NBR Probes Bank Records of 100 Exporters Over Bond Abuse

Amid allegations that nearly $5 billion worth of fabric, garments and accessories enter Bangladesh’s domestic market each year through misuse of bonded facilities and smuggling, the National Board of Revenue (NBR) has launched a major enforcement drive. The initiative includes scrutiny of bank transactions of around 100 exporting companies, officials said.

As part of the operation, the revenue authority is collecting five years of banking data from large exporters suspected of importing raw materials duty-free under bonded facilities and diverting them to the local market instead of exporting finished goods.

Officials said the transaction records will be cross-checked with import and export data available in customs’ ASYCUDA World system and other databases to identify discrepancies.

At the same time, the NBR has tightened operational controls by abolishing all manual utility permission (UP) processes related to bonded operations from 1 January, making digital compliance fully mandatory.

From now on, all bonded services, including raw material entitlements, will be processed exclusively through the Customs Bond Management System (CBMS). Officials said the system is integrated with Bangladesh Bank and customs databases, significantly strengthening monitoring, audits and risk profiling.

NBR Chairman Abdur Rahman Khan said misuse of bonded facilities would no longer be tolerated. He noted that bond automation has been made fully mandatory and that regular physical inventory checks will be conducted at bonded warehouses. If required raw materials are found missing, cases will be filed immediately.

According to NBR sources, about 6,000 direct and indirect exporters currently hold bond licences, which allow duty-free import of raw materials.

Allegations of widespread misuse

Textile mill owners say they are among the worst affected by the alleged misuse. Industry leaders claim that duty-free imports diverted into the domestic market, along with outright smuggling, account for nearly $5 billion worth of products annually, undercutting local manufacturers and depriving the government of substantial revenue. Garment accessories are also reportedly involved.

Industry insiders say misuse increased after the August 2024 political transition and the subsequent administrative split within the NBR, which weakened field-level monitoring and created enforcement gaps.

Textile entrepreneurs warn that of the $23 billion invested in the sector, around $14 billion in local investment is now at risk due to unfair competition from duty-free materials illegally sold in the domestic market.

How the bond facility works

Under the bonded warehouse facility, exporters are allowed to import raw materials duty-free on the condition that the goods are stored in approved warehouses, used to manufacture products and then exported.

If those materials are sold locally, prior customs approval is required and import duties ranging from 40% to 89%, depending on the item, must be paid.

Introduced in the 1980s to enhance export competitiveness, the facility has been a cornerstone of the ready-made garment industry. However, allegations persist that some exporters divert duty-free raw materials into the domestic market, where commercial importers must pay full duties.

Economists say this creates double losses, as government revenue is forgone while domestic manufacturers face unfair competition that discourages industrial investment. In 2016, a former NBR chairman estimated annual bond misuse exceeded Tk50,000 crore.

Bank accounts under scrutiny

As part of the crackdown, tax offices across the country have begun requesting banking data from commercial banks. Officials said most of the NBR’s 30 tax regions have already issued instructions, with some offices seeking information on multiple companies.

A senior official from Dhaka Tax Zone-8 said banking information has initially been sought for seven companies suspected of relatively large-scale bond misuse involving several crore taka.

Once the five-year banking records are received, they will be cross-checked against export-import data in ASYCUDA. If discrepancies are found, companies will be asked to explain. If banking transactions exceed what is reflected in export data without a valid explanation, authorities may assume duty-free raw materials were diverted to the domestic market.

Officials added that, if necessary, bank accounts of related individuals or affiliated companies could also be examined.

An official from Tax Zone-15 said letters have been sent to banks seeking information on eight companies, adding that the total number of firms under scrutiny nationwide is expected to reach around 100.

While the names of the companies were not disclosed, a source said at least two firms from the Thermax Group are among those whose banking data has been requested.

Industry reaction

Industry representatives have urged firm and visible enforcement while cautioning against blaming the entire business community.

Textile sector leaders say decisive action is needed to protect local manufacturers, while apparel exporters stress that only a small number of firms misuse the facility and that compliant businesses should not be penalised for the actions of a few.