Asif Showkat Kallol

In a bid to recapitalise four ailing state-owned banks, the government has decided to set aside Tk5,000 crore for the next fiscal year as per a recommendation by the International Monetary Fund under its extended credit facility (ECF) programme.

Seeking anonymity, a senior official of the Finance Division who is involved with budget preparations, said the government had no choice but to allocate the funds in the next budget as they were concerned about the financial health of four state-owned commercial banks in Bangladesh – Sonali, Janata, Agrani and Rupali.

The government gave Tk4,100 crore to the four banks in the outgoing fiscal year to help the banking sector recover from the setbacks caused by the Hall-Mark and Bismillah group scams, the official said.

Sources said the Finance Division would allocate the Tk5,000 crore only after reviewing whether the state-owned commercial banks had made substantial progress regarding an agreement with the central bank that had granted the previous Tk4,100 crore allocation.

The Finance Division would hold a meeting with the Bangladesh Bank to review the matter following the budget announcement, the sources added.  

In April, the International Monetary Fund (IMF) asked the government to put aside Tk5,000 crore in the upcoming budget as capital for the four state-owned banks.

In its fifth review of the ECF, the IMF suggested that Tk1,500 crore of the total amount should be dispatched to the four banks by December this year and the rest by June 2015.

The multilateral lender, however, has instructed that certain conditions be tagged with the handout, so that the four banks are obligated to improve their performance and automate their branches by 2016.

The move comes after the IMF forecasted that the four banks’ capital position would deteriorate fast in the coming fiscal year, even though they have a capital surplus of Tk855 crore, according to the latest available data from December 31 last year.

According to Bangladesh Bank, the loan provision surplus of Sonali Bank and Janata Bank stood at Tk80.98 crore and Tk204.80 respectively at the end of March; the loan deficit of Rupali Bank stood at Tk319.92 crore; while Agrani Bank had no surplus or deficit provision of credit.

The banks’ capital position would run into a deficit for several issues, including the expiry of the central bank’s relaxed loan rescheduling policy in June, provisioning requirements for impending classified loans, and the shift in July to BASEL III standard which requires higher capital adequacy.

Meanwhile, the Bank Division of the Finance Ministry had sought Tk6,000 crore allocation in the upcoming budget for recapitalisation of the four state-owned banks, as well as seeking Tk700 crore for the same purpose for the state-owned specialised banks.

M Aslam Alam, secretary of the Bank and Financial Institutions Division, told the Dhaka Tribune that the four government banks needed more capital in the next fiscal year in line with Basel II.

Basel II, published in 2004, is an accord that intends to create an international standard for banking regulators to control how much capital banks need to put aside to guard against risks.

The four state-owned commercial banks are said to have been robbed off their safe footing by major scams such as those staged by the Hall-Mark and Bismillah groups.

“The balance sheets of the state banks should be streamlined in order to ensure their survival... The development partners think that the state banks may collapse because of capital shortfall. So, they want to see recapitalisation in steps,” the secretary said.

News:Dhaka Tribune/21-May-2014

The makeshift field workers of the state-owned Agrani Bank limited have demanded for job obsession to the field workers who were engaged in loan disbursement and recovery to the farmers in the bank.

The makeshift field workers came up with the demand while addressing  a human shield program in this regard, in front of the National Press Club, in the capital, on Monday.

In terms of the development of agriculture besides the farmers of the country, the bank has appointed a total of 1,200 field workers in 2010.

“The field workers were assured that their job would be permanent but the bank authority has not implemented, yet,” the speakers alleged in the human chain program.

The joint-conveyor of the Field Assistant Parishad of the bank Md Bashir Uddin Mollah, Md Shahin Alam, Md Rafiqul Islam Shanta also spoke, among others, at the program while the conveyor of the parishad Jahirul Qyeeum Rana was in the chair.

United Commercial Bank Ltd (UCB) has recently signed an agreement with Grameenphone Ltd to provide UCB Mobile Financial Services “UCash” to customers via Grameenphone’s MobiCash distribution network.

Mir Jahir Uddin Ahmed, executive vice president & head of Mobile Financial Service of UCB and Md Delwar Hossain Azad, head of Financial Services of Grameenphone were, among others, present at the signing ceremony.

Rupali Bank Limited has been providing improved and modern banking services to its customers across the country as the management of the bank believes in serving the clients with best facilities.

The services are provided through 532 fully-computerized branches across the country. Besides, online and ATM services are also available for the customers from the cities to the rural areas of the country.

Dr. Ahmad al-Kabir, Chairman of the bank said this. “We are working on a variety of development works for the banks. Automation, business development, ATM services, computerized system have been introduced in almost all branches. Competitive banking activities have been ensured in order to compete with other bank for faster growth of the business of the bank.” The bank has 532 branches and all are computerized. Online banking services are provided through 72 branches, he said adding, Another 131 branches will be brought under online network in a very short time, said the chairman.

