Bangladesh Bank (BB) is preparing a guideline to help banks check forgery in online banking.
The new guideline is likely to be issued next month, a central bank official told BSS on Sunday.
The central bank is issuing the guideline against the backdrop of some incidents of credit card forgery and fraudulent transactions at ATMs.
Under the guideline, banks will be advised to follow a set of measures to protect their clients from fraudulent activities in online transactions.
Among the measures, the banks would be asked to develop a system from which their clients would get instant message (SMS) and email immediately after each and every online transaction.
Currently, some banks are providing similar services at their own initiatives to protect the interest of their clients and to ensure secured online banking.
“But, all banks should provide their clients with similar services after issuing the guideline,” the BB official said.
He said SMS and email should be sent to the respective clients against their transactions by using debit or credit cards at the ATMs (automated teller machines) or PoS (Point of Sales).
Most of the country’s commercial banks have showed positive earnings for the third quarter (July-September) of this year, but their cumulative earnings in three preceeding quarters (January-September) were negative.
Out of 30 listed banks, 28 have so far declared their third quarter earnings – 15 showing positive earnings, few of them even recovering from heavy losses of the same quarter previous year, according to published earnings statements.
Nine of them made a profit this quarter, but this was dlown from the same quarter of the previous year while the remaining four incurred net losses.
During the nine month period of this year, the cumulative earnings of 21 companies, however, still remained in the negative territory with only seven showing very marginal profits.
The banks continued to wrestle with the rising non-performing loans stemming mainly from the country’s ongoing political uncertainty, bankers said.
Political uncertainty, which discouraged private investment, and higher provisioning against non-performing loans (NPL) hit profitability, they said.
NPL is a loan on which the borrower is not making interest payments or repaying any principal. Banks normally set aside money to cover potential losses on loans (loan loss provisions) and write off bad debt in their profit and loss account.
Spillover effects of bad loans, which started to shoot up from last year following a series of financial scams, continued this year too, bankers said. The situation might turn worse in the coming months because of deepening political chaos they warned.
National Bank Ltd (NBL) was the worst performer posting a net loss of almost Tk4bn for the nine months ending September 30, down from the Tk1.3bn profit in the same period of 2012.
NBL was followed by Mutual Trust Bank, Exim Bank and One Bank.
“Political uncertainty holds back overall businesses, bringing down the banks earnings,” said Helal Ahmed Chowdhury, managing director of Pubali Bank. “Though economic growth remained positive over the last several years credit growth was not encouraging.”
On bank to bank varying profit, he said the banks that had to keep aside smaller amounts of money for loan provisioning or recovering previous bad loans posted higher profits. “The banks with higher non-performing loans made less profit.”
He said the banks awash with huge liquidity had to face the increased cost of funding, which also brought adverse impact on net profit.
The banks’ income mainly comes from two areas, core banking and capital market investment.
According to the Bangladesh Bank data, defaults on loans in the banking sector increased by more than 19% to Tk510bn as of March 31, 2013 from December last year.
Private borrowing grew by over 11% in August this year compared to about 20% in the corresponding month of last year.
Ali Reza Iftekhar, managing director of Eastern Bank, said higher provisioning due to rising NPL is the main reason behind the fall in net profits. “The business was very bad, so the profit was not satisfactory. Some even recorded higher profits. But the large provisioning has eaten up all the profits.”
He said: “This, coupled with the bearish trend of the stock market, has forced the banks to provision a substantial amount, which has cut the profit.”
Iftekhar sees more difficult days ahead in the run up to the general election. “Banks might see worse days in the coming months because of intensified political chaos.”
Banks that saw decline in their profits are First Security Bank, Al-Arafah Bank, AB Bank, Social Islami Bank, Eastern Bank, Trust Bank, Dhaka Bank and Islami Bank.
Banks that saw positive in their profits are United Commercial Bank, NCC Bank, Premier Bank, Jamuna Bank, City Bank, Bank Asia, Uttara Bank, Rupali Bank, Pubali Bank, Dutch-Bangla Bank, Mercantile Bank, Southeast Bank, IFIC Bank, Prime Bank and Shahjalal Bank.
