Dhaka Bank made gross irregularities in providing loans to some large commodity importers which helped them hoard products, control import and finally contribute to price hike, a central bank inspection report said. The Khatungonj Branch of the bank disbursed loan amount beyond single exposure limit to Ilias Brothers, Abul Khair Group and PHP Group which directly helped the players put control on essential commodities, the central bank report added.
It also violated central bank guideline as Dhaka Bank provided loan by allowing PHP group to 180 days instead of 90 days adjustment period for import of essential commodities.
Bangladesh Bank last month conducted the inspection to 15 branches of Dhaka Bank on a random sampling basis based on the bank’s June, 2010 balance.
The inspection team also identified banks irregularities in opening accounts, managing deeds and documents and paying money by cheque beyond dates.
Dhaka Bank Head of Credit SASA Musabbir said the bank has not yet receive any formal report or complaint in this regard from the central bank. “We can not comment on that allegation right this moment as we have not yet receive any formal letter from the central bank,” Musabbir added.
However according to the report the bank branch showed many others flexibilities to commodity importers including provide loan without taking mortgage, and provide loan to sister concerns violating rules. 
The bank further violated guideline as its Khatungonj branch did not collect 5 percent advance income tax from the importers as commission on opening letter of credits.
The branch management also did not take permission from head office to open LC in favour of Abul Khair Group which is also the clear violation of central bank guideline. Meanwhile Dhaka Bank has no investment policy yet despite the bank established over 10 years. The central bank asked Dhaka Bank to immediately implement an investment policy. During the inspection, the central bank identified Tk 65.78 crore provision shortfall and instructed to adjust it by June 2011. The inspection team also identified the bank combined deposit shortfall of Tk 52.35 crore which also the team instructed to fulfil as early as possible.
“The bank clearly violated many of the central bank guidelines in providing loan to essential product importers which help opportunity to price hike artificially, a high official of the Bangladesh Bank Banking Inspection Department said.
The central bank instructed Dhaka Bank to immediately adjust the single exposure limit to within limit and clarify other breaching.
When asked K. M. Abdul Wadood, General Manager, Banking Rules and Provision Department of Bangladesh bank said generally central bank at first stage warn those banks who violated guidelines, secondly the bank star non cooperation with those banks who remained unruly and thirdly central bank do not give any permission to open new branch.
He said in case of Dhaka Bank the central would analyze all the situation and will warn it against their faults. When asked bank Khatungonj Branch Manager Mozammel Haq said the branch may have some mistake which would be immediately adjusted.
He said the central bank inspection team zoomed each small mistakes of the branch for which the overall tally become big but the branch actual mistake are not big as central bank blamed.“We will soon adjust those mistakes and will inform central bank about our initiatives” Mozammel added.

Source: The Independent /Bangladesh/Jun, 02, 2011

Bank Asia, one of the leading commercial banks, recently donated a car to National Defense College (NDC).

The bank gave the car to the NDC as a part of its corporate social responsibility, said a press release.

A Rouf Chowdhury, chairman of the Bank, formally handed over the key of the car to Maj Gen AKM Muzahid Uddin, commandant of the College at a function at Mirpur Cantonment in Dhaka on Tuesday.

Aminul Islam, deputy managing director of Bank Asia, Commodore Muhammad Saiful Kabir of Bangladesh Navy, Air Commodore Shahe Alam, Brig Gen AKM Waheduzzaman, Brig Gen Sohel Ahmed and Lt Col Muhammad Obaidur Rahman were present on the occasion.

Source:Daily Sun/Bangladesh/Jun, 02, 2011

The apex trade body yesterday insisted it never lobbied with the Bangladesh Bank to extend the deadline for bringing down the banks' exposure to stockmarket as has reportedly been claimed by the central bank.

In a statement, the Federation of Bangladesh Chambers of Commerce and Industry said neither it nor any business organisation made such recommendation.

The FBCCI moved after a number of newspapers reported that it has lobbied with the BB to extend the deadline to cut banks' exposure to the stockmarket.

“During the discussion with the BB governor, we said the BB did not take any initiative to limit the banks' exposure to market.”

