Syed Waseque Md Ali, Deputy Managing Director of FSIBL, and Abul K Shamsuddin, Chief Operation Officer of RanksTel, exchange documents after signing an agreement in Dhaka recently.

First Security Islami Bank Limited (FSIBL) signed a corporate agreement with RanksTel Limited in Dhaka recently.

As per the agreement, the postpaid customers and dealers of RanksTel will be able to pay bills and deposit money from anywhere in the country, said a press release.

Syed Waseque Md Ali, Deputy Managing Director of FSIBL, and Abul K Shamsuddin, Chief Operation Officer of RanksTel, signed the agreement on behalf of their respective organisations.

Banks’ non-performing loans (NPL), also known as classified credits, have increased alarmingly, which implies low base of assets, capital and income of the banks, according to Bangladesh Bank (BB) sources.

Statistics released by the central bank Thursday showed that non-performing loans both in state-run and private banks stood at 10.03 percent of the total outstanding loans of the banks at end of the year 2012.

The amount of classified loans stood at 6.12 percent of bank’s total outstanding loans in December 2011.

Total classified loans of banks stood at Tk 427.25 billion at the end of 2012, up from Tk 226.44 billion during the same period a year ago.

Out of total classified loans, the share of four state-owned banks is Tk 215.15 billion for 2012.

“The increase in NPL is alarming for the banking sector. It implies low base of capital adequacy, weakened banks’ asset and lessen profitability of banks,” a BB official said Saturday.

BB data shows that the recovery of industrial terms loans in the first quarter of the current financial year (FY) was Tk 81.91 billion.

During July-January period of this fiscal, the recovery of farm loans stood at Tk 79.52 billion.

A high official of a private bank, however, claimed that the increase in classified loans was because of the tightened rules enforced by the central bank effective from October 2012.

“The BB has curtailed timeline for rescheduling and provisioning loans which resulted in broadening the amount of non-performing loans,” said the official, seeking anonymity.

A BB official, while replaying to this comment, said the central bank had to go for enforcement of the tightening rules to comply with international standards.

Md Yousuf Ali Hawlader has been elected chairman of Bangladesh Commerce Bank for 2013-2016, the bank said in a statement yesterday.

Hawlader started his career as senior officer with the then Muslim Commercial Bank Ltd in 1966.

He has served as deputy managing director and managing director (current charge) of Sonali Bank.

Hawlader has also been a director of Investment Corporation of Bangladesh Ltd.

The central bank has considerably shored up its precautionary measures to contain fraudulent activities in response to the recent banking scams, its governor said yesterday.

A Bangladesh Bank (BB) study on the scams -- titled Material Loss Review (MLR) -- found that bank managers failed to adhere to simple review methods like know your customer (KYC), credit risk grading (CRG), anti-money laundering provisions, among others.

They also demonstrated major lapses and deficiencies in their credit administration, risk management and internal control and compliance functions.

“As per the recommendations of MLR, BB has considerably tightened its onsite and offsite vigilance on risk management, corporate governance, internal controls and internal audit functions in banks,” said BB Governor Atiur Rahman.

The central bank has also reconstituted the state-owned banks' boards of directors with “fit and proper” persons, he added.

An online electronic supervision dashboard bringing together a range of live transactions data from banks and provide warning signs of potentially fraudulent transactions, has been put in place, too.

“The foreign exchange transactions modules of the supervision dashboard are already operational and in use by BB and the banks,” said Rahman.

He urged the top management to monitor all letters of credit (L/C) transactions by their respective branches so that they can immediately track any suspected fraud and take preventive measures.

The central bank governor advised all banks to open L/Cs (both foreign and local) through SWIFT [Society for Worldwide Interbank Financial Telecommunication] to prevent fraud.

“I hope these disciplines will be adhered to in right earnest and the banks succeed in keeping themselves largely free of insider abuses and frauds.”

Rahman's comments came at an interactive session on international trade fraud, organised by the International Chamber of Commerce, Bangladesh (ICCB) at MCCI in Dhaka yesterday.

“We have arranged this session with the higher-ups of banks and the BB governor to discuss the modalities for detection and prevention of such fraud,” said ICCB President Mahbubur Rahman.

“International trade has been a major driver of growth, and the world today is significantly more dependent on it. But commercial crime is growing faster than international trade. Frauds are more complex and involve larger sums than ever before."

Mamun Rashid, chairman of ICCB's standing committee on banking, techniques and practices, urged all bank executives, specially the trade professionals, to further review the existing trade undertaking, processing and settlement model.

P Mukundan, director and chief of ICC-Commercial Crime Services, said International Maritime Bureau can work closely with BB and commercial banks to develop a system for detection and prevention of fraud.

He urged banks to check the balance sheet and have collateral before opening of any account of its clients as well as for opening of L/Cs.