Bangladesh Bank (BB) Governor Dr Atiur Rahman Thursday directed all the commercial banks to immediately go for initiating legal procedures, including filing criminal cases, if any fraudulence in lending and other banking transactions is detected.

The governor also directed the banks to pay the outstanding L/C (Letter of Credit) bills within next 15 days (from Thursday) as accepted bills amounting to $363 million (Tk 30 billion approximately) with different banks remained unpaid though deadline expired in June last.

Dr Rahman was exchanging views with chief executive officers (CEOs) of different commercial banks at the bankers meeting held at the central bank headquarters in the capital.

At the meeting, the governor said that the central bank as a regulator would maintain zero tolerance against weak monitoring and reluctance in taking legal and disciplinary actions against fraudulence activities in banks.

“The BB will bear down harder on banks, of which, the boards and senior managements display laxity in carrying out respective duties properly regarding identification and prevention of fraudulence activities,” Dr Rahman told the bank CEOs.

He maintained, “I would urge you all to bear this in mind; and thus to strengthen and maintain utmost alertness in maintaining lending disciplines and internal audit and controls; taking appropriate disciplinary and legal criminal proceedings immediately as any fraudulent activity is detected.”

Turning to the recent Hallmark’s loan-forgery from Sonali Bank, the governor urged top bankers to create and ensure an environment so that depositors could not be gripped by panic.

“Keep continue respective banking operations normally; and take rigid stance against fraudulence activities and create trustworthiness among clients,” Dr Rahman told bankers.

Deputy Governor SK Sur Chwodhury, while briefing reporters after the meeting, said that the central bank inspection teams and the Sonali Bank management is working to probe into the Hallmark’s loan-forgery in order to find out remaining facts by investigating in all 26 banks, which are involved in lending to the little-known company.

“In-depth investigation is being carried out in concerned branches of 26 private banks about their lending linked to Hallmark Group to dig out other facts whether the officials in other banks were involved in it,” Chowdhury said.

While replying to questions regarding pending payments by Sonali Bank to other banks against accepted L/C bills worth Tk 10 billion, Chowdhury said managing director (MD) of Sonali Bank Pradip Kumar Dutta sought ‘little time’ to repay banks.

“Since Sonali Bank accepted the L/C bills, it must pay, as per the banking regulations. The bank’s MD sought little time,” he added.

Chwodhury said the outstanding L/C bills accepted by different banks amounting to $ 363 million remains unpaid to corresponding banks though deadline expired in last June.

Of the amount, $ 319.60 million (Tk 26 billion) is against 6746 inland L/C bills of both local and foreign currency and $ 43.34 million (Tk 3.30 billion) against 514 foreign L/C bills, he said.

Chowdhury said banks were directed to pay the accepted L/C bills by 15 days from Thursday (September 13).

He said the Bangladesh Foreign Exchange Dealers Association (BAFEDA) and the ABB (Association of Bankers, Bangladesh) would jointly initiate arbitration between the banks (L/C recipient bank and the bank at the other-end) regarding payment of accepted L/C bills in case of failure by any bank on expiry of 15 days.

“If the arbitration does not works, the central bank would exercise its authority to pay the dues and debit the amount from the account of the corresponding bank that fail to make the claimed payments,” he said.

At the meeting, other agendas discussed including implementation of the Bangladesh bank’s circulars on loan provisioning for classification and rescheduling, SBS (Scheduled Banks’ Statistics) II and III, bringing the bank spread (the gap between interest rate for deposits and lending by banks) to lower-single digit (below 5 percent), Cash Deposit Ratio (CDR) and capital adequacy requirements in accordance with the Basel II criterion.

Chowdhury said CEOs of banks were urged to seek the central bank help in adjustment of loan provisioning if any bank faces difficulties.

Regarding the demand of ‘more time’ to implement the circulars on loan provisioning by bank CEOs, Chowdhury said, “It was not settled right now. We are working on it.”

News: Daily Sun/Bangladesh/14-Sep-12