Banks increase service charge ‘Forex shortage is the reason’


Following the last few months shortage in hard currency, local banks began frequently increasing service charges, when customers open letter of credits (LCs).
Sources in financial institutions told Capital that banks have increased their service charges on at least three occasions, during the current fiscal year alone, which commenced on July 7, 2012.
Clients said that, on average, banks have increased their service charges by adding about 50 percent more on the rate they were charging. However, service charges differ from one bank to another. The average service charge levied for opening LCs was 2 percent at most banks in the beginning of the current fiscal year. “The hard currency shortage, with the growth in demand, is the main reason that banks had to adjust their service charges,” experts explained. Our sources noted that the banks do not have sufficient hard currency to meet their clients’ requests. “Due to that fact, banks are applying increased service charges to harmonize LC distribution,” bank experts said. 
According to these sources, with expenses like LC opening commission, LC service charges, service charges for Telegraphic Transfer (TT) and service charge for freight payments, clients have to pay somewhere in the region of 10 to 10.5 percent on existing tariffs, for opening an LC or processing a payment for an import. 
Meanwhile, although industries, which import inputs for their production, and other importers, have been complaining that they have to wait for almost half a year after opening LCs to be supplied with hard currency from banks, the government recently announced that the country has sufficient hard currency reserves.
This shortage hasn’t been resolved or addressed so far, experts claim. According to them, the decrease in last year’s exports, especially coffee, has played a significant role for the ongoing hard currency crisis.