Bank Asia, a private commercial bank, has inaugurated a branch in Moulvibazar district yesterday.

A Rouf Chowdhury, chairman of Bank Asia, formally inaugurated the branch. M Safwan Chowdhury and M Lakiotullah, vice chairmans of the bank, Shah Mohammad Nurul Alam, its director, and Irfanuddin Ahmad, president and managing director, were also present.

Customers of the bank will avail ATM and on line banking facilities from the branch along with other modern banking services, said a press release.

Bank Asia, launched in 1999, offers various types of banking facilities which include Islami banking, brokerage services, SME banking and ATM and internet banking.

News: Daily Sun /Bangladesh/19 Jan 2011

The 1188th branch of Sonali Bank Limited was opened at Nolin Bazar in Tangail recently.

Lawmaker Khandhokar Asaduzzaman inaugurated the branch as the chief guest, said a press release.

Directors of the bank K M Zaman Romel, Zannat Ara Henry, Subhas Chandra Singh Roy, managing director and CEO Md Humayun Kabir and local customers were present.

News: Daily Sun /Bangladesh/19 Jan 2011

First Security Islami Bank Limited (FSIBL) has organised a mangers’ conference at BRAC-CDM at Rajendrapur under Gazipur district recently, said a press release.

The conference was presided over by AAM Zakaria, managing director of FSIBL.

M Abdul Quddus, deputy managing director of FSIBL also attended the conference, among others.

The conference reviewed the operational performance of individual branches and divisions.

The FSIBL Managing Director in his inaugural speech gave emphasis on recovery of classified loans during the conference.

News: Daily Sun /Bangladesh/19 Jan 2011

Rejaul Karim Byron

Most private banks have ventured into risky business to bag excessive profits that inflated share prices and call-money rates.

According to Bangladesh Bank (BB) statistics, the credit-deposit ratio in private banks was 89 percent last year, which was 73 percent in state-owned commercial banks (SCB) and 83 percent in foreign banks.

Banks are allowed to lend up to 82 percent after maintaining a statutory liquidity requirement against deposits. If any bank wants to go for aggressive banking it can raise the ratio to 85 percent by adding capital alongside deposits, the central bank said.

It was revealed that 20 out of 30 private banks lend up to 85 percent against deposits. Some banks lend more than 100 percent, which means they lend by borrowing from the call-money market at higher interest rates.

Lending growth of 30 out of 43 local and foreign commercial banks was much higher than their deposit growth.

According to senior bankers, banks cannot lend more than its deposit growth but many private sector banks, even SCBs, defy the norm.

The deposit growth of one private bank was 4 percent whereas its credit growth was 22 percent. Another private bank posted 34 percent deposit growth, while its credit growth was 64 percent.

Bangladesh Bank officials said the banks went into risky banking to make high profits overnight.

In recent times, the banks made most of such investments in the share market to take returns on investment. As a result, shares were overvalued, one of the officials said.

The chief executive officers of private banks receive high salaries, so the shareholders consider their banks will make more profits quickly, enabling them to earn more in turn, said an official of Sonali Bank to The Daily Star.

K Mahmud Sattar, president of the Association of Bankers Bangladesh (ABB) and managing director of City Bank, said there was huge liquidity surplus in the banking sector last year. As a result, the banks put emphasised increased credit investment.

While lending excessive amounts, many banks failed to manage their assets and liability properly, he added.

“Our banking sector is in a very strong position now. Depositors have no risk as the banks are going for aggressive banking. Some banks may not have maintained ideal practices though.”

Sonali Bank Chairman Kazi Baharul Islam and Krishi Bank Chairman Khandker Ibrahim Khaled said such risky and aggressive banking must be stopped.

If a bank is caught practising so risky and aggressive banking in any other country including neighbouring India, the central banks take punitive action against the delinquent banks.

Islam said it also shows the incompetence of the bank authorities in fund management. Alongside, it seems that there was lack of competent supervision on the part of the board of directors of the banks concerned.

The central bank should take stern actions in this regard, he said.

“If the central bank goes for taking actions, you reporters should write that Bangladesh Bank is up to destroying the capital market,” said Sattar.

BB Executive Director SK Sur Chowdhury said lending should be within 80 percent of its deposits for sound and safe banking. The central bank monitors it regularly to ensure that banks do not cross the limit. BB has been issuing warning letters, he said.

Many observers hold the central bank responsible for the recent slump in the share market. They say if the BB had monitored strictly and checked the aggressive banking, the shares would not have been overvalued.

A central bank official said BB was warning the banks since June last year. Despite resistance from some powerful quarters, the central bank advised the banks on July 6 last year to be cautious in lending in the capital market.

News: The Daily Star /Bangladesh/17 Jan 2011

Bangladesh Bank (BB) yesterday warned five local and foreign commercial banks for violating their investment and credit limits.

The central bank issued letters to Bank Asia, Shahjalal Islami Bank, State Bank of India, National Bank of Pakistan and Exim Bank for violating their limits, sources said.

The central bank issued letters to Bank Asia and Shahjalal Islami Bank on Monday and to State Bank of India, National Bank of Pakistan and Exim Bank on Sunday. More letters would be issued to other violators in turns, bank sources said.

According to Bank Company Act, a bank has to preserve 19 percent of its total deposits to the central bank as Statuary Liquidity Ratio (SLR). The ceiling is 11.5 per cent for Islamic banks.

As on December 30, 2010 National Bank of Pakistan exceeded limit by 37.68 per cent, State Bank of India 28.72 per cent, Bank Asia 9.50 per cent, Exim Bank 15.18 per cent and Shahjalal Islami Bank 7.84 per cent.

For the reason, banks are suffering from acute liquidity crisis while the central Bank is also struggling to address the situation, analysts said.

News: Daily Sun /Bangladesh/18 Jan 2011