The central bank has laid out agent banking guideline with a view to creating an enabling environment for commercial banks to offer financial services to a new customer base

 Bangladesh Bank published the guideline yesterday, said a circular.

The guideline will be ensuring safety, security and soundness of the proposed delivery channel to permit banks to be engaged in agent banking

. Agent banking will allow an agent to provide limited scale banking and financial services to the underserved population through engaged agents on behalf of a bank under a valid agency agreement. Agents’ activities will be within normal course of banking business of the scheduled banks but conducted at places other than bank premises and ATM booths.

The services may include collecting small amount of cash deposits and processing cash withdrawals, handling inward foreign remittance disbursement, facilitating small value loan disbursement and recovery of loan installments,

facilitating utility bill payments and cash payments under the social safety net programme of the government. The agent may also generate and issue mini bank statements, sell crops and provide other insurance services. Customers will not be charged directly by the agents for the services as banks will be paying reasonable fee to its agents for the services provided.

   An agent will be eligible for the agreement after meeting some requirement and must provide its services in a designated business premises, according to the guideline.

The agents will also need to ensure compliance with Anti-Money Laundering and Combating Financing of Terrorism standards set by AML/CFT rules and regulations.

The guideline comes under the article 74(e) of Bangladesh Bank Order 1972, section 45 of Bank Company Act 1991 and section 4 of Bangladesh Payment and Settlement Systems Regulations, 2009.

The purposes of these guidelines are to provide regulatory framework for agent banking. 

Md. Habibur Rahman, Managing Director, Al Arafah Islami Bank Limited, speaks at the inaugural session of a three-day training course at Al-Arafah Islami Bank Training and Research Academy on Sunday. 

A three-day training course on “Induction Course on Islamic Banking” organised by Al-Arafah Islami Bank Limited concluded on Monday.

Earlier, Md. Habibur Rahman, Managing Director of the bank inaugurated the course as chief guest at Arafah- Islami Bank Training and Research Academy (AIBTRA) on Sunday, said a press release.

Md. Zahid Hasan, Principal of AIBTRA was also present on the occasion.

Bangladesh Bank has re-fixed minimum period for term-deposits to financial institutions at three months.

Previously, the minimum period for the deposits was six months.

The re-fixing comes to prevent funding crisis in the financial institutions, said a Bangladesh Bank circular issued on Sunday.

The circular said the depositors were previously allowed to have premature encashment after completion of six months of deposit.

After re-fixing, the premature encashment can be done after three months, it said.

“Financial institutions are going through funding crisis. To help them recover from such situation, the period for term-deposits has been re-fixed,” said Mahfuzur Rahman, executive director of Bangladesh Bank. 

News:Dhaka Tribune/02-Dec-2013

Jamuna Bank plans to issue subordinated debt bonds worth Tk2bn to strengthen its capital base, which aligns with the regulatory requirement.

Subordinated debt is a hybrid (debt and equity) financial instrument which is treated as a component of capital.

The board of directors of the company has decided to raise funds through placement as part of the tier-II regulatory capital under the guideline of risk based capital adequacy for banks, said the company in a statement.

However, the subordinated debt of Tk2bn is subject to the approval of regulatory bodies and by the shareholders.

In 2009, the central bank had issued a guideline allowing the commercial banks to raise capital by issuing subordinated debt in order to meet the Basel-II requirement.

The banks can raise their capital through issuing such debt instrument, generally known as subordinated bonds, instead of issuing right and bonus shares, according to the guideline.

The subordinated debt eligible to be considered as tier-2 capital if have a maturity period more than five years, said Bangladesh Bank (BB).

The option of such financial instrument can be exercised by a bank once it has composite CAMELS rating at least two and BB rating grade at least two, as mentioned in the guidelines on risk-based capital adequacy for banks.

The Basel-II accord came into effect in Bangladesh on January 1, 2009 alongside Basel-I to consolidate capital base of the banks.

The new Basel accord has been prepared on the basis of three pillars: minimum capital requirement, supervisory review process and market discipline.

Three types of risks - credit risk, market risk and operational risk have to be considered under the minimum capital requirement. 

News:Dhaka Tribune/02-Dec-2013

When many business houses in Bangladesh have a tendency not to repay bank loans on time, Standard Group stands out. And banks will continue supporting this trusted client.
“The Group is a wonderful client. We are ready to support their business,” said Ehsan Khasru, managing director of Prime Bank.
Standard Group was overwhelmed by a massive disaster on Friday when a deliberate fire gutted its 10-storey apparel factory building in Gazipur. Four other buildings in the complex were reportedly damaged, along with 22 trucks loaded with garments.
The fire gutted capital machinery, finished garments, fabrics and raw materials housed in more than 8.5 lakh square feet of floor space in the buildings.
The fire and the losses of Tk 1,200 crore were supposed to make the bankers of the garment maker concerned, but for this case, they were not, mainly due to the business house’s reputation.

Local private lenders — Prime Bank and Shahjalal Islami Bank, and three foreign lenders — Standard Chartered Bank, Citibank NA and HSBC — have business links worth hundreds of crores of taka with Standard Group. Most of the exposure is loans against export LCs (letters of credit).
“They are a very good and reputed client. We’ll look at the issue positively,” said Abdur Rahman Sarker, managing director of Shahjalal Islami Bank.
Sarker said he will take up the issue to his board of directors. However, he said the client is yet to contact the bank.
It was confirmed from officials of Standard Chartered, Citibank and HSBC that they have loan exposures with the Standard Group. Officials of these banks also spoke well of the apparel maker that runs compliant factories.
AKM Mosharraf Hussain, managing director of Standard Group, told The Daily Star that banks are ready to finance his business. “No bank is concerned about us.
We will sit with the banks soon to sort out the things,” he said.
Standard Group, which started its garment business in 1984, employs about 50,000 workers in its 23 units. The factory complex that was destroyed by fire employed about 19,000 workers.
A number of international brands such as Sears, American Eagle, GAP, Uniqlo, Zara and Abercrombie & Fitch are the clients of Standard Group, according to its website.

News:The Daily Star/02-Dec-2013