The World Bank has extended its support by one year for the Central Bank Strengthening Project (CBSP) to December 2012.

The project, which was scheduled to end on December 31, 2011, supports the overall strengthening of Bangladesh Bank, the World Bank said in a statement.

The project helps automation of the central bank's core functions to enable it to effectively play its role as the country's monetary authority and banking regulator.

The government of Bangladesh has prioritised initiatives to build up a strong and effective regulatory and supervisory system for Bangladesh's banking sector, according to the statement.

In response to request from the government, the World Bank has extended the project period by one year.

The project has made significant progress, introducing automation system in Bangladesh Bank. All Bangladesh Bank branches are now connected to each other online and also to the Bangladesh Bank's Enterprise Resource Planning (ERP) and Banking systems.

The World Bank release said that Bangladesh Bank's IT organisation is now capable to conceptualise, procure and deliver large scale IT systems.

The implementation of the Credit Information Bureau and Automated Clearing House has also successfully taken off.

The Daily Star/Bangladesh/ 5th Jan 2012

The National Board of Revenue (NBR) plans to introduce e-payment system by March to make income tax and other revenue payments easy and hassle-free.

"We're hopeful of introducing the e-payment system from March this year. It will bring a revolutionary change in tax payment system as taxpayers will be able to clear their payment online," said NBR Chairman Nasiruddin Ahmed.

As part of the automation of the entire revenue collection process, NBR has been implementing a project with financial and technological support of International Finance Corporation (IFC) to introduce the e-payment system, he said.

"I'm hopeful that our revenue collection would also be increased," said Ahmed. He added the tax administrator would carry out a massive campaign before and after the introduction of the system to encourage people for using it.

While elaborating the system, an NBR official said taxpayers will be able to make their payment through credit or debit cards and bank accounts and they will receive payment receipt immediately after making such payments.

ICT firm Q-Cash, Sonali Bank and NBR will jointly operate the e-payment system, said Kanun Kumar Roy, NBR's e-governance focal officer and director general of the Directorate of Tax Inspection.

"Twenty-six banks are connected with Sonali Bank's Q-Cash system. Taxpayers having account or credit card with any of these 26 banks will be able to enjoy the online payment facility," Roy added.

A taxpayer will have to open NBR website and follow the instructions to get payment clearance receipt.

"Taxpayers having no credit or debit card will have to send a message to the bank concerned about the payment through NBR website," Roy said.

Roy said the NBR has included Sonali Bank in the system because payments of income tax, VAT and customs duties are deposited to Bangladesh Bank or Sonali Bank through treasury bills.

The Daily Star/Bangladesh/ 5th Jan 2012

M Shahjahan Bhuiyan, the managing director of United Commercial Bank Limited (UCBL), has said that the Bank has sustained growth in both profit and operation.

This has been possible mainly because of the highest level of compliance of banking laws. Another healthy factor is “low level” of interference by its directors in day-to-day banking activities, according to the MD. The first generation Bank was once “problem ridden” but now under the present management, the Bank has been able to overcome that stigma.

In an exclusive interview with The Independent recently, M. Shahjahan Bhuiyan shared his views on the techniques he along with his team applied in turning the first generation private problematic bank into a top class service oriented profit making one.

The Bank earned Tk 607 crore operating profit in 2011 amid liquidity crisis in the banking sector, turbulence in the capital market, a soaring inflation and financial meltdown in European countries.

The Bank’s deposit rose to Tk 13,949 crore during the year from Tk 11,307 crore in 2011 with a 23 per cent growth, it provided Tk 11,478 crore loans to customers in 2011 against Tk 9,346 crore in 2010.

The Bank utilised alternative financing to SME sector, continue talent hunt from the market, aimed at wider customer base and banked on deep experience in both the negative and positive sides of the banking to make UCBL earn and continue the sustained growth and achieve the success, the UCBL MD said

Along with profit making the other benchmark indicators of the bank grew as well in the year because of, what the top management claimed, maintaining strict compliance with the banking law and cherishing a solid service to its customers.

The Managing Director said the Bank’s focus to finance small and medium enterprises in a preferred manner wooed thousands of new customers to the bank and brought back many old clients during last two and a half years, which helped the Bank rejuvenate comparatively early.