“In early 2010, the index was 4,200 and crossed 6,000 by June. The central bank gave warning, but did not fix CRR [cash reserve requirement]. As a result, banks made huge investment that took index unusually to 8,900," said the statement.

“When the BB announced CRR for banks in December, they made unusual profits by selling shares, resulting in a debacle.”

“As a result, small investors suffered huge losses,” the statement said.

Source: The Daily Star/Bangladesh/Jun, 01, 2011

Mesbah Ul Haq, an eminent banker, has been promoted as genera1 manager of Sonali Bank Limited recently.
Previous1y he played role as deputy genera1 manager of industria1 project financing division of the bank’s head office, says a press release. Starting his banking profession as Senior Officer in Sonali Bank in 1980, he had been manager and branch head of a number of branches including corporate branch in Dhaka Chittagong.
He has been graduated in Accounting from University of Dhaka and completed MBA in Finance from Institute of Business Administration of the same university.

Source: The Independent/Bangladesh/Jun 01, 2011

The central bank yesterday said people who now blame Bangladesh Bank (BB) for its inaction in dealing with the banks' overexposure to the capital markets had once put pressure on the BB to go soft on the banks' links with the stockmarket.

“It is curious that those now blaming the BB for inaction were themselves actively lobbying to pressurise the BB to prolong compliance timelines for banks,” the central bank said in a statement yesterday after a meeting with business leaders.

The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) on Sunday blamed the BB for not taking actions against the errant banks that had invested heavily in the stockmarket to make quick profits.

FBCCI President AK Azad said they raised the issues of liquidity crisis and interest rate. "The central bank told us that the situation is improving and the problems will be over soon,” he added.

BB Executive Director Jahangir Alam said, “We have told the businessmen that the banks do not have any liquidity crisis.”

The central bank in a written statement said the assertion in FBCCI's press bulletin that the BB did nothing to restrain banks from capital market investments beyond statutory ceiling is incorrect.

The BB asked banks to set aside their 2010 capital market investment gains for adjustment of subsequent losses, it said.

Banks are free to make their business decisions about investment of the post-adjustment remainders in the capital market, and there can be no question of coercing them to do so by a BB directive.

On the FBBCI's demand for imposing cap on the rate of interest on loans, the BB said, with inflation high and rising, the banks cannot attract deposits at low interest rates from individuals, households and businesses; and rising deposit interest rates necessarily push up lending interest rates.

Imposing ceilings on deposit and lending interest rates will worsen matters, hurting growth in deposits and the volume of available credit.

The BB also said, only by bringing down credit expansion to levels commensurate with nominal growth of the economy, inflation level can be brought down, in turn bringing down the deposit and lending interest rates.

The lending rate caps still remaining on credit for some essential and productive purposes are proving counterproductive, reducing credit access for these purposes, creating a sense of liquidity crunch, the central bank said.

Fighting down the rising trend of inflation is now a key concern in all economies -- developed and developing, the BB said.

It said, the lending and deposit interest rate ceilings in China mentioned ,in FBCCI's press bulletin are remnants of their communist era practices; and China has acted far more aggressively in fighting down their inflation rate, which is only half that of Bangladesh.

Since January 2011, China has raised interest rates four times, while Bank of England has done so twice. India has raised Indian policy interest rates nine times from January 2010, against thrice by the BB.

Bigger businesses in Bangladesh can contribute significantly in easing the rise in domestic lending interest rates by leaning less on local banks for term financing of their investment projects.

This will also ease depreciation pressure on exchange rate of the taka, and help avoid buildup of asset liability maturity mismatch in books of local banks, the BB said.

It said the rise in deposit interest rates is already showing pickup in deposit growth, improving market liquidity and the volume of loanable funds.

"We believe the business community is fully aware of the necessary tradeoffs in short term adjustment pains for stable, sound growth over the medium and longer term," the BB said in the statement.

In the current local and global inflationary environment, it is impracticable to continue with lending rate caps imposed during the global downturn.

The central bank is closely monitoring interest rate practices of individual banks to weed out practices or tendencies unfair or undesirable from consumer protection viewpoint, the BB said.

The BB will look into specific grievances of individual businesses in this respect for prompt redress, it said.

Source: The Daily Star/Bangladesh/May 31, 2011