Pubali Bank Limited’s Credit Division of Head Office was inaugurated in its new decorated premises.

Helal Ahmed Chowdhury, Managing Director and CEO of Pubali Bank Ltd, inaugurated the office as chief guest recently, said a press release.

MA Halim Chowdhury, Additional Managing Director, M Kamal Uddin Mian, Law Consultant, Sayeed Ahmed FCA ACMA, Chief Financial Officer among others were present at the function.

Pankaj Kumar, Chief Marketing Officer of F1 Soft, Shofiul Alam, Managing Director of Hypertag and SM Jahangir Akhter, Executive Vice President of BCBL, sign an agreement at the bank's head office in Dhaka recently.

Bangladesh Commerce Bank Limited (BCBL) signed a tripartite agreement with F1 Soft International Private Limited, Singapore, and Hypertag (local partner) at the bank's head office in Dhaka recently.

Pankaj Kumar, Chief Marketing Officer of F1 Soft, Shofiul Alam, Managing Director of Hypertag and SM Jahangir Akhter, Executive Vice President of BCB, signed the agreement on behalf of their respective organisations, said a press release.

Bangladesh Bank Governor Atiur Rahman on Sunday expressed dissatisfaction over the credit scams revealed recently as he unveiled the latest financial stability report.

He accused some banks of not following the realistic application of the central bank guidelines that caused deterioration in classified loan status of the worst five banks.

“The overall banking sector remained stable,” he said, upon unveiling the Financial Stability Report 2012 at Bangladesh Bank headquarters in Dhaka.

Atiur said no disaster had taken place in the banking sector until now with no red flags popping up either. As a result, a base of historical stability had been established.

“We have to give highest priority to ensure the corporate governance of banks, including state-owned ones to maintain stability in the financial sector,” he said. “Bangladesh Bank issued a guideline detailing instructions regarding this, but the scenario of realistic application is not absolutely reassuring.”

To bring back a more assuring situation to establish corporate governance, member of directors in the banks’ boards needed appropriate attention, he said. Bangladesh Bank will provide all kinds of support in this regard.

“Sharp price correction in the stock market and several fund forgery has affected the banking sector negatively,” said Bangladesh Bank Deputy Governor SK Sur Chowdhury. In addition to classified loans being increased because of the central bank’s strengthened policy and aggressive lending tendency of the banks.

So central bank has planned to strengthen the supervision to restore discipline in this sector, he said.

According to the financial stability report, the classified loans of the banking sector recorded a moderate rise at end-December 2012 compared to end-December 2011, which could largely be attributed to the new stricter loan classification and provisioning regulations of the central bank.

Classified loan concentration ratios of the 5 worst banks and 10 worst banks were 62.7% and 73.2% respectively at end-December 2012. Almost two-thirds of the classified loans are concentrated in three state-owned commercial banks and two state-owned specialised development banks.

The classified loans in the state-owned commercial banks are higher due to lack of efficiency in fund management, extending obligatory financing towards social and economic priority sectors and politically motivated lending.

The non-performing loans to total loans ratio has increased to 10% in FY12 from 6.2% in FY11. More than two-thirds of the total non-performing loan of Tk285bn is bad or loss.

The Bangladesh Bank on Monday directed the commercial banks to reduce their stock market investment to 25 per cent of the total of four components of core capital in the share market by 2016 in line with the newly enacted bank companies act. 

The BB directive also said from now on banks have to submit their stock market investment report to the offsite supervision department of the central bank within 10 days after a month ends.

 
It also provides a chart for the stock market reporting of the banks.

According to BB directive, the banks can invest into shares, corporate bonds, debentures, mutual funds or any other stock market instrument or funds up to 25 per cent of their core capital that includes paid-up capital, share premium, statutory reserve and retained earnings.

The directive said the banks’ loan to any subsidiary company which is directly or indirectly involved with the stock market operation will be counted as stock market investment. 

The directive also said the loan to banks’ subsidiary merchant banks or any other company will follow the single borrower rules of the central bank. 

It, however, said banks’ loan to stock dealers for buying A and B category shares/debentures can be 60 to 70 per cent of the market price but it cannot be more than Tk 3 crore. 

The BB directive issued on the day also spelled out the investment which will not be considered as capital market investment. 

It said land ownership documents and mortgage paper, shares of non-listed public enterprises, sub-debt instruments issued by other banks,

share of Central Depository Bangladesh Ltd and stock exchanges will not be considered as capital market investment. 

Earlier, banks could invest up to 10 per cent of their total liabilities in the capital market.

The new limit means that the exposure limit for banks in the capital market would be lower after 2016.
The BB directive comes after the parliament in July passed the Bank Company (Amendment) Bill - 2013 which redefined banks’ capital market exposure. 

The act said that within three years of enactment of the law the banks have to lower their investment to the new limit.
Capital market stakeholders said that the banks currently have around 2-3 per cent of their liabilities in stock market investment. 

The bill also keeps a provision of maximum Tk 20 lakh as fine for investing more than the new limit in the share market by the bank companies.

In case of continued violation of this provision, another Tk 50,000 will be fined per day from the second day of breaching the law.