Takes move against EC committee chairman for irregularities

Vendors and passers-by are seen outside the Motijheel Branch of Farmers Bank on Monday. A Bangladesh Bank investigation has detected that Farmers Bank sanctioned and disbursed around Tk 50 crore in loans to a number of companies violating the banking rules and regulations.

Newly-established The Farmers Bank sanctioned and disbursed around Tk 50 crore in loans to a number of companies violating the banking rules and regulations, found a Bangladesh Bank investigation. The BB probe found that the bank’s executive committee chairman Md Mahabubul Haque Chisty was directly responsible for the anomalies as he, in some cases, passed loans without taking the approval of the EC committee, bypassed branch recommendations in some cases and in other cases did not take any recommendations in sanctioning the credits. The BB investigation teams conducted separated inspections at the bank’s Gulshan and Motijheel branches in February when they unearthed the irregularities. The central bank has already served a show-cause notice asking Chisty, also a director, to reply why any action would not be taken against him. When contacted, BB deputy governor SK Sur Chowdhury told New Age on Monday that the central bank had already received reply of the show-cause notice from Chisty. ‘We are now scrutinising the reply of the show-cause notice of Chisty. The BB will take punitive measures against him if his answer fails to substantiate his stand,’ said Chowdhury. Chisty could not be reached for comments as his official mobile number was found switched off in the last two days. His private secretary Zakir Hossain on Monday said Chisty was out of the Dhaka city for few days. Farmers Bank chairman Mohiuddin Khan Alamgir on Monday told New Age, ‘The central bank has wanted to know about the issue. We have replied to the central bank.’ ‘To my knowledge, no director of my bank took any steps which are illegal,’ said Alamgir, who is also a lawmaker of the ruling Awami League and a former home minister. The BB investigation found Chisty approved an overdraft loan facility of Tk 5 crore to Prime Islami Securities Ltd, a client of the bank’s Motijheel Branch, without placing the loan proposal of the branch before the executive committee meeting violating banking rules. In another case, Chisty initially unilaterally approved a loan of Tk 2.50 to Saif Powertec Ltd without taking any recommendation from the Gulshan Branch after Saif Powertec applied with the branch for taking a loan of Tk 3 crore as working capital on July 3, 2014. Subsequently, Chisty topped up the loan facility to Tk 4 crore to Saif Powertec by giving direction over telephone to the branch. The EC committee of the bank, however, gave post-facto approval to the loan proposal of the company violating the central bank circular. The EC committee of the bank, led by Chisty, on the other hand, granted Tk 8 crore loan to United Bricks and Fultola Filling Station on March 5, 2014 without taking any credit proposal from the bank’s Gulshan Branch. The Gulshan Branch placed negative recommendations about the two companies’ business status before the head office of the bank but the EC committee avoided the suggestions breaching the banking rules and regulations. The EC committee approved a credit limit of Tk 15 crore on March 5, 2014 to Urban Design and Development Ltd against an under construction flat which was worth Tk 5.91 crore. The BB report said that the committee had not taken proper mortgage against the loan which made a threat to the depositors’ money. Besides, the committee approved the loan before receiving the credit proposal from the branch. The EC committee in its 14th meeting also approved a term-loan of Tk 16 crore and a working capital of Tk 2 crore in favour of Chittagong Fisheries, also a client of the Gulshan Branch, to purchase a fishing trawler. The EC committee approved the loan before preparing the credit proposal by the bank’s branch. ‘In some cases the EC committee is directly responsible. As the head of the committee, Chisty was served the show-cause notice for all the anomalies,’ explained a BB official. He said, ‘We are not satisfied with the Chisty’s reply. But, we do not know whether any action could be taken against him as the bank has a huge political link.’ Farmers Bank is one of the nine new banks that the previous Awami League-led government approved in 2012 because of their strong political backing. BB officials said the central bank also issued two separate letters to managing director of Farmers Bank asking him to take required measures in this regard. When asked about the irregularities on Sunday Farmers Bank managing director Choudhury Moshtaq Ahmed declined to make any comment asking New Age to communicate with him on the next day. But Moshtaq was not available in his office on Monday.