Starting career with State Bank of Pakistan in 1970’s, Bhuiyan served Pubali Bank, City Bank, and Prime Bank Limited in different positions and capacities.

He joined as Managing Director of United Commercial Bank Limited in July, 2008.

He moved to UCBL as Senior Vice President and in 2002, was closely associated with Credit Management of Prime Bank since joining and promoting the Prime Bank Limited as managing director.

About preferred SME banking Shahjahan Bhuiyan says SME is the focus of his banking strategy. “The Bank can fund only Tk 250 crore to a single borrower. If the single borrower fails in his business the bank falls in severe crisis.
Whereas if the amount equal of the single exposure limit is distributed among 2500 SME entrepreneurs and if a portion of them fails even then, the Bank can recover its profits from well performing businessmen,” he explained.
Shahjahan Bhuiyan said why his crore banking strategy did not include financing large corporate projects. He said majority of the existing Bangladeshi old private corporations and newly developed ones lack adequate corporate culture. Most of the corporations are run by family members for which a well established culture of corporate governance has not yet been developed.

“The rapid funding to SME sector can help generate more employment, pose less risks as credit risks are distributed among many parties,” he added saying this was the reason why the bank focused to SME sectors.  The successful Chief Executive Officer in the banking sector of the country hoped that his bank would secure the number one position in the quality banking within 2015.

“Only quality human resources can help achieve a target with quality service. With the influx of new generation officers the Bank with get a fresh shot in the arms.

The Bank is currently strictly maintaining quality and talent in recruiting bankers. Previously the directors used to intervene in recruitment process and employ their relatives in the banks hampering the overall performance.

“International banks perform well at any stage as their directors never come in the frontline and intervene in recruiting officials. We are following international banks policy in recruitment,” Shahjahan Bhuiyan said.

Another strength of that banks is that 50 per cent of the exiting exporters and importers of the country had experience with the bank. Many of them are now returning to their old bank observing the banks re-emergence.

About corporate social responsibility, the CEO said the government should allow 10 percent of the banks profit for CSR activities. This spending involves the Bank with socially important issues and thus make stakeholders think that that bank is caring for them.

He opposes opening many branches by the bank but supported opening outlets across the country. “Opening of new branches will enhance bank’s risks furthermore,” he opined.

About giving new bank licence, Bhuiyan said the country is earning huge remittance which contribute to the development of the country. These banks he said can open new distance outlet to serve customers with minimum costs. But without ensuring a regime of good governance, he said the future of the banks would not be healthy.
About high lending rate Shahjahan Bhuiyan said the risks of the private commercial banks would increase paving more banks to several banks.

“We want to be a universal bank, which needs to achieve a consistent growth,” Bhuiyan said.
Firstly the bank focused with recruiting high quality human resource to deliver optimum service to its customers, secondly the newly set up management emphasized dedicated banking service with modern products
Success of a bank business relates to a change in activities which included opening to new ideas though research and investigation, and the quality human resources to implement those ideas in the real business and accomplish positive results through team efforts.

Due to successfully implementation of the banking model –– ‘create new ideas, implement those and generate results,’––made the UCBL an example for others in banking service. The result will come positively if you maintain the policy of –good employee, good policy and good guideline—

Earlier, the directors could not realise the situation that only quality service could help uplift performance a commercial bank. The directors now realize that they have to follow the suggestions made by managing directors. The UCBL held less board meetings and executive meetings than other first and second generation commercial banks, which implied that the directors interference was minimum in the Bank.

The Bank has to maintain continuous business growth by selecting viable projects instead of funding at random basis. This selection needs quality human resources which the country is now lacking. The UCBL had hired several brilliant officers who helped maintain its advancement.

The first generation banks lacked in adequate compliance with required banking rules and regulations. The situation improved after gradual enhancement of qualitative changes along with regulations set by different international agencies, he added.

The banking business has become universal which forced competitive banks to upgrade their service to achieve and hold on to at an universal standard, he said adding banks have to ensure quality service and improve capacity building for sustainable growth.

About migration abroad by the local brilliant students he said private banks are facing serious problem with lack of quality human resource because of brain drain. The Bank follows several well performing banking activities in the neighbouring countries and maintain the policy –– “We do business for business”, he said.

