Financially excluded people, specially the farmers, have started getting benefits from ‘Taka 10’ bank accounts which are not only helping them to get government’s financial assistance easily but also creating saving tendency among them.

“Farmers are now depositing their money in banks and one of the major achievements of it is that such practice is gradually creating saving habit among them,” said economist Abul Barakat.

Besides, such accounts help farmers save money and time as they are now receiving government’s financial assistance such as diesel subsidy through banking cannel without harassment and paying any kickback, Barakat, President of Bangladesh Economic Association (BEA), told BSS.

Saving accounts of more than one crore financially excluded people have so far been opened in different state-owned-commercial banks (SCBs) and specialized banks after Bangladesh Bank (BB) ordered banks to allow farmers to open saving accounts at Tk 10 in 2010.

More than 96 lakh farmers have opened savings accounts in SCBs and specialized banks till September 2012. The central bank took this decision as part of its “people-centric” approach to provide economically deprived people with financial services to ensure overall economic development. “Opening of 96 lakh new accounts means these people were out of banking network and bringing them under the umbrella of banking transactions is certainly a great success,” said Abul Barakat who is also the Chairman of Janata Bank.

According to BB, during the period, accounts of around seven lakh people who receive allowances under government’s social safety net programme and around one lakh accounts of freedom fighters have been opened.

Economists and bankers said transparency has been ensured in distribution of various agricultural assistances by the government, including diesel subsidy, among the farmers.

News: The Daily Sun/Bangladesh/18th-Oct-12

The central bank has sought cooperation from the Deputy Commissioners (DCs) of 65 districts to find out SME entrepreneurs and industry cluster across the country for the development of the sector, official sources said.

The Bangladesh Bank (BB) recently sent a letter to the DCs to take necessary steps in this regard.

General Manager (GM) of SME and Special Programmes Department Sukamal Sinha Choudhury told the FE that the central bank has been working relentlessly for increasing the country's financial inclusion.

As part of the BB's initiatives, "we have requested all the DCs for more financial inclusion for further positive growth."

"Identifying the SME entrepreneurs and industry cluster are very important to improve the sector," said the letter.

The DCs are the key persons in any district and also chief of district agricultural credit committee. So they will be able to select the genuine SME entrepreneurs easily, said the GM.

The letter further said, "We (BB) are drawing your attention to inform chambers, associations, women chambers, SME and women entrepreneurs within your jurisdiction about the SME credit and Japan International Cooperation Agency (JICA) fund."

The letter also said "you can discuss on SME financing in Agricultural Committee meeting at your own as head of the committee".

"We hope that your cooperation and help in this regard will march forward the initiative," the BB letter mentioned.

In the meantime, in a bid to improve the fund flow to some segments in the small and medium enterprise (SME) sector, the central bank has asked all banks and non-banking financial institutions (NBFIs) to attach top priority to cluster financing for the rest of the period of current calendar year, A BB official said.

The BB is working to enhance funding to manufacturing, service and woman entrepreneur segments through cluster financing, as their access to SME loans was far off the mark, BB sources said.

By following the cluster financing model, the BB aims to support small and medium-scale businesses for the export purpose and thus intensify SME activities at the field level.

The BB GM said, "In the current financial year we have planned to increase the field level activities by ensuring relationship banking to smaller SMEs."

"Disbursement of SME loans is increasing but we need to give more importance to identifying real entrepreneurs and woman entrepreneurs of SME across the country." the BB SME official said.

"In the present context, cluster financing is to be given the top priority. Monitoring and supervision at the branch level need to be strengthened so the entrepreneurs setting up cottage, small and medium enterprises are selected and no genuine entrepreneurs are deprived," the BB official said.

The disbursement of SME loans during January-June of this year was Tk 322.55 billion or 55.26 per cent of the annual target, according to the central bank statistics. The figures also showed that the overall SME financing kept going up over the years.

