Banking
Prime Bank gets performance excellence award
Md. Ehsan Khasru, Managing Director and CEO of Prime Bank Limited, receives "2013 Performance Excellence Award" from Rashed Maqsood, Citi Country Officer, at the board room of the bank's head office recently.
Prime Bank Limited has been awarded "2013 Performance Excellence Award" by Citibank NA, USA recently.
Citi Country Officer Rashed Maqsood presented the award to Md. Ehsan Khasru, Managing Director and CEO of Prime Bank Ltd at the board room of its head office, said a press release.
Ahmed Kamal Khan Chowdhury, DMD, Md Yasin Ali and Kanti Kumar Saha, and Nuzhat Anwar, Head of Financial Institutions and Iffat Nagris, Resident Vice President of Citibank were also present at the award giving ceremony.
Prime Bank achieved this award for their leadership in the payments space through practicing its MT202 STP rate 95 percent and MT103 STP rate 98 percent.
Lending rate cut begins due to slump in banking business
Jebun Nesa Alo
The country’s commercial banks have begun reducing their lending rates thanks to excess liquidity in the money market and a central bank move to rationalise the interest rate spread (the difference between the average lending and deposit rates).
Some banks have already reduced their rates on loans and advances this month although this has not yet been announced officially, bankers said. Their announcements will be made in December while other banks are now at the planning stage.
The banks are reducing the lending rate to help increase the banks’ loans and advances while bringing the spread down to within the desired level, they said.
Having a huge amount of idle money accumulated due to poor demand for loans, the commercial banks earlier went for a heavy cut on the deposit rates, pushing up the spread above the desired level of 5%.
This prompted Bangladesh Bank to ask the commercial banks to cut the lending rate, said a senior executive of the central bank who recently expressed concern over banks crossing the threshold, especially Brac Bank and a number of foreign banks.
“The spread increased mainly due to lower deposit rates that came down due to a slump in banks’ business. The lending rates remained unchanged, on the other hand,” said Association of Bankers Bangladesh (ABB) President Nurul Amin.
He said the spread climbed since the beginning of this year. Barring a few exceptions, the average spread is not so alarming, he added. Bangladesh Bank data shows that the average spread was 4.91% in April, 2011 and that this has increased gradually to stand at 5.23% in July.
“Banks are going to cut lending rates individually from this month and might give announcements in December,’’ said the bankers’ president.
The average annual lending rate of the private banks stood at 14.36% and the deposit rate at 9.13% as of July down from the prvious month's rates of 14.44% and 9.1% respectively.
The spread of 26 banks remained above 5% as of July as per the latest Bangladesh Bank data. The spread of foreign banks averaged at 8.64% and among the private commercial banks, Brac bank’s spread was highest at 9.26%.
“The average spread crossed 5% despite the central bank’s directive to bring down the gap to the level below 5%,” Bangladesh Bank Deputy Governor SK Sur Chowdhury said.
To do so, the central bank asked the banks to cut down the lending rate. It already warned 26 banks about crossing the limit.
The interbank call money rate remained stable at a range of between 7% and 7.5%, showing signs of adequate liquidity in the money market.
The call money rate came down to its lowest at 7% in last couple of weeks, and went as high as 8% in the last year. It, however, rose to 9% for just over one week ahead of Eid-ul Fitre.
“Banks should cut the lending rate now as the deposit rate has already been reduced. The lending rates of some banks, however, decreased slightly,” said Bangladesh Bank Chief Economist Hasan Zaman.
“The spread widened because of increasing non-performing loans (NPLs),” said Pubali Bank Managing Director Helal Ahmed Chowdhury. “It would come under control as the banks already started cutting down the lending rate from this month and signs are there that the political turmoil will ease.”
The ratio of NPLs to the total loans for the banking sector, in both gross and net terms, increased at the end of third quarter of FY13 compared to the second quarter, as per BB data.
Gross NPLs went up from 10% at the end of second quarter to 11.9% at the end of the third quarter. The overall banking industry NPL was 2.6% higher at the end of the third quarter of FY13 than the last five years' average of 9.3%.
News:Dhaka Tribune/14-Sep-2013
BB attaches high priority to m-banking for poverty cut
Bangladesh Bank (BB) will continue its support to fostering mobile phone banking as part of its drive to attain inclusive growth towards poverty alleviation.
“BB will continue attaching high priority for fostering mobile phone based banking as a powerful tool for easing hardship of livelihoods of poorer population segments,” BB Governor Dr Atiur Rahman told a seminar held Thursday in Kuala Lumpur, Malaysia.
The governor was speaking at a session on “Banking Clients through Mobile Money” at AFI Global Policy Forum (GPF) 2013.
