The central bank is set to introduce a Real Time Gross Settlement (RTGS) system on October 8 to facilitate the business activities across the country, officials said.

"We've already directed all the commercial banks to take preparations for implementation of the RTGS as per our timeline," a senior official of the Bangladesh Bank (BB) told the FE Tuesday.

The BB also asked the participating banks to submit their RTGS implementation plans to it by April 23, the official added.

He said India, Pakistan and Sri Lanka have already introduced the RTGS system so that businessmen can quickly provide services for high-value transactions.

Earlier on November 20 last year, the central bank signed a deal with Sweden-based CMA Small Systems AB to introduce the RTGS system.

The RTGS, which can be defined as the continuous (real time) settlement of funds transfers individually on an order by order basis (without netting).

'Real time' means the processing of instructions at the time they are received rather than sometime later. 'Gross Settlement' means the settlement of funds transfer instructions occurs individually (on an instruction by instruction basis).

Bangladesh Bank is set to introduce the real-time gross settlement (RTGS) system on October 8 to facilitate instant settlements of payments online.

RTGS is a system of transferring money or securities from one bank to another on a real-time or 'gross' basis. It is part of a project jointly funded by the government and the Asian Development Bank.

Real-time settlement means payment transaction is not subjected to any waiting period. The transactions are settled as soon as they are processed. Gross settlement means the transaction is settled on a one-to-one basis without bundling or netting with any other transaction.

It enables the instant settlement of high-value, local currency transactions as well as government securities and foreign currency-based transactions, the BB said in a statement yesterday.

Under the present system, such transactions sometimes take more than a day to come through.

“All scheduled banks are required to take preparation to perform live transactions over the BB-RTGS system,” the BB said.

The RTGS will use MX (ISO 20022) message format for data exchange between central bank's systems and participating bank's systems through the existing virtual private network.  “The SWIFT network may be included as a redundant communication channel in the next phase.” 

The BB has also directed banks to complete installation of necessary hardware and software to introduce RTGS by August 17.

In line with the timeframe, participating banks will prepare their implementation plan and submit to the central bank by April 23.

Bangladesh Bank on Monday asked four state-owned commercial banks to explain in their annual financial balance sheets why their position of capital and provision strengthened last year. The four banks are Sonali, Janata, Agrani and Rupali. The BB asked the banks to prepare the balance sheets by this month as they failed to do those by February in line with the central bank directions. Monday’s directions came from a regular memorandum of understanding meeting between the BB and the state-owned banks at the central bank headquarters in the capital. BB governor Atiur Rahman presided over the meeting while the managing directors of the banks were present. The BB arranges the MoU meeting in every three months to supervise and monitor the banks’ financial health. BB deputy governor SK Sur Chowdhury after the meeting told reporters that the capital and provision of the banks strengthened last year as the central bank had relaxed provisioning against the loans which are pending with the Artha Rin Adalat. The central bank has recently asked the banks to keep provision in phases against the loans which are pending with the court that resulted in stronger capital position of the banks. The BB asked the banks to attach the information with the balance sheets. Sur said that the central bank had asked the four banks to strengthen the recovery programmes from the habitual and big defaulters as some of them (banks) failed to achieve the recovery of the defaulted loans in accordance with the central bank target. He said, ‘Rupali Bank exceeded the credit growth target set by the central bank in 2014. So, the BB asked the bank to give explanation in this connection.’ The central bank set the credit growth target for the four banks from 2013 in a bid to check their loan scandal. The BB asked the banks to strengthen their internal control and compliance in the interest of their good governance, Sur said. The BB asked the banks to take punitive measures against the officials who were responsible for the loan scandals.

Takes move against EC committee chairman for irregularities

Vendors and passers-by are seen outside the Motijheel Branch of Farmers Bank on Monday. A Bangladesh Bank investigation has detected that Farmers Bank sanctioned and disbursed around Tk 50 crore in loans to a number of companies violating the banking rules and regulations.

