Speakers opine at BIBM workshop

Speakers at a workshop in the capital on Thursday expressed their grave concern over the increasing trend in classified loans in the country's banking sector.

They also said if the situation does not improve, the banking sector will be in dire straits, and suggested strengthening monitoring of the central bank in this regard.

Speakers made the observations at a workshop on "Treasury Operations of Banks 2016" at Bangladesh Institute of Bank Management (BIBM). BIBM Director General Dr. Toufic Ahmad Choudhury presided over it.

The discussants of the programme were Managing Director and CEO of NRB Bank Ltd Md. Mehmood Husain, Additional Managing Director and Chief Risk Officer of The City Bank Ltd Faruq Moinuddin, and BIBM Faculty Member Syed Mohammad Bariqullah.

Professor of BIBM Md. Nehal Ahmed presented a paper titled 'Review Paper on Treasury Operations of Banks 2016'.

Dr. Toufic Ahmad Choudhury said the banks' classified loan situation is really an alarming signal for the banking sector.

"I think the sector will have to face manifold challenges, if the scenario does not change," he also said.

Mehmood Husain said effective implementation of various treasury-related tools is important for efficient treasury operations.

He also emphasized increasing capacity of the banks' senior management to manage various important issues of treasury operations successfully.

"Treasury operations are getting more and more complex day by day, for which continuous knowledge upgradation and capacity building are important," he added.

Nehal Ahmed in his paper depicted the state of banking sector, classified loans and various dimensions of treasury operations.

The paper showed that in 2016 classified loans of all the banks was 9.23 per cent. Classified loans in the specialised banks (SBs), state-owned commercial banks (SoCBs), private commercial banks (PCBs) and foreign commercial banks (FCBs) were 26.02 per cent, 25.05 per cent, 4.58 per cent and 9.56 per cent respectively.

It also mentioned that the classified loans, particularly bad and loss, were almost the same in 2016 and 2015, which was 84.4 per cent and 84.7 per cent respectively. In 2016, sub-standard and doubtful loans were 10.2 per cent and 5.4 per cent respectively.

The paper also showed that classified loans is more than 20 per cent in nine banks, more than 10 per cent in 12 banks, and more than five per cent in 26 banks.

The banks have maintained cumulative provisions amounting to Tk 307.4 billion in 2016, which was Tk 41.3 billion higher than that of 2015. The shortfall in provision increased significantly and reached Tk 54.7 billion in 2016.

Nehal Ahmed also identified some challenges in treasury operations of the banks, including shallow and almost non-existent secondary bond market, higher non-performing loan (NPL), overnight market liquidity problem, lack of investment opportunities, and problem in asset-liability management.

He also made some recommendations to overcome the challenges, including a more consistent auction calendar to ensure proper asset-liability management.

He opined that the banks should search for various financing options, and Bangladesh Bank (BB) may initiate a programme to allow funding from its surplus foreign currency to encourage the local banks' growth.

Besides, BB should initiate an open market operation for treasury securities. To overcome increasing NPL problem risk-based loan pricing should be introduced, and recovery of NPL should be emphasized, the paper added.

1. Today's Newspepar
2. Back Page
3. Media report false, says IBBL chairman

Donation to PM’s Zakat Fund

Media report false, says IBBL chairman

Staff Correspondent     19 May, 2017 12:00 AM

Arastoo Khan

The Islami Bank Bangladesh Ltd (IBBL) authorities have refuted the media reports that the bank is going to donate Tk 450 crore to the Prime Minister’s Zakat Fund.

“The reports about the donation are false and misleading,” IBBL chairman Arastoo Khan told a press conference at its head office in Motijheel on Thursday.

  He said there is only Tk 28 crore in the bank’s zakat fund. But media ran the reports, quoting IBBL vice-chairman Syed Ahsanul Alam Parvez as saying.

 Khan clearly said Ahsanul spoke to the media about the issues which were not discussed at the meeting of the IBBL board of directors.

 Besides, a decision to distribute Tk 13 crore to people for taking Iftar during Ramadan is not correct, he added.

 Asked whether the IBBL would remove Ahsanul, Khan said it is a long process to remove any independent director from a bank’s board.

 The vice-chairman has violated his oath and breached the trust.

A director should not disclose any information about the bank unless he is authorised to do so, he further said.

 The private bank has been contributing to the country’s development and its people through the banking service.

 The IBBL chief said the bank received Tk 347 crore as zakat and distributed Tk 174 crore in the last 34 years. The bank preserves Tk 145 crore for paying tax. An amount of Tk 27.84 crore is left to be distributed as zakat now.     The bank has not decided to submit the list of recipients of CSR fund to the Home Ministry, he said.

 Arastoo Khan said he met Prime Minister Sheikh Hasina. He was asked to clarify the report. The premier was surprised as she did not ask for such money.

