Bangladesh Bank has launched a cost of fund index for financial institutions to rationalise their interest rate, service charges and commissions for protecting the interest of the customers.

“We are going to implement a new monitoring system named base rate system. Its main component is cost of fund index,” Bangladesh Bank Governor Dr Atiur Rahman said, launching the index at its headquarters in Dhaka on Wednesday.

“We have to be careful so that efficiency or inefficiency of fund management of financial institutions is not directly imposed on the clients.” Evaluating the interest rate will be easy for financial institutions by using this cost of fund index as reference rate.

As a result, customers’ interest will be protected and there will be a healthy competition among the financial institutions.

The formulation of this identical base rate method will create level playing field in the overall financial sector, said the central bank governor.

By this based rate system, he said transparency and accountability will be ensured in fixing the interest rate and profit of financial institutions will be sustained.

A large part of funds of financial institutions comes from bank loan. So the fund cost index will play a role to protect the customers’ interest in the financial institutions. 

News:Dhaka Tribune/28-Nov-2013

Bangladesh Bank has posted an observer in the problem-ridden BASIC Bank to ensure enforcement of prudential regulations and help revive the bank from continuous financial deterioration.

The central bank took the decision and issued an order in this regard on Wednesday, deputing General Manager Ashok Kumar Dey of the Department of Banking Inspection as the observer with immediate effect.

Ashok Kumar Dey has been assigned to attend all the board meetings of the bank and observe the audit reports.

Bangladesh Bank signed a MoU (memorandum of understanding) with the bank on July 17 due to capital inadequacy, provision shortfall, continuous deterioration of profit, high rate of advance-deposit ratio, aggressive on loan disbursement, approval and renewal of loans, huge irregularities on loan rescheduling and lack of corporate governance in management.

The bank fell on risk due to failure in compliance of prudential regulation in every case.

But, the bank failed to recover its financial health following the condition of MoU, rather all financial indicators deteriorated during July to September period.

Bangladesh Bank recently held a meeting with BASIC Bank internally to review the bank’s financial situation. After the meeting, the Bangladesh Bank took the decision to post an observer in the bank, said a Bangladesh Bank senior executive.

According to latest data, capital shortfall of the bank rose to Tk6bn during July-September period from Tk1.82bn.

Provision deficit increased around 50% to Tk3bn from Tk2bn and non-performing loan increased to Tk18bn from Tk9bn.

The proposed MoU that contains 26 conditions stipulates that BASIC Bank must improve its capital to 11% of its risk-weighted assets while the asset growth should not exceed the capital growth. In addition, the credit growth must not exceed the deposit growth.

The bank’s classified loans should be reduced to 5% of the total loan by December from the existing 17% while its credit growth should not exceed 10% annually and 2.5% quarterly.

The bank will also be asked to realise Tk2.12bn which is 30% of Tk7bn classified loans by December.

All the classified loans of the bank’s Dilkhusha, Gulshan and Shantinagar branches are required to be recovered by December following the MoU. 

News:Dhaka Tribune/29-Nov-2013

Speakers at an international conference in city Friday urged the government to formulate environment-friendly policies to ensure responsible and green business.

They urged the financial institutions to frame lending policies to pursue 'green banking' in a more effective manner, as such banking has been identified as one of the major drivers of sustainable economic growth in developing countries.

"We have been working to turn our entire banking system into 'green banking' to ensure responsible business and sustainable development. But we need more specific green policies for various sectors," said SK Sur Choudhury, Deputy Governor of the Bangladesh Bank while inaugurating the function.

His observations came at the opening session of two-day conference organised by the SR Asia.

Bangladesh is hosting SR Asia 2013 International Conference jointly organised by the SR Asia, the CIRDAP and the Bangladesh Bank Training Academy with support of international organisations like GIZ, Swisscontact, IPLA, APO, E&Y, etc. The Financial Express is the media partner of the conference.

The conference began with welcome address by SR Asia Bangladesh Country Director Sumaya.

The inauguration session was moderated by Birendra Raturi, International Director - SR Asia. Other guests in the inaugural session were Md. Sabur Khan, President DCCI, Dr. Cecep Effendi, Director General, CIRDAP and Khondaker Mostan Hossain, Joint Secretary (International Organisations), the Ministry of Labour  and Employment.

The theme of the conference is 'Responsible Business Conduct to Safeguard the People's Issues and Environment by Managing Hazardous Waste." The title of the first session was on 'Green Banking: Bangladesh Bank's Initiatives & Promoting CSR, Environmental Aspect'.

The Deputy Governor said, "All banks have their general credit policies for lending sectors. But the nature of various sectors is different from environmental perspective. So, preparing sector-specific environmental policy guidelines for the banks is a big challenge."

He said the Bangladesh Bank is going to be number one bank in terms of financial inclusion within years.

"I am convinced that with the level of enthusiastic commitment and engagement demonstrated by our financial sector, green banking initiatives in Bangladesh will keep attracting yet wider recognition and attention from outside our borders," he said.

SK Sur Chowdhury said Bangladesh is one of the most climate change vulnerable countries. As a result, the country does not have any other option but to adapt to a system that would play an important role in coping with varying environmental scenario, he added.

"In this scenario, banks are required to protect their financing from the risks of a deteriorating environment and ensure sustainable banking practices," he said.

Sabur Khan urged the central bank to formulate more flexible lending policies for sustainable development.

"If the central bank only focuses on environment, sustainable development may lose its right direction," he said.

He said hazardous waste has been considered as one of the prime dangers Bangladesh as a country faces and has its negative implications on environment, occupational health and safety of people and the entire system around.

The SR Asia conference deliberates on global perspectives and trends on responsible business conduct while focusing on waste management system and impacts on developing countries.

During the first session, Khandaker Morshed Millat, Deputy General Manager of the Bangladesh Bank, spoke on 'Green Banking: Bangladesh Bank's Initiatives and Bank's Activities,' Islami Bank Bangladesh Limited Deputy Managing Director AKM Abdul Malek on 'Green Banking Policy of IBBL' where Md Abdul Awwal Sarker, General Manager of the Bangladesh Bank Training Academy moderated.

Morshed Millat said the door of the Bangladesh Bank is always open for any new financial proposal for ensuring environment-friendly economic growth.

AKM Abdul Awal said since inception, the IBBL has been taking environment-friendly policies for its customers, even before formulating green banking laws and regulations.

Business leaders, bankers, professionals and civil society organisations took part in the event.

News:The Financial Express/30-Nov-2013

NRB Commercial Bank (NRBCB) and Voluntary Organisation for Social Development recently signed an agriculture loan agreement at the Head Office of the bank recently.

As per the agreement NRB Commercial Bank will give agriculture loan facility for Tk 200 million to VOSD, said a press release.

Dewan Mujibur Rahman, MD and CEO of NRBCB and AKM Sajedur Rahman, Chairman of Voluntary Organization for Social Development signed the agreement on behalf of their respective organisations.

News:Daily Sun/27-Nov-2013

Rupali Bank Limited recently opened its 525th branch at Darbesher Hat in Feni with online facilities.

Md Neyamat Ullah, General Manager of Rupali Bank Limited inaugurated the branch, said a press release.

Syed Ahmed Chowdhury, General Manager of Comilla divisional office of the bank, Abu Md Sayedur Islam, Business Development Specialist, Anwarul Azim Chowdhury, AGM and Aziz Ahmed Chowdhury, Zilla Parishad Administrator, Feni were present at the function.

News:Daily Sun/27-Nov-2013