Newly-established The Farmers Bank sanctioned and disbursed around Tk 50 crore in loans to a number of companies violating the banking rules and regulations, found a Bangladesh Bank investigation. The BB probe found that the bank’s executive committee chairman Md Mahabubul Haque Chisty was directly responsible for the anomalies as he, in some cases, passed loans without taking the approval of the EC committee, bypassed branch recommendations in some cases and in other cases did not take any recommendations in sanctioning the credits. The BB investigation teams conducted separated inspections at the bank’s Gulshan and Motijheel branches in February when they unearthed the irregularities. The central bank has already served a show-cause notice asking Chisty, also a director, to reply why any action would not be taken against him. When contacted, BB deputy governor SK Sur Chowdhury told New Age on Monday that the central bank had already received reply of the show-cause notice from Chisty. ‘We are now scrutinising the reply of the show-cause notice of Chisty. The BB will take punitive measures against him if his answer fails to substantiate his stand,’ said Chowdhury. Chisty could not be reached for comments as his official mobile number was found switched off in the last two days. His private secretary Zakir Hossain on Monday said Chisty was out of the Dhaka city for few days. Farmers Bank chairman Mohiuddin Khan Alamgir on Monday told New Age, ‘The central bank has wanted to know about the issue. We have replied to the central bank.’ ‘To my knowledge, no director of my bank took any steps which are illegal,’ said Alamgir, who is also a lawmaker of the ruling Awami League and a former home minister. The BB investigation found Chisty approved an overdraft loan facility of Tk 5 crore to Prime Islami Securities Ltd, a client of the bank’s Motijheel Branch, without placing the loan proposal of the branch before the executive committee meeting violating banking rules. In another case, Chisty initially unilaterally approved a loan of Tk 2.50 to Saif Powertec Ltd without taking any recommendation from the Gulshan Branch after Saif Powertec applied with the branch for taking a loan of Tk 3 crore as working capital on July 3, 2014. Subsequently, Chisty topped up the loan facility to Tk 4 crore to Saif Powertec by giving direction over telephone to the branch. The EC committee of the bank, however, gave post-facto approval to the loan proposal of the company violating the central bank circular. The EC committee of the bank, led by Chisty, on the other hand, granted Tk 8 crore loan to United Bricks and Fultola Filling Station on March 5, 2014 without taking any credit proposal from the bank’s Gulshan Branch. The Gulshan Branch placed negative recommendations about the two companies’ business status before the head office of the bank but the EC committee avoided the suggestions breaching the banking rules and regulations. The EC committee approved a credit limit of Tk 15 crore on March 5, 2014 to Urban Design and Development Ltd against an under construction flat which was worth Tk 5.91 crore. The BB report said that the committee had not taken proper mortgage against the loan which made a threat to the depositors’ money. Besides, the committee approved the loan before receiving the credit proposal from the branch. The EC committee in its 14th meeting also approved a term-loan of Tk 16 crore and a working capital of Tk 2 crore in favour of Chittagong Fisheries, also a client of the Gulshan Branch, to purchase a fishing trawler. The EC committee approved the loan before preparing the credit proposal by the bank’s branch. ‘In some cases the EC committee is directly responsible. As the head of the committee, Chisty was served the show-cause notice for all the anomalies,’ explained a BB official. He said, ‘We are not satisfied with the Chisty’s reply. But, we do not know whether any action could be taken against him as the bank has a huge political link.’ Farmers Bank is one of the nine new banks that the previous Awami League-led government approved in 2012 because of their strong political backing. BB officials said the central bank also issued two separate letters to managing director of Farmers Bank asking him to take required measures in this regard. When asked about the irregularities on Sunday Farmers Bank managing director Choudhury Moshtaq Ahmed declined to make any comment asking New Age to communicate with him on the next day. But Moshtaq was not available in his office on Monday.

All commercial banks would get a 10-day final notice to set up a separate 'help desk' for women at their all branches to help create new women 
entrepreneurs by providing them with hassle-free and faster services, said a Bangladesh Bank (BB) official, reports BSS. "The central bank would issue a directive next week asking the banks open woman help desk at their all branches within 10 days of receiving the directive", BB executive director Nirmal Chandra Bhakta told the news agency yesterday.
BB in 2010 asked all banks to open separate help desk for women, but many of them are yet to follow the directive.
"BB is now collecting information from banks on their number of branches having women help desk", said the BB official, adding that the final directive regarding this matter would be issued after compilation of the
information.
He said the central bank might take punitive action in case of failure of banks to set up women held desk within the stipulated timeframe.
BB executive director and spokes person M Mahfuzur Rahman said some banks effectively showed lack of interest by not following 
the regulator's directive, but they would have no option but to follow the next directive accordingly.
The central bank data showed that Sonali Bank so far opened the highest number of women help desks at 
its 12 among 1200 branches followed by Rupali Bank with setting up similar help desk at its 10 out of 650 branches. 
Only a few out of 56 private banks have separate help desk for women. 
Agrani Bank and Janata Bank have no such desk at their branches.