall-Marks. Already more and more banking scandals are surfacing in both private and state-owned banks due to inefficient monitoring role of the central bank and political appointments at bank boards.    

And by taking an unprecedented move to impose charge by the central bank itself, the BB wade into a muddy water inviting censure by all bank clients which might ultimately force bank clients to show their back to the country’s banking sector.

BB moves to cover its expenditure

Though officially the Bangladesh Bank has not explained its rational for imposing the cheque clearance charge, but an official of BB on condition of anonymity said, “Now transactions in cheques through clearing houses have increased manifold and that has increased the expenditure and by imposing charge the BB is trying to boost its income by charging certain amount against each cheque to cover up its expenditure.”

Dumping all objections

Association of Bankers, Bangladesh has opposed the BB move for imposition of cheque clearance fees. BB has imposed the charge unilaterally and secretly dumping all such oppositions.

Even some Bangladesh Bank officials holding high positions during informal talks with the politically-biased Bangladesh Bank governor suggested him not to impose any such charges as it would backfire and dampen the image of the already shaky central bank plagued with many problems and crisis of capability due to inefficient leadership at the helm.

Reaction to the charges

Former Bangladesh Bank Governor Dr Salehuddin Ahmed told Prime News, “Central Bank is a service rendering and controlling and monitoring institution, which is run by public money. So it would make its expenditure for serving the people the best possible service and it can no way impose additional charge for its service. If the BB imposes fee for cheque clearing then private commercial banks would keep on imposing charges for each and every activities of those banks on their clients and then the BB would lose its moral authority to check that menacing fees imposed by private commercial banks.

President of Dhaka Chamber of Commerce and Industry Md Sabur Khan said, “Due to imposition of charge for cheque clearance, business expenditure would go up and it would have a negative impact on the trade and commerce.”

A client of Mrkentile Bank Sharif Hossain said, “Banks usually keep on charging extra to their clients and deduct various charges from savings of clients. In reality after giving all those charges my principal amount of saving is reducing each year then why should I keep my deposit to banks. And if this trend continues then none would come up to keep their savings to banks. Rather they would show their bavc to the  Banks.”

What is a clearing house?

For instance a Sonali Bank client issues a cheque for another client Agrani Bank who has no account in Sonali and then the client would submit this cheque to his Agrani Bank account. The Agrani Bank would then send the cheque to its local office and it would sent it to BB clearing house and BB would give it to Sonali Bank representative and he will collect the amount from the issuing branch and send it to local branch. Then the amount would be transferred to BB account and BB would pay the amount to Agrani Banl local branch and finally amount would be deposited to the account of the client.

Is there any representative?  

In the cheque clearing house, the central bank’s role is quite limited and that is even part of the bank’s responsibility. But the BB is charging extra for its such a limited role. Central bank representative only announce through loud speaker is there any representative of any cheque issuing bank. And after such announcement the concerned bank official collect that cheque and clients have been paying the newly introduced charges for such a funny announcement only. Then other officials make data entry for the cheques. If Tk 20 and Tk 50 are charged for such a service then the profit of the banks would go up to more than hundred percent. If the central bank itself get involved in such pickpocketing of clients then it should be branded slaughtering business of the central bank without care for the clients, said a financial analyst.

Ends/OSR/AMA/21/01/13