The Bangladesh Bank knowingly incurred a loss of Tk聽55 crore by purchasing dollars at a higher rate than it sold to Islami Bank, according to a central bank鈥檚 inspection report.
The irregularities occurred a day after the introduction of the crawling peg exchange rate system.
On May 9, Islami Bank, controlled by S Alam Group, bought $82 million from the Bangladesh Bank in two transactions at a rate of Tk 110 a dollar.
However, on the same day, the central bank bought back $85 million from Islami Bank at Tk聽116.46 a dollar, resulting in a loss of Tk 54.91 crore.
Although the deal was occurred on May 9, the transactions were officially shown on May 8 to hide the irregularities, according to the inspection report.
The unprecedented incident allegedly occurred under the direction of recently resigned governor Abdur Rouf Talukder and his associates, primarily to benefit S Alam Group, according to central bank officials.
On May 8, the Bangladesh Bank introduced the crawling peg system, which allows the exchange rate of a currency to fluctuate within a specified band.
Following this, the dollar exchange rate jumped from Tk聽110 to Tk聽117.
Attempts to reach Bangladesh Bank spokesperson and executive director Md Mezbaul Haque for comments on the issue were unsuccessful, as he did not respond to phone calls.
The transactions were conducted after the introduction of the crawling peg system by the forex reserve and treasury management department of the Bangladesh Bank.
Usually, the front office executes such deals and sends transaction messages to the middle office, which then forwards them to the back office under the accounts and budgeting department.
The back office is responsible for verifying the accuracy of transactions and account balances. In this case, discrepancies were detected during the back office鈥檚 review.
The reserve management and investment unit of the central bank failed to provide a satisfactory explanation for the foreign exchange deals, according to the inspection report.
The report also revealed that the signatures of the additional director and director of the forex reserve and treasury management department were missing from the transaction documents, a clear violation of the central bank鈥檚 reserve management operation manual.
According to the manual, a copy of the foreign exchange deal note should have been sent to the mid-office and back-office branches, which was not done.
Islami Bank managing director and CEO Monirul Mawla also could not be reached over phone for comments.