Engr. Mohammad Abul Bashar, Deputy Managing Director of IBBL, seen at the business development conference for the Bank officials of Khulna Zone in Jessore recently.

Islami Bank Bangladesh Limited organised business development conference for its officials of Khulna Zone in Jessore recently.

Engr. Mohammad Abul Bashar, Deputy Managing Director and Head of ICT Wing of the Bank was present in the programme as chief guest, said a press release Monday.

Md. Obaidul Haque, Executive Vice President of the Bank presided over the function.

News: The Daily Sun/Bangladesh/20-Nov-12

AAM Zakaria, Managing Director of First Security Islami Bank Limited inaugurates an ATM Booth at Bohaddarhat, Chittagong recently.

First Security Islami Bank Limited opened an ATM Booth at Bohaddarhat, Chittagong recently.

AAM Zakaria, Managing Director of the bank opened the booth.

Deputy Managing Directors of the bank Md. Abdul Quddus and Syed Waseque Md. Ali, SEVPs Kazi Osman Ali and Syed Habib Hasnat, Zonal Head Quazi Latiful Islam, branch managers of Chittagong zone were also present on the occasion.

News: The Daily Sun/Bangladesh/20-Nov-12

The government will include two ministries in the working committee on National Coordination on Anti-money Laundering to deal with money-laundering issues more efficiently.

The ministries are—Commerce Ministry and Housing and Public Works Ministry.

Earlier, the Financial Intelligence Unit of Bangladesh Bank in a letter urged the Banking and Financial Institution Division of the finance ministry to insert two ministries to the 12-member committee, a senior official of the central bank Monday said.

The official also said the two ministries would be included since several reporting agencies have already been incorporated under the existing Anti- Money Laundering Prevention Act, 2009.

The reporting agencies are include real estate developers, cooperative societies, Jewellary shops and various professional groups, including lawyers, notary publics and accountants.

Sources said two representatives of the commerce and housing and public work’s ministries will attend the next meeting of the working committee on national coordination on anti-money laundering.

Currently, the 12-member committee on anti-money laundering comprised of members from the finance ministry, Bangladesh Bank, National Board of Revenue, and Anti-Corruption Commission (ACC).

News: The Daily Sun/Bangladesh/20-Nov-12

A parliamentary watchdog Monday recommended to the central bank to issue proper guidelines for the loan disbursement and recovery in the state- owned commercial banks (SCBs) and specialised banks (SBs) to help save depositors' interest, said a release.

The Parliamentary Committee on the Finance Ministry also asked all the SCBs to follow the Bangladesh Bank (BB) guidelines for their operations and strengthen monitoring of the central bank in this regard, the release added.

The recommendations came at the committee's 52nd meeting at the parliament building with its chairman AHM Mustafa Kamal in the chair. Members of the committee Ali Ashraf, AKM Maidul Islam, Tajul Islam, MA Mannan and Farida Rahman were also present, among others, in the meeting.

The meeting discussed the activities of the SCBs of the country. The performance reports of the SCBs like Sonali, Janata, Agrani and Rupali, SBs like Bangladesh Krishi Bank (BKB), Rajshahi Krishi Unnayan Bank (RAKAB), Bangladesh Development Bank Ltd (BDBL) and Bangladesh Small Industries and Commerce Bank Ltd (BASIC) and Expatriate Welfare Bank, Karmasangsthan Bank and Ansar and VDP Development Bank were presented and discussed in the meeting.

The various weaknesses inthe basic structure of the banking sector were identified in the meeting. Recommendations were also made to follow proper rules and regulations regarding loan disbursement and recovery to save the depositors' money from being embezzled and to bring back the confidence of the local and foreign customers in the public sector banks.

The meeting also asked persons concerned to discharge their duties properly and ensure transparency and accountability in the banking sector.

The committee suggested all the government banks to follow the central bank guidelines in their operations. Besides, the committee decided to hold separate meeting with central bank and finance ministry and another one with BASIC Bank and finance ministry.

Additional and deputy secretaries of the finance division and high officials of Bangladesh Bank were also present at the meeting.

