The central bank has initiated a move to reduce the influence of individual families on banks' boards, a senior Bangladesh Bank (BB) official said.

"We are considering necessary amendment to the Banking Companies Act, 1991 so that more than two members of a family cannot be on the board of directors of a banking company," the BB executive director Jahangir Alam told the FE Wednesday.

Presently, the Banking Companies Act does not allow a family or a company to hold more than 10 per cent share of a bank at a time. However, the amendment is not considering to bring any change in this particular provision, he said.

The draft of the proposed amendments, which is likely to be submitted to the Ministry of Finance (MoF) within this month, is also considering tagging a clause regarding the exposure of banks in the capital market with their equity instead of depositors' money.

"banks won't be allowed to invest depositors' money in the stock market. Only a portion of their paid-up capital can be invested in the capital market, but the amount is yet to be fixed," said Mr Alam, who is leading the team drafting the amendment.

"We are also working on changing the definition of capital," he said without elaborating.

According to the present Banking Companies Act, if any company of a group becomes defaulter the group is considered defaulter. The proposed amendment is likely to consider the specific company defaulter, not other members of the group, sources said.

The draft of the proposed amendment, which is almost at the final stage, is going to propose the maximum number of directors at 20 instead of the present 30 to 40. The existence of a large number of directors proves to be a barrier to proper governance of the bank, as most of them try to influence loan sanction and other processes, an official said.

The amendment is likely to propose empowerment of the central bank to penalise individuals and organisations directly instead of going to courts for the same. At present offenders take legal protection to save themselves from punishment, and the regulator becomes helpless.

Sources said the draft amendment may propose formation of a central financial regulatory authority, comprising all the financial regulatory bodies, including the BB, the insurance authority, the micro-credit authority and the Securities and Exchange Commission to help monitor the banks' exposures to other areas.

The draft is likely to bring changes to Section-35 of the Act, allowing more than one person as nominee of an account holder.

The BB has been working on the amendment to the Banking Companies Act during the last one year, following the promulgation of an ordinance by the last caretaker government.

Source: Financial Express, Bangladesh, 16th June 2011

Every mobile phone can be a branch of a bank, taking financial services to the country's un-banked low-income people anywhere anytime, speakers said yesterday.

They said both the mobile operators and banks should develop mutual trust to run mobile banking in the country, as the service is performed in partnership between the two service providers.

The comments came at a conference on e-banking and mobile commerce at Hotel Sonargaon in the city.

Yeafesh Osman, state minister for ICT, said globally the mobile-based banking has spread, and the mobile device has converged as a single gadget for financial services.

The government has targeted to bridge the digital gap between the wealthy and the poor, said the minister.

Atiur Rahman, governor of Bangladesh Bank, said: “The central bank is actively encouraging engagement of banks, microfinance institutions and mobile phones and other IT platforms in partnerships to innovate financial service delivery models responding to the diversity of existing and emerging new demands in the fast developing market.”

He said mobile phone operators stand to gain from allowing the new e-payment platforms through unrestricted use of the mobile phone networks, which will give them new income from increased usage of their capacities.

“We would like to see the issue is sorted out promptly for mutual satisfaction of both sides,” he said.

Rahman requested the chairman of Bangladesh Telecommunication Regulatory Commission to take measures to solve dispute, if any, between mobile operators and banking system.

BTRC Chairman Zia Ahmed said the mobile telecom sector is matured enough to introduce m-banking in Bangladesh.

The Saarc Chamber of Commerce and Industry initiated the conference, which was organised by Total Communications, Pakistan. Shafquat Haider, chairperson of Saarc ICT, and other experts from Bangladesh, India and Pakistan also spoke.

Source: The Daily Star, Bangladesh/16th June 2011

Dhaka, June 15: The Securities and Exchange Commission (SEC) has brought changes in merchant bank and portfolio manager rules 1996, barring the merchant banks from appointing or sacking their managing directors and chief executive officers without its prior permission. The rules were amended after taking opinions from people and stakeholders after advertising on the newspapers.

“This has been done for brining transparency and efficiency in the merchant banking operation,” said Saifur Rahman, SEC executive director, after the commission meeting, presided over by SEC Chairman M Khairul Hossain.   The securities regulator also gave green light to two closed-end mutual funds -- LR Global Bangladesh Mutual Fund One and AB Bank First Mutual Fund-- to hit in the market.
Size of the LR Global Bangladesh Mutual Fund One is Tk 3.0 billion, sponsored by AB Bank, City Bank, Trust Bank, IDLC Finance Limited, Green-Delta Insurance Company, Popular Insurance and International Leasing and Financial Services Ltd.

A mutual fund is a professionally managed collective investment scheme that pools money from many investors and invests in stocks, bonds and short-term money market instruments.
In the LR Global Bangladesh Mutual Fund One, sponsors will subscribe units worth Tk 500 million as sponsors, while Tk 1.0 billion will be raised through pre-IPO or private placement, and the rest Tk 1.50 billion will be kept for initial public offering (IPO).

Size of the AB Bank First Mutual Fund is Tk 1.50 billion. Earlier, the Bank has decided to reduce the fund size of AB Bank 1st Mutual Fund to Tk 1.50 billion from Tk 3.50 billion.

Of the fund, AB Bank Limited will subscribe Tk 300 million as sponsor, placement portion of the fund will be Tk 450 million and IPO portion of the fund will be Tk 750 million. Per unit price of each of the two mutual funds will be Tk 10 and both the funds are closed-end with a maturity period of 10-years. Currently, 35 closed-end mutual funds are being traded on the bourses.

Source: The Independent, Bangladesh/16th June, 2011

Jamuna Bank Limited inaugurated a free sewing centre and a vocational training centre for the underprivileged women and deprived meritorious students respectively.

The projects financed by Jamuna Bank Foundation are situated at Jafrabad, Mohammadpur in the city.

Al-Haj Nur Moha-mmed, chairman of the Jamuna Bank Foundation inaugurated the projects as chief guest while managing director of the bank Md Motior Rahman presided over the programme.

Among others, Kanutosh Majumder, director of JBL, deputy managing director of Jamuna Bank, Md Abul Shahjahan, head of all divisions, head office and all branches of Dhaka city of the bank and the reputed persons of Mohammadpur area were present on the occasion.

Source: daily-sun, Bangladesh/16th June, 2011

Today, M.H. Business School, Presidency University has arranged a seminar on Modern Banking at it's Aman Conference Hall. Mr. Syed Mahbubur Rahman, Managing Director & CEO of BRAC Bank Ltd was present in the seminar as guest speaker.

During his speech, Mr. Syed Mahbubur Rahman has given a presentation covering history of Banking and evolution of Modern Banking. Then, he has given an introduction of his BRAC Bank and its business model including SME Banking, ATM Network, Phone Banking, Online Banking, Internet Banking, E-Commerce Shopping, SMS Banking, Customer Service and Mobile Banking etc.

Mr. Syed Mahbubur Rahman has said that, BRAC Bank is going to launch Mobile Banking within a month which will turn our mobile phone into virtual wallet.

On QA session after the speech, he has answered questions from participants on various banking topics.

The seminar is chaired by Honorable Vice Chancellor (in-charge) of Presidency University, Dr. Anwar Hossain