All commercial banks would get a 10-day final notice to set up a separate 'help desk' for women at their all branches to help create new women 
entrepreneurs by providing them with hassle-free and faster services, said a Bangladesh Bank (BB) official, reports BSS. "The central bank would issue a directive next week asking the banks open woman help desk at their all branches within 10 days of receiving the directive", BB executive director Nirmal Chandra Bhakta told the news agency yesterday.
BB in 2010 asked all banks to open separate help desk for women, but many of them are yet to follow the directive.
"BB is now collecting information from banks on their number of branches having women help desk", said the BB official, adding that the final directive regarding this matter would be issued after compilation of the
information.
He said the central bank might take punitive action in case of failure of banks to set up women held desk within the stipulated timeframe.
BB executive director and spokes person M Mahfuzur Rahman said some banks effectively showed lack of interest by not following 
the regulator's directive, but they would have no option but to follow the next directive accordingly.
The central bank data showed that Sonali Bank so far opened the highest number of women help desks at 
its 12 among 1200 branches followed by Rupali Bank with setting up similar help desk at its 10 out of 650 branches. 
Only a few out of 56 private banks have separate help desk for women. 
Agrani Bank and Janata Bank have no such desk at their branches.

Sohail RK Hussain, managing director of City Bank, presents a dummy cheque as part of a CSR programme to Hasibur Rahman, executive director of MRDI, and Mobinul Islam Mobin, editor of The Gramer Kagoj, at a programme recently. Rokia Afzal Rahman, former caretaker government adviser, and Meher Afroz Chumki, state minister for women and children affairs, were also present.

Businesses can complement government efforts to empower women and ensure welfare of children as part of corporate social responsibility by helping vulnerable women become self reliant, said Meher Afroz Chumki, state minister for women and children affairs.

Chumki spoke at a function to mark the signing of the second phase of an agreement between City Bank, MRDI and Gramer Kagoj, at the head office of the bank in the capital. The bank also handed over a cheque for over Tk 67 lakh for the initiative, MRDI said in a statement yesterday.

Under the second phase of the initiative, another 160 women of the village will be trained and the educational expenses of 105 children of the members of the association will be borne in the next five years. The bank's total financial commitment to the programme is about Tk 1 crore and 25 lakh in two phases, according to the statement.

The first phase of the programme resulted in a successful women's livelihood programme at Basatpur, Jessore as a CSR intervention initiated by the Management and Resources Development Initiative with support of the City Bank.

Providing support to children's education is a positive step to ensure future impact of the initiative, Rokia Afzal Rahman, former adviser to a caretaker government, said at the programme.

The government is providing 10 percent tax rebate on CSR expenditure, said Mir Mustaque Ali, member (information management and service) of the National Board of Revenue. Such successful initiatives will open the possibilities of ensuring more policy incentives for CSR, he said.

Women trained under the first phase of the initiative are now applying their skills to earn money and support their families, MRDI said.

They have learnt to stitch and sew as well as developed capacity to run business through their registered association, according to the statement.

Their products are being retailed through Gaon Swapna, a marketing outlet of their own.

The Basatpur centre is a good example of a successful CSR initiative that could be replicated elsewhere, said Sohail RK Hussain, managing director of City Bank.

To ensure total welfare of the families, educational support is being provided to the children of the members of the association, Hussain said.

MRDI's advocacy for promoting CSR as a sustainable alternative source of development has demonstrated a sustainable impact through the success of this centre, Hasibur Rahman, MRDI's executive director, said at the programme.

From left, Debapriya Bhattacharya, distinguished fellow of Centre for Policy Dialogue; Towfiqul Islam Khan, research fellow; and Mustafizur Rahman, executive director, attend a media briefing on the think tank's recommendations for the upcoming budget, held at Brac Centre Inn in Dhaka yesterday.

The Centre for Policy Dialogue is not in favour of the government's move to seek budgetary support from the World Bank, as the amount is not significant and it would come with a host of conditions which would undermine the policy-making independence.

The need for budgetary support from the World Bank remains unclear, as the past two national budgets did not face any major resource constraints, the think-tank said, adding that the amount that is being sought, $500 million, is not significant.

CPD made the observation at an event in Dhaka to unveil its expectations from the upcoming budget, due in June.  

At present, negotiations are on the way between the government and the World Bank to receive Development Support Credit (DSC).

In order to receive the credit, the government has already agreed to undertake a set of policy reforms, said Finance Minister AMA Muhith in the last week of February.

The policy reforms would encompass nine areas including public fund management, banking, energy, transport, ICT, public-private partnership and migrant workers; and they would be implemented in three fiscal years, starting in 2015-16.

