Bangladesh Bank (BB) will continue its support to fostering mobile phone banking as part of its drive to attain inclusive growth towards poverty alleviation.

“BB will continue attaching high priority for fostering mobile phone based banking as a powerful tool for easing hardship of livelihoods of poorer population segments,” BB Governor Dr Atiur Rahman told a seminar held Thursday in Kuala Lumpur, Malaysia.

The governor was speaking at a session on “Banking Clients through Mobile Money” at AFI Global Policy Forum (GPF) 2013.

The Alliance for Financial Inclusion (AFI), in cooperation with the Bank Negara Malaysia (BNM), is holding the three-day forum, began on September 10.

The Forum has become the world’s most important Forum on financial inclusion, and has consistently grown along with AFI, which now represents more than 100 institutions from 87 countries.

Addressing the session, Atiur said Bangladesh has the potential of expanding mobile banking faster with over 100 million among 152 million people using mobile phones.

“Fast penetration of mobile telephony everywhere in Bangladesh attracted attention early on for its high promise as a cost effective new financial inclusion instrument,” he said.

Apart from this, the governor said Mobile Network Companies (MNCs) in Bangladesh were keen on launching their own mobile phone based financial services. But on prudential stability considerations BB opted for promoting this service in a bank led mode with the MNCs in partnering role on fee income basis.

He said the number of mobile phone banking client accounts has nearly doubled over the past two years and reached 7.21 million in last March. The numbers of area agents have risen to 108 thousands, transaction volumes have gone up correspondingly.

Even then, the governor said Bangladesh still has vast potential for further expansion of mobile banking with new services.

Currently, he said, mobile phone banking transactions in Bangladesh comprise mainly money transfers including utility bill payments and salary disbursements.

Besides, he said, mobile phone banking is now setting up to extend other services like deposit taking, loan disbursement and loan recovery.

“Trial phases for introduction of these services are likely to be straightforward and brief after the much more complex initial phase of setting up secure glitch free software and connectivity, we expect these new transactions to take off rapidly before long,” he said.

News:Daily Sun/14-Sep-2013

Disbursement of agricultural credit witnessed a rise in the first two months of the current fiscal year as banks channelised Tk 1,549.50 crore to the sector which is up by around Tk 193 crore or 9.60 per cent from the same period of the last financial year.

During the first two months (July-August) of the fiscal 2012-13, commercial banks dusbursed Tk 1,356.52crore.

The central bank has targeted disbursement of Tk 14,595 crore agricultural credit in the year 2013-14.

“Agricultural credit disbursement goes up in July-August because of aman season . . . like the state owned commercial banks (SCBs), private banks are attaching priority to the agriculture sector in providing loan,” said Provash Chandra Mallick, general manager of Bangladesh Bank’s Agricultural Credit and Financial Inclusions Department.

The central bank has also beefed up its monitoring and supervision to achieve agricultural credit disbursement target, he added.

According to BB, SCBs and specialized banks disbursed Tk 822.37 crore while private commercial banks (PCBs), including the foreign ones, provided Tk 727.13 crore.

Among the SCBs, Bangladesh Krishi Bank disbursed the highest Tk 517.91 crore, followed by Rajshahi Krishi Unnayan Bank Tk 115.40 crore and Sonali Bank Limited Tk 70.41 crore.

Among the PCBs Islami Bank disbursed the highest Tk 227.19 crore. Six foreign commercial banks Al Falah, Habib Bank, National Bank of Pakistan, State Bank of India and Woori Bank did not provide any agriculture credit during the period.

During the period, BRAC disbursed Tk 22.30 crore among the sharecroppers under Bangladesh Bank’s refinancing scheme while BRDB disbursed Tk 85.19 crore in the agriculture and rural development sector.

News:Daily Sun/14-Sep-2013

Islami Bank Bangladesh Ltd has recently appointed a legal consultancy firm in the US to help the bank clear its name from the US Senate report on money laundering and terrorist financing, officials of the bank said.
The Washington-based firm, Dana Contratto and Associates,

was hired by Bangladesh’s top shariah-based bank at a cost of $25,000 per month (nearly Tk 20 lakh) under an initial contract of six months.

“The firm will help us reach our explanation to the US Senate committee that came up with the report last year,” Managing Director of the bank MA Mannan said.

In the report on HSBC’s money laundering lapses, Islami Bank, along with Social Islami Bank of Bangladesh, was accused of having links with terrorist organisations.

The report is the result of an investigation on London-based HSBC Holdings PLC by the Senate Permanent Subcommittee on Investigations.

The report also said HSBC’s US division provided banking services to some banks in Bangladesh who were reportedly involved in helping terrorist outfit al-Qaeda in fund raising.
Later, the US authorities fined HSBC a record $1.92 billion.

