A file photo shows a client using an ATM in Dhaka. Bangladesh Bank has issued dispute management rules for inter-bank card-based transactions under National Payment Switch mentioning that they (banks) would have to settle the clients’ claim by six months.

Bangladesh Bank has issued dispute management rules for inter-bank card-based transactions under National Payment Switch mentioning that they (banks) would have to settle the clients’ claim by six months.
The BB issued separate circular and guidelines to managing directors and chief executive officers of all banks on Thursday asking them to apply to the central bank for settling the dispute if they failed to resolve the problem.
The clients usually face harassment in ATM and PoS transactions when they fail to receive the amount in line with their requirement.
Sometimes, the ATM machines do not provide the required cash although the fund is deducted from the clients’ account with the banks.
The BB guidelines said that the clients would have to submit applications before their account holders’ banks within 60 days after having failed to get their required cash from the ATM or PoS terminal.
The banks will have to resolve the dispute within a few days after submitting the clients’ claim, it said.
The banks, which acquire the debit or credit card of the clients, will have to submit the claim by maximum 25 days to the ATM or PoS terminal holder banks.
After getting the claim, the ATM and PoS machine holder banks will have to resolve the claim by maximum 30 days.
The BB guidelines, however, said the process would have to be completed in the shortest possible time so that the clients would be allowed to get the fund without facing any harassment.
The BB will play role as an arbitrator if the ATM or PoS holder banks deny repaying the claimed fund, the circular said.
The BB will scrutinise video footage from ATM booths along with the banks calculation to settle the dispute if required.
In a few cases, the clients receive partial amount from ATM booths against their requirement.
The banks will go to the central bank to settle such type of dispute on priority basis if they (banks) fail to settle the problem.
The central bank has recently introduced a ‘Dispute Management Software’ with the NPSB so that the banks can easily settle the clients’ claim. All banks, attached with the NBPS, are now allowed to use the software.
The BB guidelines said that the disputes would have to be settled by six months despite the central bank’s intervention as an arbitrator.

Bangladesh Bank has not confined itself to its sole goal of tackling inflation and is rather addressing risks of instabilities and imbalances through inclusive and environmentally sustainable institutional ethos in financing, its governor said.

Atiur Rahman said BB has deliberately shunned the minimalist orthodoxy of inflation targeting as the sole legitimate objective of the central banking.

“Last decade's global financial crisis has proven this minimalist orthodoxy deficient even for developed economies, but the unconventional approaches of developed economy central banks still go no further than monetary loosening by quantitative easing, in effect sowing seeds of further imbalances, future instabilities and crises.”

“BB and a number of other developing economy central banks have instead been trying to address the risks of instabilities and imbalances at sources, by promoting socially responsible inclusive and environmentally sustainable institutional ethos in financing,” he said. 

Rahman spoke at an international seminar on 'Challenges of price stability, growth and employment in Bangladesh: Role of Bangladesh Bank' in Dhaka on Thursday.

Bangladesh Bank and the International Labour Organisation (ILO) organised the event.

In recent years, the BB has widened its developmental role of playing its part in the national strategy of inclusive growth and is seeking to model itself as a developmental central bank.

Bangladesh is cited among the very few countries where the central bank has an explicit development objective.

Rahman, who promoted pro-poor and SME financing since taking the helm of the central bank in 2009, said BB's sustained motivation, enablement and policy support efforts in promoting inclusive and green financing are paying off well for the Bangladesh economy, in terms of sustained stable 6-plus percent real annual GDP growth spell for well over 12 years now amid persistent global growth slowdown, with stable downtrend in inflation.

“The inclusive quality of Bangladesh's stable, steady growth is evidenced by rapid poverty decline with buoyant, vibrant employment growth in the rural economy supported by inclusive micro, small and medium enterprise financing of farm and off farm output activities.”

“Attention to adequacy of financing for crops, vegetables, dairy, poultry and fishery has yielded substantial output gains in these areas, including self sufficiency in rice and exportable surplus in many agricultural produces.”

The governor said because of the inclusive stance of financing promoted by BB, SMEs and other start-up businesses in Bangladesh faced no credit crunch during or following the global financial crisis.

He said Bangladesh's entire financial sector is now fully on board with BB in mainstreaming inclusive and environmentally responsible financing in the financial sector.

Rahman thanked all development partners for coming forward in extending policy support for SME and green financing with low-cost refinance lines for BB.

At the seminar, Muhammed Muqtada of the ILO presented a study on the role of the central bank in tackling challenges of price stability, growth and employment in Bangladesh.

The study said BB has adequate reasons to engage in multiple mandates, especially in financial structure development and financial inclusion initiatives. 

These, apart from serving the  national  strategy  of  social  inclusion,  could  potentially  lead  to  strengthening  and deepening of the financial sector and, hence, support price stability, according to the study.

With respect to price stability, BB is trying to bring the inflation rate down further through credit channels.

The study contends that BB has an “imprecise control” over price stability owing to weak transmission mechanisms.

Also, its existing instruments have a limited capacity to address volatile food inflation that weighs heavily on general inflation.

“Given the BB's mandates, it would be necessary for it to design a middle- to long-term strategy to strengthen its existing policy stance, and to initiate policies that would allow greater play and effectiveness of its instruments.”

