Eastern Bank Limited (EBL) has signed a Memorandum of Understanding (MoU) with Dun and Bradstreet (D and B) Rating Agency Bangladesh Limited recently, says a press release. Md Khurshed Alam, head of SME business, EBL and Tarique Afzal, chief executive of D and B, signed a MoU at EBL head office. Under the MoU, D and B will rate the “Small Segment” customers of EBL which in turn will enable the bank to minimise time for banking formalities and extend better service to its customers.
The rating will also help avoid risky investments for the bank. This rating is arrived after considering various financial, non-financial parameters, past credit history and future outlook.

News: The Independent/ Bangladesh/ 29-Oct-2011

The World Bank has warned that the government's excessive borrowing from the banking sector and using banks to stabilise the stockmarket will make the country's financial sector weak and ultimately dampen growth.

The WB in its latest economic update released yesterday said, “These pressures could hurt the efficient allocation of capital and dampen economic growth.”

The WB also said the significant rise in export and import trade has increased the demand for trade financing including letter of credit facility, adding to liquidiy pressures.

Also the increase in interest rates and the problems in the textile sector arising from liberalised rules of origin could add to the non-performing loan portfolio of banks.

This will ultimately reduce loanable funds of the banks, the WB said.

It said all these factors can hinder the banking system in its role of allocating resources to private activities with the best possible returns.

“Since these pressures are not likely to ease in FY12, the concerns will continue and could even intensify over the course of the year,” the WB update said.

Explaining the macroeconomic pressures in the banking system, the WB report said the government's increasing reliance on domestic financing is raising concerns on crowding out domestic financing of the deficit, most of which came from banks.

The multi-lateral lender said, this has intensified the liquidity pressures that some of the banks are facing.

The exposure of some banks to the stockmarket, as well as the creation of a fund with support from public financial institutions to shore up the market also reduces loanable funds for the private sector.

The creation of the fund also increases contingent liabilities for the government, the report added.

The update said weak corporate governance in parts of the banking sector, especially state-owned banks, leads to sub-optimal loan decisions.

Finally, there are vulnerabilities posed by ad-hoc policy decisions such as changes in interest rate caps, contribution to a stock stabilisation fund, and financing of large loss-making state enterprises.

Mentioning various steps taken by the government and the Securities and Exchange Commission (SEC), the WB said equity markets have remained volatile.

About approval for setting up new banks, the WB update said, the central bank is planning to invite applications to establish new banks and insurance companies even though the country is facing the problem of “overbanking.”

Allowing new institutions to enter the market may not necessarily increase competition or access to finance. New banks would also imply the need for closer regulation and supervision, the lender said.

It also commented on the budget for the current fiscal year and macroeconomic situation.

The WB said the current budget had several measures aimed at protecting local industries by raising customs, supplementary and regulatory duties.

Nominal protection increased significantly from 23.7 percent in fiscal 2011 to 26.5 percent in fiscal 2012.

The WB said the overall nominal protection rate is now at its 2006 level, which is a setback to the agenda for trade diversification.

The global lender also projected that the government will have to give subsidy of Tk 30,320 crore to Bangladesh Power Development Board, Bangladesh Petroleum Corporation and Bangladesh Chemical Industries Corporation in the current fiscal year.

The actual subsidy was Tk 12,300 crore last year.

The WB report said the budget faces a major subsidy burden and has over-programmed the annual development programme.

In contrast, its revenue target is ambitious in the wake of a strong revenue growth last year.

News: The Daily Star/ Bangladesh/ 26-Oct-2011

The banking sector is now playing more effective role in eradicating poverty, the central bank governor has said. “In developing education and health, removing environmental catastrophe and eliminating poverty, the banking sector is performing more effective role than before,” Dr Atiur Rahman told a stipend distribution ceremony on Tuesday.
The event was organised by Bangladesh Bank Employees Co-operative Credit Society Ltd, with its chairman Dr Abul Kalam Azad in the chair.
The Society distributed Tk 8 lakh stipend among 232 students who became successful in the examination of PSC, JSC, SSC and HSC in 2010 for the third time.

News: The Independent/ Bangladesh/ 26-Oct-2011

Speakers at a daylong workshop have asked the branch level bankers to put in their best efforts to resist money laundering and finance terrorism for the sake of freeing the nation from various social crimes. Terming the border-belt Rajshahi, Chapainawabganj, Pabna and Kushtia as the crime-prone districts they said the bankers must be sincere and alert so that money laundering and financing terrorism could be reduced to a greater extent.
National Bank Limited organised the workshop titled “Prevention of Money Laundering and Finance in Terrorism” for its branch level executives and officers at its Regional Office  on Monday for disseminating updated knowledge and strategies on how to stop the malpractice..
Regional executive vice-president of the bank Wasef Ali addressed the workshop as the chief guest while vice- president and chief money laundering prevention officer Abdul Wahab of the bank and deputy director of Bangladesh Bank Nazrul Islam spoke as special guests. Senior vice-president Binoy Kumar Shikder chaired the session.
Stressing the need for preventing money laundering and terror financing the speakers urged the participants to utilise the acquired knowledge from the course in their respective working fields properly for ensuring a transparent atmosphere in the banking sector.
In this regard, they mentioned that free flow of illegal money always create an unusual situation together with breeding various social crimes in every spheres of life.
So, this is the high time to end the malpractice and the bankers have a vital role as the present government as well as the Bangladesh Bank is very much sincere in this regard.

News: The Independent / Bangladesh/ 26-Oct-2011

National Commerce and Credit Bank Limited (NCCBL) signed an agreement with NEC Money Transfer, S A of Spain for channeling remittances of Bangladeshi expatriates living in that country.

Under the deal, Bagladeshi expatriates in Spain can easily and quickly remit their money to home using NEC Money Transfer through NCC Bank and TMSS network, says a press release.

Mohammed Nurul Amin, managing director and CEO of NCC Bank and Ikram Farazy, manging director and CEO of NEC Money Transfer, signed the agreement on behalf of their respective sides the bank’s head office in Dhaka.

The bank’s additional managing director Golam Hafiz Ahmed, deputy managing directors A K Md Siddique, Mohabbat Khan and T M Faruque Chowdhury and directors of NEC Money Transfer Dr Anower Farazy and Md Monir Farazy, among others, were also present.

News: Daily Sun/ Bangladesh/ 26-Oct-2011