“Earlier, we had tried to clear our position before the US Senate subcommittee. But we could not reach them,” said Mahbub ul Alam, deputy managing director (international banking wing) of Islami Bank.

Alam said they are now confident the consultant will be able to convince the committee that the Bangladeshi bank was not involved in any sorts of money laundering or terrorist financing.

Another official of the bank said they have been facing troubles in international business as the report mentioned its name as HSBC’s “Serving other banks with suspected links to terrorism.”

The government has decided to establish Palli Sanchay Bank along the lines of Grameen Bank in its latest bid to emulate the success of Nobel laureate Muhammad Yunus.
A draft of Palli Sanchay Bank Act, 2013 has already been prepared by the Rural Development and Cooperatives Division and forwarded to the finance ministry’s banking division to secure approval from the cabinet.
The new bank will emerge from the government’s “One House, One Farm” project, just like Grameen Bank was born in 1983 following the conversion of Chittagong University’s Yunus-led Grameen Bank project.
As per the draft law, the specialised bank will enjoy exemption from value-added and income taxes, like Grameen Bank.
The bank will not be governed under the Banking Companies Act, meaning it would remain mostly out of bounds of the central bank. However, Palli Sanchay Bank’s managing director would be appointed, by the board of directors, with prior permission of Bangladesh Bank.
The bank’s paid-up capital will be Tk 600 crore, 80 percent of which will be provided by the government through its “One House, One Farm” project.
The government will hold 50 percent of the bank’s ownership and the remaining 50 percent would go to the member cooperative societies of the “One House One Farm” project. However, the government will not take any dividends against its shares.
The activities of the specialised bank, in many aspects, would also resemble those of Grameen Bank. Like Grameen Bank, it will collect deposits and lend to its members.
But Palli Sanchay Bank will differ from Grameen Bank in that it would also conduct general banking activities, including various types of foreign exchange related transactions including opening of letters of credit (LC), online banking, introducing debit and credit cards.

The bank’s board of directors will consist of 17 members and the secretary of the Rural Development and Cooperatives Division will be its ex-officio chairman.
Seven directors will be selected from the share holders, with the government appointing one from the civil society. The other positions of the board will be filled up by government officials.
The “One House, One Farm” is a project under the Annual Development Programme, the first phase of which started in 1997. The second phase of the project started after the present government assumed power.

The government will seek financial assistance from the World Bank to help the state banks meet a huge capital shortfall that stemmed from years of bad governance.

The WB finds four state banks have a capital deficit of Tk 17,600 crore ($2.2 billion), while Bangladesh Bank sees the figure at Tk 10,340 crore as of June 30.

With the huge capital deficits, the banks will face problems in international transactions and a dearth of confidence in the local market as well, the WB said.

A finance ministry official said the lender has assured the government of giving the support to meet a portion of the shortfall, but the loans will have tough strings.

A WB team held a series of meetings with the officials of the finance ministry and the central bank from August 3 to 8 and has recently sent a draft “aide-memoire” to the government.

The team also discussed the overall situation in the banking sector in recent times, especially how the banks’ financial health deteriorated.

The government will soon send a letter to the WB seeking the support, the ministry official said.
Finance Minister AMA Muhith will go to Washington next month to attend the WB’s annual meeting and will hold detailed talks on the matter with the high officials of the lender.

The Banking Division told the WB team that the government has allocated Tk 5,000 crore ($633 million) to recapitalise the banks but the amount is not enough to help them maintain capital at 10 percent of their risk weighted assets.
“The mission was informed that the government appreciated the past involvement of the WB in the restructuring of the state banks through the Enterprise Growth and Bank Modernisation project, and would like the WB to remain engaged,” according to the draft aide-memoire.

The banks’ financial health improved due to the WB project taken during the last BNP regime, it said.
However, the lender said, to get the financial support reintroduced, the BB will have to prepare a list of 150-200 professionals and appoint directors of the state banks from them.

The government will have to divest part of its shares in the state banks to bring down its control of the banks, according to another condition of the WB.
The government will form an expert panel in consultation with the central bank to decide on the amount of capital the banks need. The government will also provide the capital in phases, not in a chunk, the WB said.

Before giving the capital, the panel will evaluate the banks’ performance indicators every three months.
The WB also recommended picking independent directors for private banks from the list to improve the governance of the overall banking sector.

After the present government assumed office, large-scale politicisation in selecting the state banks’ directors, and corruption took a huge toll on the financial health of the banks. The BB also alerted the finance minister to the wrongdoings on various occasions.

However, the Banking Division informed the WB team that some steps have already been taken to bring changes to the top management and boards of the banks.