News: The Daily Financial Express/Bangladesh/17th-Oct-12

The commercial banks in the country have sought a clear directive from the central bank about settlement of payments against the 'inland bill purchase' (IBP) following the much-talked-about Hall-Mark loan scam involving a state-run bank.

Although the Bangladesh Bank (BB) verbally instructed the banks Monday to settle overdue payments against inland bills, some banks were not convinced.

"If the BB takes a step for settlement of all 'overdue' payments against inland bills, the confidence gap between the businesses and the bankers will be bridged promptly," a senior banker said.

The total number of overdue accepted bills in the banking sector stood at about 7,260 involving around US$ 363 million as of June 30 last. The large volume of unsettled bills needs to be settled urgently through direct intervention of the BB to restore confidence in the banking sector.

"The BB asked the banks verbally Monday to settle payments against inland bills without further delay. But it may not be effective if they do not take actions directly," a senior official of a leading commercial bank told the FE Monday.

Until settlement of those overdue bills, most banks might not be interested in accepting or buying fresh 'inland bills' from traders, he said.

He also pointed out that the BB should come forward with a comprehensive guideline to deal with the 'inland bills' for purchase or providing 'acceptance' against L/Cs (letters of credit) opened by the businesses in the country.

Bankers said in the absence of comprehensive guidelines on the 'inland bills' the bankers, especially the new generation ones, were getting confused about how to deal with such bills, as the business turnover is gradually increasing in the country.

The BB recently issued a circular giving a couple of instructions for the banks to follow while purchasing inland bills.

But they were not enough in the context of the prevailing situation, the bankers said.

In the latest circular the BB said any branch manager must take permission from their head office before providing acceptance against inland bills.

The branch manager also needs to be sure that the goods were supplied to the exporter, before accepting or buying an inland bill.

This circular in some cases was helping the banks verify authenticity of the bills. But it was not assisting the banks in settling overdue payments against inland bills, bankers said.

The move also could not address the banks' reluctance to purchase or provide 'acceptance' against new 'inland bills,' as the Hall-Mark Group and other five business entities swindled a large sum of money from the state-run Sonali Bank through fake bills and documents

Therefore, the supply chain, related with the country's ready-made garment industry, was highly disrupted over the last few days due to the banks' unwillingness to accept or buy such 'inland bills' from concerned traders.

While talking to the FE Monday, Bangladesh Krishi Bank (BKB) Chairman Khondokar Ibrahim Khaled told the FE: "The BB should come forward to negotiate the existing problem in relation to the payments against 'inland bills' for the sake of the country's economic benefit. It needs strong intervention in the banking sector to solve the problem."

The Managing Director and CEO of the state-run Agrani Bank Limited, Sayed Abdul Hamid, said the BB also should take a step to change the definition of 'Deemed Export' to solve the problem urgently.

"Perhaps, after the Hall-Mark loan scam, the time has come to change the definition of 'Deemed Export' for the sake of confidence-building between the bankers and the traders," Mr Hamid said.

As per the existing definition, the 'Deemed Export' refers to the transactions in which the goods supplied have not left the country and the payment for such supplies is received in local currencies, and in the case of Bangladesh it is taka.

The business confidence, especially in dealing with 'inland bills' among the bankers and the traders could be restored if the definition was changed, the Agrani Bank MD noted further.

News: The Daily Financial Express/Bangladesh/17th-Oct-12

Two out of nine new banks have failed to submit their supporting documents with their applications for licences within deadline which passed yesterday, Bangladesh Bank officials said.

The two banks, NRB Global Bank and Madhumati Bank, have sought for extension of six months to meet BB's regulations for setting up new banks.

“The central bank will decide on the time extension at its board meeting,” a BB official said yesterday.

“We need more time to arrange the money required as paid-up capital. We hope to get the extension,” Nizam Chowdhury, proposed chairman of the NRB Global Bank, said yesterday.

