BB appoints fraud detection adviser The central bank takes other supervisory steps to rein in irregularities in banks

Posted by BankInfo on Fri, Dec 21 2012 10:02 am

Bangladesh Bank has appointed a fraud detection adviser and taken some other supervisory steps to stop irregularities in the banking sector in the backdrop of the recent Hall-Mark loan scam.

The details of the 28-point supervisory measures were presented at a meeting of the BB board yesterday.

A web-based corporate memory management system (CMMS) has also been developed to record violation of banking rules by the officials and directors of banks and other financial institutions, the BB told its board.

Some irregularities by bank officials and directors have already been recorded in the CMMS and these will be reviewed later for taking further actions, the board was told.

Earlier, the BB board advised the authorities to find out the reasons behind the Hall-Mark scam and wanted to know about the measures the central bank is going to take to stop such frauds, a central bank official said.

At the board meeting, the central bank made a presentation, which highlighted its existing and future measures to stop such financial irregularities, BB Director Sadiq Ahmed told The Daily Star.

A BB report placed at the board meeting also portrayed the failure of Sonali Bank's treasury management, and gave details how a huge amount of money was embezzled by dubious Hall-Mark Group when the bank was going through financial crisis.

Sonali Bank gave loans worth Tk 10,883 crore from January to May this year. Of the amount, Tk 5,814 crore went to the private sector although the bank had a huge deficit in maintaining its cash reserve ratio, according to the report.

The adviser to detect fraud and mitigate related risks has already started working, the central bank told its board.

In another move, the BB has asked the banks to form a separate risk management unit. The units will do risk modelling, determining their risk limit, and analysing and supervising all the existing risks.

The financial integrity and customer service department of the central bank has inspected 53 branches of 26 banks that had links with the Hall-Mark scam carried out through the Sonali Bank's Ruposhi Bangla branch.

The department also conducted special inspections of several branches of Sonali, Krishi, Rupali, Agrani and Janata banks.

The BB has already taken actions against the officials concerned of these banks for which the volume of fraud-related bill purchase has come down now.

Regular inspections are being carried out to ensure whether due diligence is being followed in case of inland bill purchase and accepted bills.

The BB also said it has started regular preparation of diagnostic review report of the banks to bring the concerned banks under intensive monitoring after evaluating the gravity of irregularity through distant cautionary signal.

The banking regulator also said an assessment system has been introduced in banks to avert any probable irregularity.

News: The Daily Star/Bangladesh/21th-Dec-12