Bangladesh’s banking sector is slowly recovering from a severe strain caused by a shortage of foreign currencies in the local money market, according to the Association of Bankers, Bangladesh (ABB).

In their recent press conference, the ABB leaders unveiled the ‘Bangladesh Banking Sector Outlook 2023’ and stated that the situation regarding foreign exchange supply has started to improve.

The ABB attributed this positive development to the prudent policy support from the central bank, the resumption of transactions between overseas corresponding banks and Bangladeshi banks, and other relevant factors.

Selim R. F. Hussain, chairman of the association of top executives of local banks, acknowledged the abnormal pressure the banking sector faced starting from July of the previous year due to the scarcity of foreign exchange.

This scarcity led to difficulties in settling import bills, forced banks to defer payments, and caused a strain in opening new letters of credit.

The ABB also addressed concerns about trade-based money laundering, stating that intensified monitoring by the central and commercial banks has significantly reduced such activities.

Mashrur Arefin, vice chairman of ABB, highlighted the positive turnaround in dollar holdings and the narrowing exchange rate gap between formal and informal markets, indicating improving conditions for banks.

The ABB vice chairman and managing directors of City Bank Limited, Dutch Bangla Bank Limited, and Midland Bank Limited also shared their perspectives during the event.