News: The Daily Financial Express/Bangladesh/20-Nov-12

I was lecturing at a training session on `trade risk management'. For the sake of the training, we all had to contain our presentation and discussions with regard to risk associated with 'letters of credit, advising, negotiation, shipping document, bill of exchange, payment, bill of entry, pricing, exchange rate and other trade products'. In the question and answer session a lady bank executive from a second generation private commercial bank asked me a question- 'sir, could an independent central bank help avoid the Hallmark scam'?

Considering the recent 'hue and cry' raised over the central bank's independence or autonomy, I wanted to avoid the answer. But the other attendees joined the lady and the voice seemed to have become louder. Though I always felt that an independent, strong and effective central bank could play a significant role in improving the overall banking environment in the country, I don't think that central bank autonomy had anything to do with 'Hall-Mark scam'.

We unfortunately had to swallow a lot of `knowledge donations' re: the possible causes of 'Hall-Mark episode' as explained by people not having even an iota of knowledge in international trade, risk analysis, risk management, bank limit, audit, governance, information technology in banking or financial institutions risk management. Any humble student of banking should be able to say; Hall-Mark is a glaring example of - 1) control lapses in state-owned commercial banks- the head office didn't have enough control on the branches and didn't have adequate knowledge about what was really happening in the branches, 2) non-compliance with the procedures of 'accommodation bill' and bill discounting under bank limit- nobody was keeping track of transaction happening within two group entities under Hall-Mark in the same branch of a state-owned bank and continuous diversion of funds to other banks , 3) local banks are happily taking exposures under bank limit on another bank without analyzing the underlying fundamentals, strengths or weaknesses of the respective banks , nobody in the bank branches as well as head office were monitoring the outstanding against the bank limits and some people even thought that they could take any exposures or risks on Sonali Bank, which is a government of Bangladesh undertaking 4) documentation as well as validation process in `local or domestic trade' is very weak in Bangladesh- in many cases letters of credit is established after the goods have been shipped and only in order to formalize the payment process or in most cases, 'delivery receipts' can't be verified 5) banks are increasingly becoming subservient or captive to the big business groups- in most occasions drawings by the large groups are heavily in excess of their overall sales numbers or turnover and, most importantly, 6) banks are not in command of the required and relevant information due to absence of right information technology platform or weak management information system (MIS) or inappropriate record keeping process. While respective banks' lending capability is constrained by a percentage of their capital and reserve, the large clients can enjoy a 'loan bonanza' without any relevance to their capital and reserve.

Added to these were of course the lack of accountability in the state-owned banks, politicization of the board and, may be, the entire banking system and weak or no human resource development practices and performance management culture.

Strong control over the CEO and board appointment process might have helped the central bank to have louder voice on timely submission of the returns, dictate a proper audit plan on the state owned banks or even impose a better asset-liability management plan. But I don't think it would have helped a bank like Sonali to avoid 'Hall-Mark' type scam. We need a better risk appraisal culture, data processing, mining and analyzing capability with well-trained human resources to detect or protect fraud or risk managers to identify and mitigate transaction risks in order to make sure we do not encounter surprises like that of Hall-Mark.

Who does not want the central bank to enjoy autonomy to formulate an effective monetary policy or even in a transition economy like Bangladesh to achieve respectable supervisory strength to protect depositor's interest? Having said that, I would rather put my money more on the banks to improve their human resources, rewrite their transaction or audit manuals or check lists, ensure establishment of a proper risk appraisal and approval process with an effective information technology delivery platform and, more importantly, see to that the internal control and compliance process is working.

I would also humbly remind our friends in the central bank that nobody is telling them to increase their number of offices or recruit 10,000- odd auditors or inspectors to ensure supervisory excellence in the commercial banks, be those government-owned or private commercial ones. We only want them to improve their 'offsite supervision', increase the use of technology in bank supervision manifold and, more importantly, their senior officials to start learning and appreciating the 'practical way' of handling international trade transactions, large loans or treasury management. But one important thing needs to be remembered by all concerned - 'no matter how much we improve our systems, process or platform, nothing can stop fraud and forgery in banks, unless we can recruit better people, capable but non-controversial people in senior positions in regulatory, supervisory and business development affairs.

News: The Daily Financial Express/Bangladesh/20-Nov-12