“The CPD has always maintained that reforms, whilst much-needed, must be domestically-owned and nationally-designed.”

If there is any shortfall in resources, funds may be mobilised from development partners including the WB, according to the CPD.

“Regrettably, both in case of International Monetary Fund-support and WB DSC, reform agendas are being imposed as conditionalities for receiving funds,” CPD said.

This undermines both the national cause of policy making independence and also the prospects of implementation of these reforms, said the CPD.

Most of the reforms identified by the government and the WB are related to adoption of new laws, rules and action plans, and timely implementation of various projects related to infrastructure and ICT and other sectors.

While both sides have common positions with regards to a number of areas including PPP, setting up of special economic zones and infrastructure projects, there are differences in opinion over time-bound action plan to strengthen the financial sector and undertaking energy sector reforms.

As part of the reforms, the WB is also interested in including other tax-related issues including customs act and direct tax.

The multilateral lender is at one with the IMF over the introduction of a unified VAT rate instead of the existing multiple rates and automatic adjustment of energy price with international market. The research organisation said if the government and the WB reach an agreement in the coming months, the next budget will need to address a long list of reform-related issues.

The issues which are included in the first year's proposed activity list include formulation of an apex body to coordinate activities of different government agencies functioning in Dhaka city, prepare urban transport policy, finalise an action plan to integrate with regional and global markets.

A time-bound action plan will have to be drafted in to strengthen state banks along with preparation of a public fund management strategy and a formula for revenue sharing with local government.

It also has to update the telecom policy, design a strategy for increasing efficiency of existing thermal plants, revise the energy policy and prepare a strategy for reducing the cost of remitting funds from abroad.

“This is a long list and the needed activities will need to be reflected in fiscal 2015-15 budget if the support is approved in the coming months. The government will need to carefully examine the proposals before these are finalised,” said the CPD.

Meanwhile, the think-tank is of the belief that the budgetary and fiscal measures for the next fiscal year should take into cognisance the global economic outlook for the near-term future.

The potential channels of transmission of the implications of the emerging scenario will need to be considered in designing the budget.

It said developments in the global markets have important consequences for the Bangladesh economy when the budget is being prepared. Thus, care must be taken to mitigate the effects of the shocks arising from the fluctuations.  It said lower international oil and commodity prices will provide additional policy spaces.

The CPD said Bangladesh, a net importer of crude oil, stands to make formidable gains from low oil prices, as the plunge in the petroleum prices is providing opportunities to oil-importing countries to reduce subsidies associated with its import.

For Bangladesh, it is important that subsidies are diverted to Bangladesh Power Development Board in fiscal 2015-16, keeping the electricity prices unchanged, it said.

The government also needs to make the best use of the opportunity and complete the annual development projects related to electricity-production within the planned deadline to cut over-reliance on the high-cost liquid to generate power, said the CPD. In general, the lower commodity prices should result in lower inflationary pressure in the domestic market.

“Hence, the government will have some policy space for using expansionary fiscal and monetary policy instruments, which can then be used to catalyse private investment and promote economic growth.”

The think-tank said the upcoming budget should proactively pursue ways to generate new jobs in the domestic market by promoting private investment as overseas employment may remain subdued in the near future.

It called for prudent exchange rate management next fiscal year, as the current trend in the international currency market can reverse in the coming months.

The budget should also make allocations to promote trade facilitation measures in line with the Bali package of the World Trade Organisation.

It also said garment exports to the US are struggling, while shipment to the EU market is facing greater competition. The upcoming budget needs to consider these trends while coming up with fiscal proposals including incentives.

SM Abdul Hamid, Deputy Managing Director and CFO of IFIC Bank, and M Shamsur Rahman, Chief Executive Officer, Independent Television Ltd and also Editor of The Independent, exchange documents after signing an agreement at Independent Television�s office at Tejgaon in Dhaka recently.

IFIC Bank Limited and Independent Television Limited (ITV) signed an agreement for disbursing the company's district correspondents salary through IFIC Mobile Bank. SM Abdul Hamid, Deputy Managing Director and CFO of IFIC Bank, and M Shamsur Rahman, Chief Executive Officer, Independent Television Ltd and Editor, The Independent, signed an agreement on behalf of the respective organisations at Independent Television's office at Tejgaon in Dhaka recently, said a press release.