Bangladesh News

Different commercial banks charge customers for 51 services on transaction which, according to Bangladesh Bank (BB), increases prices of both export products and local consumer items.

The commercial banks take 25 types of charges and commissions for import related transactions and 14 other types for export transactions. In addition to these, 12 types of fees are charged for local transactions.

Amid allegations of high and unnecessary service charges, the central bank has recently held a meeting with the owners and top officials of the banks.

On instruction from the BB, the owners and high-ups have formed a committee, which is working out as to how the banks can reduce these charges.

The committee submits Monday its report to the central bank, which will discuss it with the owners and top officials soon.

The central bank data shows charges for the same services vary in different banks, while foreign and private banks are taking high charges compared to that of the state-owned banks.

The BB report says the banks do business on their clients’ deposits, but it has been found some banks take charges from the depositors in the name of operational charges. Even the clients are forced to give fees if they wish to close an account, the BB found.

State-owned banks take annual fees of Tk 50 to Tk 100 to operate current and savings accounts, whereas private banks take Tk 200 to Tk 1,000. On the other hand, foreign commercial banks charge Tk 500 to Tk 1,000 for the job.

The state-owned banks provide locker services at Tk 900 to Tk 2,000 annually, private banks at Tk 1,500 to Tk 5,000 and foreign banks at Tk 1,500 to Tk 8,000.

The state-owned banks take 0.10 percent of the amount or minimum Tk 20 for issuance of Demand Drafts (DD) and Telephonic Transfer (TT). The private commercial banks charge 0.15 percent and foreign banks 0.30 percent on the amount or minimum Tk 300 for such services.

Besides, the banks take charges on pay orders, duplicate statements of accounts, standing instructions, inward bill purchased and collection and bank guarantee.

In case of import related transactions, the state-owned banks take 0.25 percent of the value of the Letter of Credit (LC) or minimum Tk 250 to Tk 500.

The private banks charge for such transaction Tk 500 to Tk 3,000 as minimum charge or 0.30 percent to 0.60 percent of the amount. Foreign commercial banks take commercial cost in addition to the service charges for LC opening.

Besides, the banks take charges on LC amendment, acceptance, confirmation, cancellation, foreign correspondent charges, handling charges, shipment documents charges and charges for credit report collection.

The BB has asked the banks to stop taking handling charges from importers when the traders give charges for opening LC. The banks take highest Tk 25,000 as handling charges in import transaction.

The state-owned commercial banks do not take charges on LC opening where hundred percent margin is received, but private and foreign commercial banks take different ranges of charges despite such receipt of money against LC.

On export transactions, the state-owned banks take Tk 250 to Tk 500 for LC advising and amendment advices, private banks Tk 500 to Tk 2,000, and foreign banks take Tk 500 to Tk 1,000 in addition to the commercial cost of such services.

Moreover, the banks take charges for export related transactions including LC advice, confirmation, foreign bank guarantee, document collection and mailing.

Abdus Salam Murshedi, a director of BGMEA, admitted that service charges on bank transactions are quite high in Bangladesh comparing to neighbouring countries.

Murshedi, also a director of a private commercial bank, said different banks take dissimilar charges and there is no banking policy in the process.

“The banks should reduce the charges and there should be a policy which will determine how much a bank can take in service charge for a certain job,” he observed.

Golam Mustafa, managing director of the South East Sweater, cited an example of import transaction saying: “We need to give almost 3 percent of a Tk 1 crore import deal to the banks in service and other charges.”

“Banks in our country make profits even from the services which are free in other countries,” he added.

He suggested a rationalised system of the banks’ service charges.

Chairman of the Association of Bankers Bangladesh (ABB) K Mahmud Satter said the central bank has identified some service and fees taken by the banks as unnecessary.

“We are working on it and sitting with Bangladesh Bank next week so that we can make the charges rational,” said Satter, also managing director of the City Bank Limited.

He favoured higher service charges in private banking compared to the state-owned banks and argued that the private banks’ services are better than the government ones.

“It’s not a logical idea in free market economy that all banks irrespective of their quality of services will take the same fees,” he said.

Khandaker Ibrahim Khaled, former deputy governor of BB, said foreign and some private banks are taking higher service charges and different fees.

Khaled, who served in different private banks, said the central bank can persuade the private and foreign banks to stop taking extra charges on services even after taking normal commissions.