Bangladesh Bank (BB) will take necessary steps to restore stability in the stock market.

BB will take stock market friendly initiates on adjusting over exposure of banks and financial institutions as the call money market has already been stabilised through immediate steps taken by the central bank, BB governor Atiur Rahman said.

Atiur told this at a meeting with SEC member Yasin Ali to discuss on how to overcome the restless situation of the stock market.

At the meeting, the policy makers expressed deep concern over instability in stock market due to liquidity crises.

Recently the BB asked the SEC to take necessary steps to help stabilise stock market and following that the SEC high official met the central bank chief.

“BB will not take any decision to bring down the over exposure of banks and financial institutions, which might bring negative impacts to the stock market,” said Atiur.

He also said BB will cooperate SEC in developing a sustainable stock market to bring confidence of the investors.

Source: Daily Sun/ BAngladesh/ Jan-05-2011

The central bank (Bangladesh Bank) has warned banks against awarding depositors any interest higher than the rate announced.

On receipt of complaints that some commercial banks in a deviation from rules are giving more interests on deposit, Bangladesh Bank (BB) issued a circular to the banks asking those not to choose this way to lure depositors.

News: The Daily Star Bangladesh/05 Jan 2011

Banks of Bangladesh will introduce an electronic fund transfer system on February 24 to speed up transactions and payment, the central bank said yesterday. The system will be introduced under the central bank's automated clearinghouse project. With the automation, the corporate entities will be able to make faster payment of salaries to employees and make refund warrants in the case of initial public offerings and company dividends.

It will also take remittance and various government allowances such as those for freedom fighters, widows and elderly, easily to the beneficiaries. People will also be able to use the system to pay utility bills quickly. The decision was taken at a meeting of chief executives of all commercial banks at the central bank premises. Governor Atiur Rahman presided over the meeting.

Bangladesh Bank launched the automated system for settlement of paper cheques on October 7 last year. The meeting also decided to settle high-value cheques -- Tk 5 lakh or more -- from January 31 at 1,200 bank branches in Dhaka region. Besides, all cheques in Sylhet region will come under automated clearing system from January 20 and the Chittagong region from February 3. BB chief urged the banks to take technical preparations for the sake of modernising the payment system. He underscored cooperation among banks.

Rahman directed state-run banks to take special steps quickly to this effect to survive in the competition.

News: The Daily Star Bangladesh/05 Jan 2011

Professor Mohammed Farashuddin, Former governor of Bangladesh Bank, has called for imposing a strict limitation on scheduled banks' investment in Initial Public Offerings (IPOs) only and bringing them out of pre-IPO investment as it is creating only asset inflation in the economy. He was speaking at tenth Nurul Matin Memorial Lecture on 'Ethics in Banking', organized by Bangladesh Institute of Bank Management (BIBM) in a city hotel Monday.

"Banking Ethics has been put in the cold storage by commercial banks in diverting good part of their advances in non-IPO shares and making abnormal margin in a chaotic stock market", Dr. Farashuddin said, adding that such practice bars stock market's capacity of capital or equity formation. "Limiting commercial banks' involvement in IPOs and ensuring the limited exposure is channeled through properly formed and supervised subsidiaries should be in order along with regular surveillance on Small and Medium Enterprise (SME) fund to stop its diversion in consumer goods and non-IPO investment", he suggested.

Dr. Farashuddin also asked for scrutinising SME fund's performance not only in terms of providing working capital, but also from the aspect of creating newer enterprises. He also emphasised on further strengthening of Bangladesh Bank's supervisory capacity as well as additional operational independence and asked the government's attention for separate compensation package for central bank officials. "BB should be relieved from the duty of 'auxiliary assistance in socio-economic development' which will enable it to concentrate more on monetary policy and bank supervision objectives", Dr. Farashuddin said.

The speaker brought the issues of depositor's representation in board of directors, double-digit spread of interest, political intervention in sanctioning and waiving loan, excessive loan taken by equity-holder directors, commercial bank's BASEL-II compliance in his speech. Dr. Farashuddin also suggested for forming Asset Management Company for dealing with Non-performing Assets (NPAs), offloading nationalised commercial bank's share and exposing them in competition for efficiency, BB's involvement in assessment of scheduled bank's chief executives, limiting spread of interest to 6-7 per cent, and finalising merger law and enforcing it simultaneously with capital adequacy requirement. Concurring with the speaker's suggestion, BB governor Dr. Atiur Rahman, chair of the function, said, "BB is pursuing equitable and inclusive growth by engaging private banks in socially desirable lending and creating ground for tomorrow's profitable business".

Former governor A.K.N Ahmed was present as the chief guest and suggested to ensure ethics in policy making level in banks and keeping banks' growth in line with society's growth. BIBM director general Dr. Toufic Ahmad Choudhury welcomed all. Bankers, eminent economists, representatives from civil society and BB top officials were also present.

News Source: Financial Express/05 Jan 2011

Bangladesh Bank governor Dr Atiur Rahman and noted engineer and former adviser to the caretaker government Prof Dr Zamilur Reza Chowdhury have been selected for Sheltech Award-2010.

The awards will formally be handed over to the winners on March 12 this year, said a press release.

Each of the winners will be awarded Tk 2 lakh and crest, the news release added.

Sheltech has been giving the award to country’s eminent personalities since 1998 for their outstanding contribution to different sectors.

Source: Daily Sun/bangladesh/01-Jan-2011