Twenty-five banks and financial institutions have ‘dodged’ value added tax (VAT) against income from commission, fee and charge. 

The mismatch resulted in  Tk 588 million revenue loss for the state exchequer, the Comptroller and Auditor General’s (CAG) office has found out and recommended recovery of the amount lost. The CAG came across the irregularities during a special audit on the 2006-07 fiscal, conducted at the Large Taxpayers Unit of the National Board of Revenue.

 Banks and financial institutions are required to pay 15 per cent VAT on income from fee, commission and charge, as per a statutory regulatory order (SRO) of NBR, but they did not pay VAT properly in 2006. IFIC bank did not pay Tk 49.3 million, UCBL Tk 38.4 million, Dutch Bangla Bank Tk 37.98 million, and National Bank has outstanding VAT amounting to Tk 37.2 million. 

The other banks on the list are, Woory Bank, Prime Bank, Al-Arafah Islami Bank, Bank Alfalah, BASIC Bank and Social Investment Bank.

 Among the financial institutions are LankaBangla Finance, Fareast Finance & Investment, IDLC Finance, Bangladesh Finance and Investment Company, Phoenix Finance and Investment, Islamic Finance and Investment, GSP Finance Company and National Credit and Brothers.

 Even though show-cause notices were recommended to be served upon some of the institutions, the CAG’S office, however, says only claiming the money will not be enough. It is essential to recover the said revenue amount and get it deposited in the state coffers.

Source: The Independent/ Bangladesh/ 13th Dec 2011

Pubali Bank Ltd, a leading commercial bank in the country, stands ready to offer financing for the construction of the second Padma Bridge under public private partnership (PPP), said its top official.

"The Bank will actively consider any offer for the construction of the second Padma Bridge under PPP.

However, we alone cannot finance the project," said Helal Ahmed Chowdhury, managing director of the private Bank

"It can be financed through a syndication loan in cooperation with other banks. The infrastructure deficiency in the country cannot be overcome without PPP and foreign direct investment," he said.

In an interview with The Daily Star recently, the career banker discussed various banking issues, including the profit situation in the banking sector, investment in stocks by the banks and financing PPP projects like the Padma Bridge.

In 1977, Chowdhury joined Pubali Bank, then in the public sector, through the competitive Bangladesh Civil Service examinations.

He served the Bank in different positions, including additional managing director, deputy managing director, general manager of different divisions, and heads of different corporate branches.

Starting out as a probationary senior officer, Chowdhury has climbed the ladder to become the chief executive of the Bank. He has received the Pubali Bank Ltd Gold Medal for his outstanding performance.

Many quarters claim that the country's banks have been facing a serious liquidity crisis. However, the Pubali Bank managing director said there is a pressure on liquidity, but no crisis.

He said treasury management by banks is responsible for pressures on liquidity but there is no crisis in general.

He said if the treasury management could be done properly, many banks would face no liquidity pressures. A bank should expand its business on the basis of its ability, he added.

Chowdhury said in many cases, banks open too many letters of credit (L/C) without proper planning. When it is time to make payments, they find that they do not have adequate funds and go for borrowing from the market. “It creates instability in the market.”
Pubali Bank plans to purchase shares from the stockmarket through their brokerage house but will evaluate the financial soundness of the company before they invest, said the managing director.

On investment in the stockmarket, Chowdhury said the bank's board of directors decided that they would actively participate to bring stability in the market.

He said they were alert in the past and will remain so in the future. They will take into consideration the fundamentals of a company before buying their shares within the regulatory framework and permissible limits fixed by the central bank so that the depositors' money remains safe.

If other financial institutions and individuals buy shares after evaluating the company's financial position, they will not face any losses, he said. The banker said all banks should invest in the stockmarket in line with the rules and regulations.

The Association of Banks, Bangladesh (ABB) also decided that the banks will invest in the stockmarket, which will increase investors' trust, Chowdhury hoped.

He said even though some banks violated rules, creating volatility in the market, most banks went by the rules in making investments in the market. “If anybody participates in the share market by following the rules and regulations, there is nothing wrong in it.”

Chowdhury said although banks' profits from the share market fell this year, their profit from core banking operations would balance the situation.

He said overall business activities including export and import increased significantly this year. As a result the earnings of the banks have gone up, he said.

The Pubali Bank chief hoped that his bank is likely to reap satisfactory profits this year.

Pubali Bank was the only bank run by the then East Pakistan before Bangladesh won its independence in 1971. After liberation, it started functioning as a state-owned bank.

In 1985, the bank was handed over to the private sector. At the time, the central bank had then identified Pubali as a problem bank. But now, the bank has changed its image and its default loans have come down to about two percent.

It won The Daily Star-DHL Business Award in 2010 for its performance.

Chowdhury said the Bank was limping at a time with bad loans and the default loans had reached 42 percent. With intensive supervision by the central bank coupled with the professionalism by the bank's board and management, it has now become one of the top banks in Bangladesh.