The ILO study advises the central bank to avoid being fetish about a strict adherence to low inflation targets warranting sharp contractionary monetary measures, as the existing monetary policy is likely to be challenged if the economy were to follow the predicted growth path to Vision 2021.

“Greater opening up of the economy and future financial liberalisation would require BB to enforce greater integration of financial market segments and market resilience to avoid disruptions in price and exchange rate stability. The strategy would require more attention to strengthening and accommodation of the increasing importance of the policy rate and exchange rate channels.”

The study also said a well-functioning financial sector would require not only increasing the size of the sector, but also developing secondary markets for securities that would control interbank rates and transactions.

There needs to be a review to assess the real employment and effects of the financial inclusion initiatives, and their sustainability.

“Strengthening and support to mobile banking, automations in payment systems, agent banking, and designing of confidence-building regulations and guidelines could act as an important catalyst towards standardising commercial banking across the country, rural or urban.”

A seminar titled ‘credit access for women entrepreneurs-challenges and the way forward’ will be held tomorrow (Saturday) in Sylhet. Bangladesh Bank Governor Dr Atiur Rahman will be the chief guest in the event, jointly arranged by BB and Bangladesh INSPIRED, according to a statement issued by BB.

Defaulted loans in the banking sector increased by Tk 4,501.92 crore in the first quarter of this calendar year as borrowers did not repay instalments of their loans in due time showing excuse of political unrest, experts and Bangladesh Bank officials said. According to the BB data released on Thursday, the overall defaulted loans rose to Tk 54,657.69 crore as of March 31, 2015 from Tk 50,155.77 crore as of December 31, 2014. The defaulted loans had gone down to Tk 50,155.77 crore as of December 31, 2014 from Tk 57,290.89 crore as of September 30, of 2014 due to a central bank’s relaxed rescheduling policy. Former BB governor Salehuddin Ahmed told New Age on Thursday that some habitual defaulters had rescheduled their loans in the last quarter of 2014 using the relaxed policy of the central bank and they again entered into the defaulted zone in the first quarter of this year that fuelled the overall defaulted loans in the banking sector. The habitual defaulters usually showed excuse in the recent years that their business suffered due to political unrest, he said. He said, ‘Lack of good governance in the banking sector is another cause of the rise in the defaulted loans in the banking sector. Many bank directors are often influencing the management of the respective banks to disburse loans to their near and dear ones.’ Such borrowers failed to repay their loans, he said. Besides, some banks have recently terminated en masse jobs of their officials, creating an indiscipline situation in the banking industry, he said. The rise in the defaulted loans in the first quarter is a reflection of lack of good governance in banks, the former BB governor said. A BB official said that defaulted loans would have increased more in the first quarter of this year if the central bank did not reschedule the defaulted loans by taking lower amount of down payment avoiding the existing rules and regulations. The habitual defaulters will take the existing relaxed rescheduling policy again when they will try to take fresh loans from other banks, he said. The central bank has been continuing with the relaxed rescheduling policy since mid-December 2014 in a bid to decrease the defaulted loans artificially, he said. The defaulted loans stood at 10.47 per cent of the total outstanding loans of Tk 5,22,266.24 crore in the banking sector as of March 31, 2015. It was 9.69 per cent of the total outstanding loans of Tk 5,17,837.43 crore as of December 31, 2014. Former interim government’s finance adviser AB Mirza Azizul Islam told New Age that the country’s business had faced a dire situation between January and March of 2015 due to political turmoil. The production capacity of the real businessmen decreased significantly in the period due to a slower export growth that diminished their (businesspeople) capacity to repay the banks’ loan, he said. He noted that this was also one of cause of increasing defaulted loans in the banking sector in the first quarter of 2015. Of the total classified loans, those of five state-owned banks — Sonali, Janata, Agrani, Rupali and BASIC — stood at Tk 22,654.04 crore as of March 31, 2015 from Tk 22,763.21 crore as of December 31, 2014. The classified loans in the private commercial banks rose by Tk 4,321.20 crore as of March 31, 2015 from the end of December 2014. The total classified loans in the PCBs increased to Tk 22,747.42 crore as of March 31, 2015 from Tk 18,426.22 crore as of December 31, 2014. The classified loans in the three specialised development banks rose by Tk 157.27 crore in the period. The total classified loans in the three banks soared to Tk 7,417.07 crore as of March 31, 2015 from Tk 7,259.80 crore as of December 31, 2014. The classified loans in the nine foreign commercial banks increased by Tk 132.62 crore at the end of March 2015 from December 31, 2014. The total classified loans in the banks soared to Tk 1,839.16 crore as of March 31, 2015 from Tk 1,706.54 crore as of December 31, 2014. The BB data showed that defaulted loans at Agrani Bank increased to Tk 4,116.20 crore as of March 31, 2015 from Tk 3,706.23 crore as of December 31, 2014, that of Janata Bank to Tk 3,887.59 crore from Tk 3,286.16 crore, that of Islami Bank Bangladesh to Tk 2,802.63 crore from Tk 2,281.93 crore, and that of National Bank to Tk 1,402.04 crore from Tk 891.31 crore. 

News:New Age/15-May-2015

Bangladesh Sangbad Sangstha . Dhaka