Bangladesh Bank Governor Dr Atiur Rahman stressed the need to prepare sector specific credit policy guideline as “the nature of different sectors is different from the environmental perspective.”
He also said holding positive mindset and attitude on environmental credit guideline is the biggest challenge for the bankers.
Dr Atiur Rahman was speaking at “International Sustainable Banking Conference 2013” in Dhaka on Saturday.
Bangladesh Bank and International Finance Corporation jointly organised the day-long conference.
“Polluting industries like tannery differs from the investment in poultry,” said the governor explaining the nature of the lending sectors.
He added that quantifying environmental risk rating is another challenge.
On mindset, Governor said: “The mind-set amongst bankers should not be that environmental guidelines are damaging for growth of the business and a hindrance it’s in your own interest too for long run growth of your profits.”
“Capacity building on environmental issues is therefore required for the central bank and the commercials banks” to develop structured green banking practices and green reporting initiatives (GRI).
The green banking has been identified as one of the major drivers of sustainable economic growth in developing countries.
Governor said Bangladesh Bank’s Corporate Social Responsibilities (CSR) mainstreaming guidance of 2008 highlighted environmental sustainability issues alongside those of social and financial inclusion.
This was followed by indicative policy guidelines of 2011 specifically on instilling green banking practices, both in internal processes and in environmental impact assessment of financing proposals, he pointed out.
“Bangladesh Bank as a central bank took utmost care to kick the process off with setting examples in its own practices.”
Dr Atiur Rahman said: “In green financing lenders routinely take up environmental impact assessment of investment proposals, factoring in environmental risks in their financing decisions.”
He added the green financiers deny financing for environmentally risky undertakings lacking in adequate mitigation measures.
“This environmental screening of borrowing proposals, green financing promotes adoption of new energy efficient.”
Governor said Bangladesh Bank advises the banks to finance solar energy,bio-gas plant, ETP and Hybrid Hoffman Kiln (HHK) in brick field under refinance programmes.
“We introduce Tk2bn refinance line in FY2010 against bank loans for investments in solar energy, ETPs and biogas plants,’ he added.
Kyle Kelhofer, IFC’s Country Manager for Bangladesh, Bhutan and Nepal and Deputy Governor SK Sur Chowdhury, among others were present.
The parliament yesterday passed the much talked-about Grameen Bank Act, 2013, one that elevated the government roles in the running of the microcredit organisation without any increment of its ownership stakes.
“As the Grameen Bank has been running under an ordinance, it was necessary to enact a law,” Finance Minister AMA Muhith said in parliament yesterday.
The government has not brought any changes to the organogram of the organisation out of respect for Prof Yunus, who, Muhith said, has brought much pride to the country by way of his Nobel Peace Prize.
Meanwhile, Jatiya Party lawmaker Mujibul Haque Chunnu questioned why such an important bill was being passed when the national election is knocking on the door. He suggested taking public opinion before the passage of the bill as “interests of many people have been featured in it”.
But the parliament rejected Chunnu’s proposal and passed the bill with voice vote.
The new act, which would replace the Grameen Bank Ordinance, 1983, authorises the government to make rules for any aspect of the running of the bank.
The government, however, had the authority in the Grameen Bank Ordinance, 1983 but it relinquished them through an amendment in 1990 and only retained the power to make rules for the election of borrower-directors.
Furthermore, the government added a provision which allows it to take steps to remove barriers to the implementation of the new law. The government’s share in Grameen Bank, however, remains the same at 25 percent and the remaining 75 percent belong to the bank’s borrower-shareholders.
The managing director of the bank will be appointed following approval from the central bank and the MD will hold office until the age of 60 years, according to the new law.
In a major change, the bank will have to be audited by at least two chartered accountant firms, instead of two auditors each year, to ensure international standards. The bank will then submit the audited report and statement of accounts to the government within three months of the year’s end.
A new addition stipulates the bank will also have to submit the return, the audited report and the statement of accounts as per Bangladesh Bank’s demand.