The Daily Independent/Bangladesh/ 4th Jan 2012

The state-run banks are becoming a lacklustre option for export financing despite the fact that they offer lower interest rates and have better access to funds, exporters say.

Exporters nowadays are rather opting for private commercial banks, which provide fast and well-organised service, while the government banks are fraught with inept and complex procedures, bureaucratic red tapes and sluggish service. However, exporters still rely on state-run banks when it comes to big volume financing as arranging vast amount of cash is often hard for private banks.

“The processing of simple loan applications in state-run banks is very lengthy and it’s difficult to go through all the voluminous paperwork,” said Abdus Salam Murshedy, president of the Exporters Association of Bangladesh (EAB).

The EAB chief said the state-owned banks played an extraordinary role in industrialisation and export financing during the 80s and 90s but couldn’t keep up with the changing needs of exporters and struggled to provide efficient service.

“The private banks slowly took over the financing of export-oriented sectors because of their superior services. They also maintain better customer relations,” Murshedy told The Independent. The state-run banks are performing poorly in industrial loan recovery, he added.

The private banks’ top-notch service and hassle-free financing had made an increasing number of exporters move away from state-run banks.

Anowarul Islam, a garment exporter, said, “Private banks have state-of-the-art facilities and they are proactive in communication. Opening letters of credit and availing loans are much easier in private banks.”

The state-run banks, on the other hand, claim that they are providing better facilities such as lower lending rates and easy access to loans.

Md Abdur Razzaque, assistant general manager of Foreign Trade Department of Janata Bank, said, “State-run banks’ interest rate for exporters is 7 per cent, while the private banks charge 18 per cent. We have no extra fees and ‘hidden charges’ like private banks.”

Razzaque said private banks are reluctant to help small clients and state banks are still the solution to  them. He said the regular collateral ratio is 1:1.5, but for exporters it is either 1:1 or collateral-free.

He said the state banks are serving a big customer base and that could sometime lead to slow service. “If a private bank serves 10 clients, we serve 110. They have a selective customer base, we serve everyone,” Razzaque said.
Razzaque said state-run banks are working in line with the government’s export policy and give highest priority to the export sector. The state banks arranged quick cash during Eid for the garment exporters to pay their workers which helped avert labour unrest, he added.

Financing exports at a subsidised rate also makes it hard for the state-run banks to make any profit. “Sometimes we even make losses, but we are following government policy to help exports,” Razzaque said.

However, private banks defended their high interest rates, citing rising inflation and monetary policy pressures. “On top of the inflationary growth and tight fiscal policy, we have to think about availability of funds and the costs of running an operation. If you consider these things I’d say we are not charging high interest rates,” said Muhammad A (Rumee) Ali, chairman of BRAC Bank.

Murshedy said state banks can afford lending at a lower rate because they face much less liquidity crisis and get big funds from the government.

“The private banks collect money from the public and they have a much higher risk factor,” he said.

He, however, said, “When it comes to big loans, there is little to do but to go to the government banks. Private banks have to form consortiums to put together such big amounts.”

At present, the government under the Export Credit Guarantee Scheme provides Export Credit Guarantee (Pre-shipment), Export Credit Guarantee (Post-shipment), Export Payment Risk Policy (Comprehensive Guarantee) and Whole Turnover Pre-shipment Finance Guarantee, covering risks on export credit as well as probable commercial and political risks occurring abroad.

The government also provides loans and venture capital on easy terms and low interest rates from the Export Promotion Fund (EPF) for the exporters.

The Export Policy 1997-2002 also ensured incentives such as rebate on insurance premium, income tax rebate on export earnings, duty drawbacks, tax holiday and cash subsidies.

The Daily Independent/Bangladesh/ 4th Jan 2012

AB Bank Limited recently opened its 4th solar powered ATM booth at Sandwip, Chittagong. The ATM machine and all its components, the Uninterrupted Power Supply (UPS) equipment, two air conditioners, and other necessary system have been set up on the roof of the ATM site, said a press release.

The system was installed as ATM booths require uninterrupted power supply for offering 24-hour service.

The Bank earlier installed solar energy at its booth in Uttara, Dhaka and powered ATMs at Joypara, Dhaka and Lohagora, Chittagong with solar power.

The Daily Sun/Bangladesh/ 4th Jan 2012