Upon moving to the private sector, the cultural environment of the bank and people's mindset had to be changed. There had to be a balance between the old and new employees. The bank's employees were given the highest facilities possible to make a smooth transition, he said.

The highest priority was given to loan recovery within specific plans, Chowdhury said.

He said they have appointed private agents to recover loans. The government sector dues to the bank were also realised through negotiations. The Bank has monitored loan disbursement and realisation round the clock by forming a team.

A banker can work as an adviser to a borrower so that he can make optimal use of a credit facility and contribute to the national economy, Chowdhury said.

On the present loan situation, he said defaults dropped substantially in the last two decades thanks to initiatives taken by the central bank and reforms in the banking sector.

The central bank issued a circular on loan classifications, which gradually restored credit discipline in the banking sector, he said.

The father of two said forming the Credit Information Bureau (CIB) by the central bank worked as a milestone in bringing down default loans.

Thanks to CIB, the banks can know obtain detailed information on a borrower, including his default loan status, before giving any credit to him.

The 'Artha Rin Adalat' has also played a positive role in reducing default loans, he said.
Chowdhury said if a bank's internal control system is strong, there will be no reason for its default loans to rise.

Pubali Bank has made a foray into the private sector with a large workforce and a culture of trade unions.
Despite huge establishment costs, the bank makes handsome profits every year. In the last five years, both deposits and advances of the bank have grown at 20 percent on average.

This has been possible by earning the trust of the clients and improving services, such as automation and developing software using its own team.

A team led by the bank's General Manager Mohammad Ali has built the bank's IT system, which has reduced its reliance on foreign experts, saving a huge amount of foreign currency.

Of 410 branches of Pubali Bank, 252 are now online. The Bank will bring all the branches under its online service by 2012. At the same time, it will also set up 200 automated teller machines.

Chowdhury also said Pubali is financing health and power sector projects. A number of big hospitals have been built in the health sector with its support.

On remittance, he said the bank has introduced a new scheme to send Bangladeshis abroad for jobs. It provides Tk 2.5 lakh to each job-seeker as a “Probashi Kalyan” loan at low interest.

To get the loan, two local guarantors and valid travel documents are enough. No one has to mortgage or sell property to receive the loan, he said.

Chowdhury said the bank's officials will verify the loan-seekers' documents and there will be no possibility of anybody being cheated after going abroad.

Source: The Daily Star/ Bangladesh/ 13th Dec 2011

Eastern Bank Ltd has launched three new products under EBL Payroll Banking yesterday to cater the growing need of payroll management.

A ‘full service savings account’, ‘debit card only savings account’ and ‘pre-paid card solution’ combines the product suite of EBL Payroll Banking, said a press release.

Ali Reza Iftekhar, managing director and CEO of EBL disclosed these at a press briefing in a city hotel yesterday. Muklesur Rahman, DMD of EBL, Ziaul Karim, head of brand and marketing, Md Sadd Ullah, head of Cluster-3, Nazeem A Choudhury, head of Cards and other senior bankers were present at the press briefing.

Payroll Banking is an innovative package to customise an organisation and its employees’ needs. This provides companies convenience, accessibility and efficiency to pay salary and offer employees a structured staff benefits programme.

Source: The Daily Sun/ Bangladesh/ 13th Dec 2011

Khondoker Mesbah Uddin Ahmed, member of the board of directors of Al-Arafah Islami Bank Limited, inaugurates its 84th branch at Dakshin Khan Bazar in the capital’s Uttara area recently.

Al-Arafah Islami Bank Limited has opened its 84th branch at Dakshin Khan Bazar in the city’s Uttara area.

Engr. Khondoker Mesbah Uddin Ahmed, member of the board of directors of the Bank, inaugurated the branch as chief guest, said a press release.

Ekramul Hoque, managing director of the Bank, Alhajj Md. Harun-Ar-Rashid Khan, director, Alhajj Md. Khalil Mollah, ex-chairman of Dakshin Khan Adarsha Union Parishad and Jahirul Haque, director of Asian University of Bangladesh, were present the function.

Local elites, businessmen and well-wishers of the Bank, also attended the ceremony, the news release added.

Source: The Daily Sun/ Bangladesh/ 13th Dec 2011

Jamuna Bank Ltd arranged a get-together for its officials in Rajshahi Zone at Hotel Naz Garden in Bogra recently.

Md Belal Hossain, chairman of the Bank, attended the function as chief guest, said a press release.

Al-Haj Nur Moha-mmed, chairman of the Jamuna Bank foundation, was also present as a special guest.

Md Motior Rahman, managing director of the Bank, presided over the function where Md Abrar Hossain Khan, the zonal head of the Bank’s Rajshahi zone, was also present.

Source: The Daily Sun/ Bangladesh/ 13th Dec 2011