The Grameen Bank Ordinance, 1983 superseded any other law, due to which the microcredit organisation enjoyed various tax exemptions. This feature was left out in the new act, meaning Grameen Bank will now get only income tax exemption and that too for the period stipulated by the government.
The new act increased Grameen Bank’s authorised capital to Tk 1,000 crore from Tk 350 crore to prevent the need for changing the law in future. The paid-up capital, too, has been increased to Tk 300 crore from Tk 50 crore.
In case of vacancy of all nine elected directors, three government-appointed directors including the chairman will be enough to meet the quorum obligation and sit for a meeting.
According to the law, the GB’s zonal manager or an official of equal status will retain the power to file cases under the Public Demands Recovery (PDR) Act to realise un-repaid loans from borrowers.
Under the ordinance, any GB official would have been able to exercise the power. But now the scope has been limited to senior officials of the bank in order to prevent abuse of power.
The law also extended financial fine from Tk 2,000 to Tk 10,000 for individuals who wilfully provide false statement, documents or information to the bank in obtaining loans or other advantages. The imprisonment term remains the same, of one year. The individuals may even face both the financial fine and the imprisonment term.
The new act also said if anybody uses the bank’s name in prospectus or advertisement without any written permission from Grameen Bank, he or she would face at least one year of imprisonment or Tk 1 lakh as financial fine or both.
Following a Supreme Court order, the government is turning the Grameen Bank Ordinance 1983 into the Grameen Bank Act 2013, along with more than 500 ordinances promulgated during the military rule between 1982 and 1986.
Nine elected directors of the bank and its 26,000-strong employees’ union have protested the new law, saying the changes will only help the government establish control over the bank.
“The objective of the law is to expand the services of the Grameen Bank to the larger group of people in rural areas while keeping the ownership of the government and state-owned agencies intact,” Finance Minister AMA Muhith said while placing the bill in the parliament last month.
The move will also help loan recipients become the bank’s shareholders, he added.
News:The Daily Star/07-Nov-2013
Credit disbursement to the agriculture sector shot up by 24.82 per cent in the first quarter (July-September) of the current fiscal year 2013-14 compared to the same corresponding period of the previous FY 2012-13. According to the data of Agricultural Credit and Financial Inclusion Department of Bangladesh Bank, both the public and private commercial banks have disbursed Tk 2,861.58 crore in the period of July-September of FY 2013-14 while they credited Tk 2,292.52 crore in that period of the previous fiscal year, a 24.82 per cent more than the first three-month of the FY 2012-13.
The BB data also shows that the loan disbursement to the agriculture sector in the Q1 of FY 2013-14 was 19.61 per cent of the credit target of Tk 14,595 crore for the agriculture sector.
Besides, the rate of credit realisation in the agriculture sector was also higher in the July-Sept of 2013-14 than the same corresponding period of the previous fiscal year 2012-13.
As per the central bank’s data, the banks have realised Tk 11,000 crore credit from the agriculture sector in the first three-month of FY
2013-14 while the amount of credit realisation in this sector was Tk 9290.56 crore in the same corresponding period of FY 2012-13.
Provash Chandra Mallick, general manager of Agricultural Credit and Financial Inclusion Department of BB, said the amount of agriculture loan has been increased in recent time due to mainly strong supervision and keeping an eye to the agriculture development by the central bank.
Moreover, at the outset of the current fiscal year the demand for agriculture loan was high during ‘aman season,’ he said.
“The risk in the agriculture loan is very low as most of the agro-loan is small in size. Thus, the loan recovery rate is very sound,” Mallick said.
Analysing the central bank’s data, it has been found that in the July-September period of 2013-14, the state-owned commercial banks have distributed Tk 1,699.43 crore agro-loan among farmers and the private commercial banks along with foreign banks disbursed Tk 1162.15 crore credit to the agriculture sector.
Among them, Bangladesh Krishi Bank have allowed highest amount of agriculture loan to the farmers which was Tk 110.24 crore.
And, the Rajshahi Krishi Unnayan bank disbursed Tk 237.77 crore agro-loan securing second position in terms of agro-loan disbursement.
Among the state-owned commercial banks, Sonali Bank has disbursed Tk 113.12 crore agro-loan.