The government has decided to shut down the Gulshan branch of state-owned BASIC Bank in capital Dhaka.

Finance Minister AMA Muhith broke the news to reporters at Sonali Bank UK Ltd’s dividend handover ceremony at his office on Thursday.
“It’s a good day. Because a state-owned institution is paying the dividend money. But the incident of Sonali Bank and Hall-Mark has tainted our image,” he said.
“No-one knows as yet about another incident of fraud which has taken place at state-owned BASIC Bank. That’s why we are shutting down the bank’s Gulshan branch.”
FIle Photo FIle Photo A Bangladesh Bank investigation has found irregularities in nearly Tk 17 billion loan disbursement in that branch.

Most of that money has become default loans. The central bank investigators believe the chances of recovering that money are slim.BASIC Bank’s Board of Directors and management are believed to be involved in these loan frauds.
The central bank had signed an understanding with it last year, but the irregularities kept persisting.
A special committee of the Bangladesh Bank has questioned the bank’s Managing Director Qazi Fakhrul Islam in connection with the fraud.
The Anti-Corruption Commission (ACC), too, is probing the incidents.
The bank’s deputy managing director and five other were sacked on Apr 15 for their alleged links with loan frauds and other irregularities.
Among them were Gulshan branch Manager and the bank’s Deputy General Manager Shifar Ahmed and loan section Chief Deputy Manager Jahid Hasan.
The other sacked officers were also with the bank’s loan section.

The central bank investigation report says certain gross irregularities had been detected at the bank’s Gulshan branch. For instance, a loan of Tk 2.4 billion had been given to a fictitious organisation called ‘Mama Bhagne’.
The investigators have termed this a ‘vanishing loan’.
One ‘Jewel’ had been given a total loan of Tk 3.380 billion for his five fictitious companies.
A recent survey of the Bangladesh Bank also showed that the Gulshan branch of BASIC bank had shown undue favour to a former director of Premier Bank.
His loan limit had been raised despite a low transaction level. Besides, his repayments had been repeatedly rescheduled, although he had not paid back any amount.
The central bank has now sought an explanation from state-owned bank’s Gulshan branch.
The report says several irregularities have come to light in the approval, disbursement and monitoring of loans, and that the branch authorities had ignored loan defaults.
Meanwhile, the Sonali Bank UK Limited has given the government nearly Tk 130 million in dividend for 2013.
The bank’s board Chairman M Aslam Alam and Chief Executive Officer Ataur Rahman Prodhan handed the cheque to the finance minister on Thursday.
Sonali Bank Ltd Chairman Habibur Rahman was also present there.
In 2012, the bank had given the government a profit share of 400,000 pounds.
The government has a share in the Sonali Bank UK Ltd, but it functions as an autonomous entity under licence from the Bank of England.
With six branches and 66 employees, the bank is providing services to the Bangladesh expatriates in the UK.
It began operations there in 2001 but initially arranging remittances was its main function.
It had incurred losses until 2007, but began making profits once new banking products were introduced.

The central bank investigation report says certain gross irregularities had been detected at the bank’s Gulshan branch. For instance, a loan of Tk 2.4 billion had been given to a fictitious organisation called ‘Mama Bhagne’.
The investigators have termed this a ‘vanishing loan’.
One ‘Jewel’ had been given a total loan of Tk 3.380 billion for his five fictitious companies.
A recent survey of the Bangladesh Bank also showed that the Gulshan branch of BASIC bank had shown undue favour to a former director of Premier Bank.
His loan limit had been raised despite a low transaction level. Besides, his repayments had been repeatedly rescheduled, although he had not paid back any amount.
The central bank has now sought an explanation from state-owned bank’s Gulshan branch.
The report says several irregularities have come to light in the approval, disbursement and monitoring of loans, and that the branch authorities had ignored loan defaults.
Meanwhile, the Sonali Bank UK Limited has given the government nearly Tk 130 million in dividend for 2013.
The bank’s board Chairman M Aslam Alam and Chief Executive Officer Ataur Rahman Prodhan handed the cheque to the finance minister on Thursday.
Sonali Bank Ltd Chairman Habibur Rahman was also present there.
In 2012, the bank had given the government a profit share of 400,000 pounds.
The government has a share in the Sonali Bank UK Ltd, but it functions as an autonomous entity under licence from the Bank of England.
With six branches and 66 employees, the bank is providing services to the Bangladesh expatriates in the UK.
It began operations there in 2001 but initially arranging remittances was its main function.
It had incurred losses until 2007, but began making profits once new banking products were introduced.