The central bank suggested the banks to sincerely follow the EFT (electronic fund transfer) return rules to accomplish financial transaction in a faster way, said a central bank circular

LONDON: The Bank of England opted yesterday to keep interest rates at a record-low 0.50 percent, despite governor Mark Carney’s recent warning that they could rise sooner than expected.

The British central bank’s nine-member monetary policy committee (MPC) also decided after a two-day meeting to maintain the level of cash stimulus, or quantitative easing, at 375 billion ($641 billion, 471 billion euros).

Both decisions were in line with market expectations and were shrugged off on the London stock market. The BoE will publish minutes from the gathering on July 23.

The bank had slashed borrowing costs to 0.50 percent in March 2009, when it also launched the radical QE policy to stimulate economic growth.

However, Britain’s economy emerged from recession in the second half of 2009, after a fierce downturn rooted in the global financial crisis, and has since recovered somewhat.

The economy powered ahead with 0.8 percent growth in the first quarter of 2014 compared with output in the final three months of last year.

However, analysts argue that easing inflation may persuade policymakers to keep record-low rates for the time being.

“Although the economic recovery appears to be heading into the second half of this year with plenty of momentum, the continued weakening of inflationary pressures suggests that today’s decision by the MPC to leave interest rates on hold is likely to be repeated throughout 2014,” said Capital Economics analyst Samuel Tombs.

Consumer prices have been sliding in Britain, with 12-month inflation slowing to 1.5 percent in May—the lowest level for four and a half years.

The central bank is therefore having to deal with inflation that is below its 2.0 percent target, and a housing market that has rallied over the past year, especially in London.

Mindful also that it has to ensure that Britain’s growth revival keeps going, the central bank has so far shied away from raising rates to prevent a property bubble from forming.

Instead, it has deployed other tools at its disposal to deal with the rising housing prices.

Carney had last month hinted that the bank could lift rates sooner than expected, prompting analysts to price in a hike by the end of the year. —AFP

State-owned BASIC Bank, under fire over financial irregularities, has an unrecoverable debt that has soared nearly 30 times over the past four and a half years, reports bdnews24.com. It currently has a capital deficit of over Tk 6.58 billion. Information provided by the finance ministry at the meeting of a parliamentary standing committee on government institutions on Thursday showed the specialised bank had a Tk 1.41 billion bad debt at the end of 2009. The amount swelled to Tk 41.57 billion by June this year. In 2009, the bank loaned out Tk 4.56 billion of its total capital to nine institutions, of which 4.83 percent turned out to be bad loans. At present the percentage stands at 36.55. The amount of disbursed loan went up consistently after 2009.
Eight institutions were given Tk 4.98 billion in loan in 2010, while Tk 8.81 billion was given to 12 institutions as loan in 2011. Tk 19.65 billion was loaned to 23 institutions in 2012 and last year, 20 institutions received Tk 23.05 billion in loans from the bank. The committee has held the bank's board responsible for the irregularities and recommended legal actions.
After Thursday's meeting, committee chief Shawkat Ali said preliminary investigation showed that the board members and officials were partners in crime as far as the financial irregularities were concerned. “We are waiting to see what the new board of directors do,” Ali said.
"If their steps are not proper, then this committee will investigate the matter and make necessary recommendations," he said. BASIC Bank's managing director was removed last May amid loan irregularities while its chairman stepped down last week.
A new chairman was appointed two days later and the board was revamped. Ali said only removing those involved was not enough. "They must be punished," he said. So far, the committee has not found any link between the apex Bangladesh Bank and the irregularities at the Basic Bank.
The finance ministry said it found irregularities over loan disbursement at the bank's main branch and other branches at Gulshan, Karwanbazar, Shantinagar and Dilkusha. While approving loans in several cases, the bank overlooked rules and accepted fake documents from third parties as mortgage.
The ministry claimed to have obtained information about loan proposals that had been cleared without visiting the businesses, not collecting CIB reports of many customers, hastily opening running accounts to approve loan proposals within a short time and approving loans without necessary deposit.
It has asked the new BASIC chairman to investigate the irregularities and file a report within a month. Those involved will be prosecuted by the Anti-Corruption Commission, the ministry said. The parliamentary committee has recommended investigating the bank's financial irregularities and an elaborate report on it. Committee member Subid Ali Bhuiyan said changing the board alone would not help. "Exemplary punishment has to be handed down so that such irregularities do not take place in future."

he government on Monday appointed four directors to constitute the board of directors of the scam-hit Bangladesh Small Industries and Commerce Bank Limited. They newly appointed directors are : Hasan Mahmood FCA, former managing director of Bangladesh House Building Finance Corporation Raihana Anisa Yusuf Ali, banks and financial institutions division joint secretary Mamun Al Rashid and Dhaka University Professor of the department of Accounting and Information System Mujib Ahmed. A circular by the banks and financial institutions division said they were appointed to bring professionalism and dynamism into the bank’s management. Officials said two more directors will be appointed to the seven-member board of directors soon. Earlier, the government dissolved the board of directors of the BASIC Bank Limited after resignation of its controversial chairman Sheikh Abdul Hai Bachchu. It appointed Bangladesh Krishi Bank chairman Alauddin A Majid as the new chairman of BASIC Bank on Sunday and relieved him from the Krishi Bank. Alauddin A Majid held a meeting with the bank’s staff on Monday at its headquarter in the city. Briefing reporters after the meeting, he said that they would take initiative to recover the loans and improve the financial health of the bank. He noted that it would take time to see any improvement. There were anomalies worth more than Tk 4,500 crore in the transaction of the Basic Bank in recent years and the Bangladesh Bank asked the finance ministry to dissolve the BASIC Bank board of directors a couple of months ago. Loan scams in the BASIC Bank – a specialised bank once touted as one of the best-run public sector banks – was first detected in November 2012. Abdul Hai Bachchu, who was appointed chairman in 2009, was rewarded with reappointment in 2012. In June, the BB fired BASIC Bank managing director Kazi Faqurul Islam for his involvement in the loan scam. The default loans of BASIC Bank soared to Tk 2,557 crore last March from Tk 1,417 crore in February. Alauddin A Majid said, ‘I have already asked the senior management to provide data and information about the latest financial situation of the bank. After getting the data, I will take decision what type of strategy will be taken to improve the bank’s financial health’. He said that he had earlier gathered experience as managing director of the Basic Bank and that knowledge would help him to improve the bank’s health. He said that he had already asked the senior officials of BASIC Bank not to play ‘blame game’ about the irregularities. He said, ‘I will not allow the external interference on the activities of the board of directors and the management. The board and the management will take final decision about the bank’s operation.’ He said that the board would take decision in the quickest possible time to appoint a new managing director and chief executive officer for the bank. BASIC Bank acting managing director Fazlus Sobhan, deputy managing director Kanak Kumar Purkayastha and other senior officials of the bank attended the briefing. 

Banking division will signed a performance guarantee contract with the all state owned banks as there had no responsibility and accountability in the banking sector before’