The Alliance for Financial Inclusion (AFI), in cooperation with the Bank Negara Malaysia (BNM), is holding the three-day forum, began on September 10.
The Forum has become the world’s most important Forum on financial inclusion, and has consistently grown along with AFI, which now represents more than 100 institutions from 87 countries.
Addressing the session, Atiur said Bangladesh has the potential of expanding mobile banking faster with over 100 million among 152 million people using mobile phones.
“Fast penetration of mobile telephony everywhere in Bangladesh attracted attention early on for its high promise as a cost effective new financial inclusion instrument,” he said.
Apart from this, the governor said Mobile Network Companies (MNCs) in Bangladesh were keen on launching their own mobile phone based financial services. But on prudential stability considerations BB opted for promoting this service in a bank led mode with the MNCs in partnering role on fee income basis.
He said the number of mobile phone banking client accounts has nearly doubled over the past two years and reached 7.21 million in last March. The numbers of area agents have risen to 108 thousands, transaction volumes have gone up correspondingly.
Even then, the governor said Bangladesh still has vast potential for further expansion of mobile banking with new services.
Currently, he said, mobile phone banking transactions in Bangladesh comprise mainly money transfers including utility bill payments and salary disbursements.
Besides, he said, mobile phone banking is now setting up to extend other services like deposit taking, loan disbursement and loan recovery.
“Trial phases for introduction of these services are likely to be straightforward and brief after the much more complex initial phase of setting up secure glitch free software and connectivity, we expect these new transactions to take off rapidly before long,” he said.
News:Daily Sun/14-Sep-2013
Tk 1,549cr farm loan disbursed in two months this fiscal
Disbursement of agricultural credit witnessed a rise in the first two months of the current fiscal year as banks channelised Tk 1,549.50 crore to the sector which is up by around Tk 193 crore or 9.60 per cent from the same period of the last financial year.
During the first two months (July-August) of the fiscal 2012-13, commercial banks dusbursed Tk 1,356.52crore.
The central bank has targeted disbursement of Tk 14,595 crore agricultural credit in the year 2013-14.
“Agricultural credit disbursement goes up in July-August because of aman season . . . like the state owned commercial banks (SCBs), private banks are attaching priority to the agriculture sector in providing loan,” said Provash Chandra Mallick, general manager of Bangladesh Bank’s Agricultural Credit and Financial Inclusions Department.
The central bank has also beefed up its monitoring and supervision to achieve agricultural credit disbursement target, he added.
According to BB, SCBs and specialized banks disbursed Tk 822.37 crore while private commercial banks (PCBs), including the foreign ones, provided Tk 727.13 crore.
Among the SCBs, Bangladesh Krishi Bank disbursed the highest Tk 517.91 crore, followed by Rajshahi Krishi Unnayan Bank Tk 115.40 crore and Sonali Bank Limited Tk 70.41 crore.
Among the PCBs Islami Bank disbursed the highest Tk 227.19 crore. Six foreign commercial banks Al Falah, Habib Bank, National Bank of Pakistan, State Bank of India and Woori Bank did not provide any agriculture credit during the period.
During the period, BRAC disbursed Tk 22.30 crore among the sharecroppers under Bangladesh Bank’s refinancing scheme while BRDB disbursed Tk 85.19 crore in the agriculture and rural development sector.
News:Daily Sun/14-Sep-2013
Islami Bank appoints US consultant to clear its name
Islami Bank Bangladesh Ltd has recently appointed a legal consultancy firm in the US to help the bank clear its name from the US Senate report on money laundering and terrorist financing, officials of the bank said.
The Washington-based firm, Dana Contratto and Associates,
was hired by Bangladesh’s top shariah-based bank at a cost of $25,000 per month (nearly Tk 20 lakh) under an initial contract of six months.
“The firm will help us reach our explanation to the US Senate committee that came up with the report last year,” Managing Director of the bank MA Mannan said.
In the report on HSBC’s money laundering lapses, Islami Bank, along with Social Islami Bank of Bangladesh, was accused of having links with terrorist organisations.
The report is the result of an investigation on London-based HSBC Holdings PLC by the Senate Permanent Subcommittee on Investigations.
The report also said HSBC’s US division provided banking services to some banks in Bangladesh who were reportedly involved in helping terrorist outfit al-Qaeda in fund raising.
Later, the US authorities fined HSBC a record $1.92 billion.
“Earlier, we had tried to clear our position before the US Senate subcommittee. But we could not reach them,” said Mahbub ul Alam, deputy managing director (international banking wing) of Islami Bank.
Alam said they are now confident the consultant will be able to convince the committee that the Bangladeshi bank was not involved in any sorts of money laundering or terrorist financing.
Another official of the bank said they have been facing troubles in international business as the report mentioned its name as HSBC’s “Serving other banks with suspected links to terrorism.”