Chowdhury said initially he thought Tk 200 crore would be needed as paid-up capital, but later found the figure was Tk 400 crore.

Sheikh Fazle Noor Taposh MP who is a sponsor of the Madhumati Bank could not be reached for comments.

In April, the BB gave the go-ahead to nine new private banks, all linked with either lawmakers of the ruling Awami League and Jatiya Party or influential persons, despite opposition from different quarters.

The BB issued a 'letter of intent' for the new banks on April 17 and asked them to submit all supporting documents within a six-month timeframe.

Sponsors of the banks will also have to ensure they have arranged minimum Tk 400 crore needed as paid-up capital.

The minimum shareholding stake of each sponsor shall be Tk 1 crore, with the maximum being 10 percent or Tk 40 crore of the Tk 400 crore paid-up capital.

The seven banks which managed to meet the deadline are: South Bangla Agriculture and Commerce Bank, Midland Bank, Farmers' Bank, Union Bank, Meghna Bank, NRB Commerce Bank and NRB Limited.

“We'll now scrutinise the applications, including the eligibility of the sponsors and sources of their money,” said the BB official. Their credit reports, too, will be examined, he said.

Upon receiving the formal licences, the banks will have to issue public shares within three years from the date of commencement, with the public issues at least equal to the sponsors' share amount.

At present, 47 public, private and foreign banks are in operation in the country, in addition to the 29 non-bank financial institutions.

News: The Daily Star/Bangladesh/17th-Oct-12

The central bank warned Monday that it will not accept any indifferent attitude by private banks while accepting or buying 'inland bills' of the garment manufacturers or those supplying accessories to the country's export-oriented apparel industry. “No banks should avoid accepting or buying inland bill purchase (IBP) citing any excuse of Hall-Mark loan scam,” said Bangladesh Bank Deputy Governor SK Sur Chowdhury while briefing the journalists after a meeting with textile and apparel industry leaders.

“Most of the private banks have become more conscious after the Hall-Mark scam which prompted them to be choosier,” said the Deputy Governor, instructing the bank MDs who attended the meeting, to purchase the IBP as usual.

The central bank held a meeting with leaders of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BMEA) and Bangladesh Textile Mills Association (BTMA) at its board room to resolve banking problems the industry is facing.

According to sources, the business of the supply chains of the major export sector, especially the garment (RMG) industry, has been highly affected because of the Hall-Mark loan scam as most of the commercial banks are reportedly reluctant to finance businesses through 'inland bills' in the recent days.

Bangladesh Bank in a circular on July 11 reduced the power of purchasing IBP by the branches of banks as the banking regulator detected irregularities in disbursement of loans against opening of letters of credit. The regulator had found a significant rise in collecting funds through preparing accommodation bills against LCs, without any real business transaction.

The trend of bill purchase increased as those transactions were handled at branch level, with the principal branch kept in the dark.

Therefore, the regulator asked the banks branches to take permission from their principal branch before purchasing such accommodation bills.

Bangladesh Bank Deputy Governor, however, assured the entrepreneurs that they will get all cooperation regarding IBP if the bills were genuine. “They will purchase bills as usual which they did earlier,” asserted the Deputy Governor.
Association of Bankers’ Bangladesh (ABB) president Nurul Amin, who attended the meeting, also assured that all the banks, including the Sonali Bank, would purchase IBP and there will be no problem. “Relations between banks and clients should not be hampered,” Amin said.

BGMEA president Shafiul Islam Mohiuddin said they were assured by Bangladesh Bank about IBP purchase adding that the central bank is now more vigilant and will monitor the issue more seriously.

“The IBP will be accepted on bank-client relationship basis. We brought the issues those were not being addressed by our banks to the Bangladesh Bank,” BGMEA president said.

The meeting was attended among others by BKMEA acting president Mohammad Hatem, BTMA president Jahangir Alamin and BGMEA vice president Siddiqur Rahman.

News: The Daily Independent/Bangladesh/16th-Oct-12