Bangladesh Bank governor Atiur Rahman has asked the commercial banks to reduce their interest rates to accelerate industrialisation.

The governor gave the directive in a meeting of bankers at Motijheel on Sunday.


He said the ceiling on interest rates, except that on export and import of essentials, term industrial loan and farm loan, had been withdrawn as it was felt necessary due to the global economic meltdown.

"Allegations have it that many banks were imposing 14-15 percent interest on industrial loan after the withdrawal of the ceiling," Atiur told the meeting.

"Allegations are also there that some service charges are being realised at much higher rates," the governor said urging the banks to rationalise those.

He said a directive had been given to take action against those who were defying the order in this regard.

News: The Independent/Bangladesh/ Apr-11-2011

Bangladesh Bank (BB) has asked the chief executives of all commercial banks not to get deeply involved in non-banking activities, including investment in the stockmarket.

At a meeting with the chief executives yesterday, the central bank said punitive actions will be taken against the banks involved in irregularities in the stockmarket.

After the meeting, BB Deputy Governor Nazrul Huda told reporters that they are yet to receive the report on the recent share market probe. He, however, said the central bank will conduct a separate investigation after getting the report.

On the basis of the investigation, actions will be taken against the banks according to the gravity of the offence, if any.

"We have read stories published in newspapers and are saddened to learn about manipulation by the banks," Huda said.

He said the central bank has taken steps to amend the rules that govern the amount of money the banks can invest in the share market.

Citing a study by the central bank, Huda said that if any bank invests 10 percent of its deposits and if the share price slides by 25 percent from its purchase price, the bank's capital will be reduced by a minimum of 2 percent.

In a meeting, BB Governor Atiur Rahman said they had earlier expressed concerns over the banks' non-banking activities, especially risky investments.

The “precariously off-balance situation” has been created in the banking sector as these banks did not take the corrective measures on time. The BB governor advised the banks to conduct banking activities cautiously in future.

News: Daily Star/Bangladesh/ Apr-11-2011

Sajjadur Rahman

---

The central bank has launched an in-depth investigation into the financial institutions named in a probe report on the recent stockmarket crash, top officials of Bangladesh Bank (BB) said yesterday.

The BB has also written a letter to the government to amend a section of the Banking Companies Act 1991 that allows a bank to invest 10 percent of its liabilities (deposits) in the stockmarket.

If the proposal gets through, the new law will restrict banks' investment in the stockmarket by reducing the percentage of the deposits or fixing the rate in terms of equities (not deposits), which is an international standard practice.

“We have already ordered the related department to carry out a detailed investigation into the banks and non-banks that were found responsible by the probe committee in the alleged scam,” a top BB official told The Daily Star.

The central bank's decision came hours after the probe committee led by Bangladesh Krishi Bank Chairman Khondkar Ibrahim Khaled submitted its report to Finance Minister AMA Muhith on Thursday. The report recommended that the BB take action against the financial institutions in question.

The probe report said some banks pocketed huge profits violating the rules and regulations. Some of the banks were also involved in fuelling the stock prices last year.

Allegations have been made against some banks for taking high premium for rights and preference shares.

During the two-month investigation, the committee had talked to over 500 traders, including all members of Dhaka and Chittagong stock exchanges, journalists, professors and researchers.

The probe panel has made a series of recommendations, including a major overhaul of the Securities and Exchange Commission (SEC) and an amendment to section 26 (2) of the Banking Companies Act 1991.

“We have responded promptly on our part,” said the BB official on the investigation order against the financial institutions.

BB Governor Atiur Rahman confirmed the central bank's move.

“We have written to the government to amend section 26 (2) of the Banking Companies Act to restrict a bank's investment in the stockmarket,” Rahman said.

“Ideally, it should be related with the capital, not with the liabilities,” said the governor, citing examples of other countries.

According to the existing laws, if a bank has Tk 10,000 crore deposits, it can invest Tk 1,000 crore in the share market.

The BB found many banks were overexposed into the capital market last year. Some banks invested more than 10 percent of their liabilities and helped fuel the stock prices. Still a bank has more than 10 percent of its liabilities into the stockmarket, according to a senior official of the central bank.

sajjad@thedailystar.net

News: Daily Sun/Bangladesh/ Apr-10-2011

A meeting of the Shariah Supervisory Committee of Islami Bank Bangladesh Ltd was held at Islami Bank Tower in the city on Thursday.

Mufti Sayeed Ahmad, vice chairman of the committee and Head Mufti of Al Jamiatus Siddikiah Darul Ulum (Madrasha-e-Furfura Sharif), presided over the meeting, said a press release.

The meeting was attended among others by Prof. Dr. Abu Bakr Rafique, member secretary of the Committee and pro-vice chancellor of International Islamic University Chittagong, Mohammad Abdul Mannan, managing director, Engr. Md Abul Bashar, Syed Abdullah Mohammad Saleh and Md. Habibur Rahman Bhuiyan, deputy managing directors and Md. Shamsul Huda, executive vice president of the bank, Principal Mohammad Serajul Islam, former principal of Madrasah-E-Mesbahul Ulum, Md. Abdur Rakib, former executive president of the Bank, Mufti Shamsuddin (Zia), Muhaddith of Zamea Islamia, ,Patia, Abdus Shahid Nasim, president of Bangladesh Quran Shikkha Society, Dr. Hasan Muhammad Moinuddin, assistant professor of International Islamic University of Chittagong, Dr. A.S.M. Toriqul Islam, associate professor of Department of Dawah & Islamic Studies of Islamic University, Kushtia

The meeting took various decisions on compliance of Shariah and expressed satisfaction in overall activities of the bank.

News: Daily Sun/Bangladesh/ Apr-10-2011

Kazi Baharul Islam, chairman of board of directors of Sonali Bank, recently urged the bankers to work with service oriented approach.

He was addressing as chief guest at a meeting to exchange views with top officials of Chittagong zone of the bank, said a press release.

Md Abdur Rab, general manager of the bank’s Chittagong general managers’ office, chaired the meeting. Kashem Humayan, member of board of directors of the bank, Md Humayan Kabir, bank’s managing director and chief operating officer also spoke.

News: Daily Sun/Bangladesh/ Apr-10-2011