Banks will have to face punitive action if they fail to maintain the advance-deposit ratio prescribed by Bangladesh Bank (BB), the apex bank governor, Dr Atiur Rahman, said on Wednesday. According to a BB directive, the ceiling for advance-deposit ratio is 85 per cent for conventional banking, and 90 per cent for the Islami Shariah banking. Banks must maintain the statutory liquidity ratio (SLR) at 19 per cent in case of conventional banking and 11.5 per cent for Islami Shariah banking, which allow credit disbursement up to 81 per cent and 88.5 per cent respectively.
“Banks with advance-deposit ratios above 85 per cent must fall in line, by June, by raising deposits and scaling down lending commitments, or else they won’t be allowed to open new branches and expand business, Rahman said, at a meeting with bankers at the central bank office. They will also face downgrading of their Camels rating and the usual penal action as per the Bank Companies Act," he added.
The governor, during a meeting with bankers in the capital, told them to cut lending for non-essential and unproductive purposes. However, there are some complaints about loans being refused summarily for ongoing productive activities and for essential imports, he pointed out.
Rahman also expressed disappointment over the inefficiency of banks to collect export payments timely, which is resulting in difficulty in payment for imports. He said export receipts are lagging behind export shipments by nearly US $2 billion.
The governor urged the bank CEOs to pep up their export desks so that they could timely collect export bills from abroad in order to meet import bill payments.
"There is much that banks themselves can and should do to improve market liquidity further by hastening repatriation of proceeds of booming exports of their clients," he said.
Hastening collection of even a fraction of the huge amount ($2 billion) will ease market liquidity considerably in terms of both taka and forex. And this would, in turn, ease pressures on taka exchange rates and interest rates, he added.
Rahman said he would welcome a proposal jointly by two key players in the banking sector, Bangladesh Association of Banks (BAB) and Association of Bankers Bangladesh (ABB), for a revision of the decade-old BB guidelines on minimum required standards of management of core risks.
"With a view to eliciting stronger engagement and ownership of actual users of the guidelines in the banking community, we would like to see ABB and BAB jointly take the initiative in this ragard," he said.
BB staff in the regulation and supervision departments will extend necessary support in this regard. BB deputy governors Nazrul Islam and Murshid Kuli Khan, and managing directors of Janata Bank, City Bank and Pubali Bank, SM Aminur Rahman, K Mahmood Sattar and Helal Ahmed Chowdhury, respectively, joined the meeting, among others.

News: The Independent/ Bangladesh/ May-12-2011

The World Bank approved a concessional credit worth US$195 million for Bangladesh for the Identification System for Enhanced Access to Services (IDEA) Project to assist the country in developing a reliable and accurate national identification (ID) system. The system is expected to enable efficient and transparent delivery of benefits and services to the people, particularly the poor. The credit is from the International Development Association (IDA), the World Bank’s concessionary lending arm. The credit carries a 0.75 per cent service charge, a maturity of 40 years, including 10-years grace period.
Establishing a full-fledged and reliable national Identification system would significantly improve the delivery of public and private services. The system will be built upon the existing voter-list database by the Bangladesh Election Commission, said a release of World Bank.
Identification numbers and cards will be issued to about 90 million Bangladeshi citizens of age 18 and above within next five years.  Modern technology will be used to produce robust national ID cards to protect the citizens from fraud and forgery.
“A comprehensive national identification system will transform the way in which public services, including social benefits, are delivered to recipients” said Ellen Goldstein, World Bank Country Director for Bangladesh. “’It will also assist in better planning, minimizing corruption and increasing transparency in service delivery.”

News: The Independent/ Bangladesh/ May-12-2011

Scheduled commercial banks with more than 85 percent of credit deposit ratio (CDR) have to bring down the ratio by this June or face stern action from the regulator, along with a low camels rating, the Governor has warned banks’ top executives.

The punitive measures might also include the central bank’s bar in opening up new branches by the banks, in line with the Banking Companies Act.

“Banks must have to control the CDR within the directed limit of 85 percent by June 2011 with simultaneous efforts of deposit increase and credit decline. Otherwise, they have to concede a lower grade in camels rating in addition to some punitive measures complying with the Banking Act,” Dr Atiur Rahman told the managing directors of Banks at a meeting at the BB headquarters in the city.

He also drew attention of the top bankers to some complaints that banks are reluctant to provide loans to productive sectors and some essential imports.

“To rein in inflation is our main agenda. At the same time, we have to be farsighted to achieve our growth target. Banks have to be more careful that productive sectors get priority instead of the unproductive ones,” Atiur said.

About the liquidity situation, the Governor said BB has kept up its continued efforts to pump local and foreign currencies into the circulation. But, banks themselves can and should do to improve market liquidity further, just with pro-activity towards quicker repatriation of proceeds of booming exports of their clients.

Export receipts are lagging export shipments by nearly USD 2 billion; hastening collection of even a fraction of this will ease both Taka and forex liquidity in the market considerably, in turn easing pressures on Taka exchange rates and interest rates, he added.

“I would strongly urge you (bank CEOs) to see that export desk staffs in your AD branches are active in timely collection of export bills from abroad and your import desk staffs are in meeting import bill payments,” Atiur said.

BB deputy governor Nazrul Huda, however, alleged that Banks are frequently violating BB directives.

“Commercial banks are violating BB directives in re-scheduling their loans. They are not providing facts in their income-expenditure and profit statements,” he said while briefing reporters after the meeting.

Chaired by the Governor, the meeting was also attended by deputy governor Murshid Kuli Khan.

News: Daily Sun/ Bangladesh/ May-12-2011

The 211th meeting of the board of directors of Al-Arafah Islami Bank Ltd was held at its head office recently.

Badiur Rahman, chairman, board of directors presided over the meeting, said a press release.

The meeting decided to hold the 16th annual general meeting (AGM) of the bank on June 6, the press release added.

Among others, members of the board Alhaj Md Harun-Ar-Rashid Khan, Alhaj Abdul Malek Mollah, Alhaj Hafej Md Enayetullah, Alhaj Abdul Moktadir, Alhaj A N M Yeahea, Alhaj Abdus Salam, Alhajj Niaz Ahmed, Sabrina Farah Ahmed, Md Ashik Hossain, Mohammad Emadur Rahman, Md Rafiqul Islam, Dr Momtaz Uddin Ahmed, Brig Gen (retd) M A Malek, attended at the meeting.

General manager of Bangladesh Bank Ahmed Ehteshamul Haidar, managing director of the bank Ekramul Hoque and company secretary and executive vice president Md Mofazzal Hossain were also present at the meeting.

News: Daily Sun/ Bangladesh/ May-12-2011

Eastern Bank Limited (EBL) has achieved 9001:2008 certificate for its commitment to quality delivery.

The EBL is the first local bank to achieve the certificate, said a press release.

Golam Kibria, country manager of Bureau Veritas Certification, formally handed over the certificate to Ali Reza Iftekhar, managing director and CEO of the bank, at a ceremony at EBL corporate head office in the city.

EBL Deputy Managing Director Md Fakhrul Alam, Secretary Mahbubul Alam Tayiab, Head of ICC SM Akhtaruzzaman Chowdhury, Head of Operations Malick Musfique Reza and Head of Finance AMM Moyen Uddin, among others, were present on the occasion.

News: Daily Sun/ Bangladesh/ May-12-2011