No scope for rescheduling Hall-Mark loans: Sonali
Rejaul Karim Byron
Sonali Bank board has rejected any possibility of rescheduling Hall-Mark Group’s loans worth Tk 2,554 crore that were taken out through fraudulent means despite the Group’s inability to repay the amount.
The decision, taken on Monday, was arrived at after assessing Hall-Mark Group’s total asset, their repayment capacity and their lawyers’ opinion, and was conveyed to the finance ministry’s banking division on Wednesday.
The state-owned bank also concluded that the Group does not have the capacity to repay the loans and therefore proposed filing several cases against the disgraced company, said a finance ministry official upon condition of anonymity.
The move comes after the finance ministry in March asked Sonali Bank to evaluate the Group’s assets and send a proposal to the ministry such that the company’s operations can be resumed.
In the letter to the finance ministry, Sonali Bank said the Group’s assets are worth about Tk 1,170 crore but it has a shortfall of Tk 1,000 crore in collateral against its total loans.
As of June 30, Hall-Mark Group’s outstanding amount to Sonali Bank stood at Tk 2,554 crore. Around Tk 200 crore was taken out as loan and the rest through various irregularities.
The official cited the withdrawal of Tk 1,000 crore against a “mere slip” as an example of the irregularities that took place.
According to the six lawyers that Sonali Bank consulted, the cases have to be filed within three years of detection of the irregularities.
Bangladesh Bank in May last year unearthed the wrongdoings in the state-run bank, which ended up being the biggest banking fraud in the country’s history. The offences took place between 2010 and 2012.
The Anti-Corruption Commission has already lodged 11 cases against several officials of Hall-Mark Group and Sonali Bank, but there has been none by Sonali Bank yet.
According to Sonali Bank’s latest data, Hall-Mark Group took loans of Tk 2,964 crore, of which it has already adjusted Tk 410 crore. As a result, the company still owes the state-run bank Tk 2,554 crore.
News:The Daily Star/02-Nov-2013
Govt moves to boost portfolio investment
Rejaul Karim Byron
The government yesterday exempted four foreign banks from the mandatory requirement of a subsidiary to participate in the stockmarket for the sake of development of the capital market.
The four banks are: Standard Chartered Bank, Citibank NA, HSBC and Commercial Bank of Ceylon.
The move comes after the central bank last month, as per the Banking Companies Law, sought the finance ministry’s opinion on the matter in a bid to boost portfolio investment.
The recently amended law has made it compulsory for banks to form a separate subsidiary if they want to offer share market services — a time-consuming and tricky process for foreign banks.
To form the subsidiary, the foreign banks would require approval from their headquarters, which, in turn, would require authorisation from their regulators.
As the size of the capital market in Bangladesh is still small, the headquarters of the foreign banks are unlikely to give permission for separate subsidiaries.
A high official of the central bank said the four banks have been providing custodian services to foreign multinational banks and financial institutions in the share market.
The amount of portfolio investment of the foreign financial institutions through Standard Chartered Bank, Citibank NA, HSBC and the Commercial Bank of Ceylon is more than $1.2 billion.
“As these banks account for the lion’s share of the external portfolio investment in the country, the problem caused by the recently amended law should be resolved,” the central bank told the finance ministry.
“Otherwise, the stability of the stockmarket might be hampered,” it added.
News:The Daily Star/02-Nov-2013
BB steps up efforts to counter money laundering
Non-financial businesses, including gold and real estate, will have to send reports of transactions they deem suspicious to the central bank from now onwards as part of the government’s efforts to combat money laundering and terrorism financing.
Bangladesh Bank yesterday issued a guideline to be applied by all real estate developers, business firms dealing with valuable metals and stones, trust and company service providers, lawyers, notary and other law professionals and accountants.
For instance, if a real estate developer becomes suspicious of the buyer’s source of money, it would immediately have to send the transaction’s report to the central bank.
The guideline, which was prepared in light of Anti-money Laundering Act, 2012 and Anti-terrorism Act, 2009, will be available in the website of the central bank and has been sent to the presidents of the concerned businesses and professional organisations.
News:The Daily Star/02-Nov-2013
BB move to ensure good governance in banks Guidelines for chairmen, CEOs, boards of directors issued
The central bank has taken a move to ensure good governance in the country's banking sector through updating responsibilities and formation of banks' boards of directors, officials said.
The Bangladesh Bank (BB) issued three circulars in this connection Sunday and asked chairmen and chief executive officers (CEOs) of all the banks to comply with the existing rules and regulations in line with the Bank Company Act (Amended) 2013.
Under the latest moves, the banks have been asked to form risk management committees along with the existing executive and audit ones to minimise fraud and forgeries in the banking sector.
The BB has specified the terms of reference and responsibilities of the committees to ensure accountability and transparency of the banks' management.
"We've taken the measures to protect the interest of depositors through establishing good governance in the banking sector," SK Sur Chowdhury, deputy governor of the BB, told the FE.
He also said the central bank has issued the circulars in line with the Bank Company Act (Amended) 2013 to ensure corporate governance in the bank management.
The central bank said prior approval will be sought from the BB for appointment of new directors of the banks excepting the specialised ones.
Currently, there are more than 600 directors in the commercial banks.
A meeting of the Board of Directors can be held once in a month, but it can be more if necessary. However, at least one board meeting has to be held in three months, according to the circulars.
Regarding responsibilities of the chairmen of the boards of directors, the BB said the chairman of the board or chairman of any committee formed by the board or any director does not personally possess the jurisdiction to apply policymaking or executive authority. Therefore, he will not participate in or interfere into the administrative or operational and routine affairs of a bank.
The CEO will ensure compliance of the Bank Company Act, 1991 and/or other relevant laws and regulations in discharge of routine functions of the bank.
"The CEO shall report to the Bangladesh Bank of issues violative of the Bank Company Act, 1991 or of other laws/regulations and, if required, may apprise the board post facto," the BB said.
Besides, the BB issued a unified policy for the banks in appointing their advisors and consultants contractually.
Under the new rules, former director, chief executive officer or any other officer of the banks cannot be appointed as the advisor or consultant of the same banks contractually immediately after their retirement or termination.
However, they can be appointed as advisor or consultant of the same bank after passing one year from the date of their retirement or termination.
BB launches Financial Access Map
Bangladesh Bank (BB) on Saturday launched the web portal, Digital Map of Financial Services in Bangladesh at a function at the BB Training Academy.
The map includes geographic information of bank branches, ATMs, agents, and other financial access points across the country. Bangladesh Bank Governor Atiur Rahman launched the web portal.
This project was sponsored by the Bill & Melinda Gates Foundation, facilitated by BB and Microcredit Regulatory Authority,
and implemented by a specialist firm Brand Fusion who hired local data collectors to go around Bangladesh over a six-month period earlier this year.
Speaking on the launch of the programme Atiur said the map would help us to generate information and analyse the financial access points and would eventually be a great value to the commercial sector.
“This new tools can complement our new Integrated Supervision System which is our new electronic portal which allows us to monitor many aspects of the financial sector both at the aggregate macro level as well as zoom into branch level data,” the governor said.
Besides, he said this new financial mapping tool to be used by both BB and the Microfinance Regulatory Authority (MRA) in making balanced and sound policy and regulatory decisions.
For example BB staff can use this when giving bank branch permissions and also when determining the appropriate balance of branch, ATM, agent and other point of service.