 He said the vice-chairman tried to put the government, the Prime Minister and the bank in an awkward situation by spreading such a rumour.

The government is likely to allocate Tk 4,035 crore in ADP funds for 60 projects under the water resources ministry in 2017-18 fiscal.

 The ministry will be implementing the projects at a time when there is widespread criticism over the quality of water resources projects implemented in the haor area.

 Of the 60 projects, a series of water management and livelihoods projects in the haor areas will receive Tk 177 crore. The current ADP made available Tk 108 crore for those projects.

 Besides, Tk 74 crore will be allocated in 2017-18 FY for advance flood protection and drainage of water projects.

The allocation was Tk 100 crore in the current fiscal.

 In the next fiscal, Bangladesh Haor and Wetland Development Board will continue the study on the interaction between haor and river ecosystem and development of wetland inventory and wetland management framework in addition to the investigation and expansion of groundwater irrigation in Habiganj, Moulvibazar, Sylhet, Sunamganj, Netrokona and Kishoreganj at a cost of Tk 79.70 crore.  

 Director General of Bangladesh Haor and Wetland Development Board Mojibur Rahman told daily sun they have recently recommended taking only submersible road and highway projects in haor areas to ensure sustainability of the development works.

 “Boro cultivation and fish production would be affected severely if the LGED and Roads and Highway Division construct regular roads for infrastructure development in the post-flood haor areas,” he cautioned.

 He also advised for constructing flyovers and culverts to facilitate smooth water flow in the haor region.

 The ministry will take up two new projects, including an embankment protection scheme to protect some areas adjacent to River Halda from erosion at a cost of Tk 238.74. Another Tk 24.77 crore dredging project will be taken up for protecting Rabindranath Kuti Bari in Kushtia from Padma erosion.

 Other projects planned for the next fiscal include the Buriganga River recovery project, river dredging projects, char development and sustainable projects, coastal embankment improvement and development project phase-1 and flood and river erosion risk management project.

 AKM Saiful Islam, professor of Flood and Water management Institute of Bangladesh University of Engineering and Technology (BUET), said the government should properly monitor the quality of embankment, switch-gate or water training projects.

 “For example, the recent disaster took place in the haor largely due to lack of monitoring. The flooding in Chalan Beel and Chilmari occurred due to lack of proper maintenance of switch gates before the flash floods,” he added.

 Mentioning that some areas are prone to flash floods in April, implementation of river embankment projects in those areas must be completed by February.

 During last year’s DC conference, several deputy commissioners urged the government not to implement any embankment projects during the rainy season.

The government is expecting the lion’s share of the funds needed to implement 40 railway projects aligned with a master plan to come from development partners as loans due to local resource constraints.

 Implementation of the 40 railway projects will require Tk 95,901 crore where foreign loans’ contribution is expected to be Tk 76,932 crore, Planning Commission sources said.   

 The rail projects to be complete by 2035 in line with the railway development master plan have been incorporated in the new Annual Development Programme (ADP) for FY18 without any allocation with a hope to get overseas financing.

 Railway officials said the government will implement the projects under a 20-year master plan starting from 2015 to bring about a radical change in the country’s rail service.

 Foreign loans will play a crucial role in implementing these transformational projects because local resource won’t be enough to meet the financing needs, they added.

 But when the projects will be complete will only be known after confirmation of foreign financing and feasibility studies.  

 Economic Relations Division (ERD) is now trying to mobilise foreign loans for the schemes.

The railway ministry has also completed the primary negotiations with some development partners, railway officials informed.  

 For instance, the government has set a target to complete the planned double-track standard gauge rail line from Dhaka to Chittagong via Comilla-Laksam by 2022 at a cost of Tk 30,955 crore, but managing the funds has become a big challenge.

 Tk 24,764 crore of the estimated project cost has been proposed to come from foreign loans and the government primarily thinks Chinese loan will be a suitable option for this project.     

 The feasibility study of the project is currently underway at a cost of Tk 100 crore and the government received verbal confirmation from the Chinese authorities about the project financing, sources added. 

 Another important project for introducing electric traction system in Dhaka-Chittagong rail corridor requires nearly Tk 8,000 crore where project loan has been estimated at Tk 5,000 crore.    

 Transforming Akhaura-Sylhet section into a duel-gauge track also needs Tk 6,500 crore in foreign loans. The total cost the project has been estimated at Tk 8,000 crore.  

  Another Tk 6,000 crore foreign loan has been estimated for construction of a duel-gauge line in Joydevpur-Ishwardi section at a cost of Tk 7,000 crore. 

Mashrur Arefin, Additional MD of City Bank and Engr. Md. Arifur Rahman, Chief Executive Officer of Assurance Developments Ltd, signed an agreement at the bank\'s head office recently. Under the deal the customers of the company will get attractive benefit