The government has decided to establish Palli Sanchay Bank along the lines of Grameen Bank in its latest bid to emulate the success of Nobel laureate Muhammad Yunus.
A draft of Palli Sanchay Bank Act, 2013 has already been prepared by the Rural Development and Cooperatives Division and forwarded to the finance ministry’s banking division to secure approval from the cabinet.
The new bank will emerge from the government’s “One House, One Farm” project, just like Grameen Bank was born in 1983 following the conversion of Chittagong University’s Yunus-led Grameen Bank project.
As per the draft law, the specialised bank will enjoy exemption from value-added and income taxes, like Grameen Bank.
The bank will not be governed under the Banking Companies Act, meaning it would remain mostly out of bounds of the central bank. However, Palli Sanchay Bank’s managing director would be appointed, by the board of directors, with prior permission of Bangladesh Bank.
The bank’s paid-up capital will be Tk 600 crore, 80 percent of which will be provided by the government through its “One House, One Farm” project.
The government will hold 50 percent of the bank’s ownership and the remaining 50 percent would go to the member cooperative societies of the “One House One Farm” project. However, the government will not take any dividends against its shares.
The activities of the specialised bank, in many aspects, would also resemble those of Grameen Bank. Like Grameen Bank, it will collect deposits and lend to its members.
But Palli Sanchay Bank will differ from Grameen Bank in that it would also conduct general banking activities, including various types of foreign exchange related transactions including opening of letters of credit (LC), online banking, introducing debit and credit cards.

The bank’s board of directors will consist of 17 members and the secretary of the Rural Development and Cooperatives Division will be its ex-officio chairman.
Seven directors will be selected from the share holders, with the government appointing one from the civil society. The other positions of the board will be filled up by government officials.
The “One House, One Farm” is a project under the Annual Development Programme, the first phase of which started in 1997. The second phase of the project started after the present government assumed power.

The government will seek financial assistance from the World Bank to help the state banks meet a huge capital shortfall that stemmed from years of bad governance.

The WB finds four state banks have a capital deficit of Tk 17,600 crore ($2.2 billion), while Bangladesh Bank sees the figure at Tk 10,340 crore as of June 30.

With the huge capital deficits, the banks will face problems in international transactions and a dearth of confidence in the local market as well, the WB said.

A finance ministry official said the lender has assured the government of giving the support to meet a portion of the shortfall, but the loans will have tough strings.

A WB team held a series of meetings with the officials of the finance ministry and the central bank from August 3 to 8 and has recently sent a draft “aide-memoire” to the government.

The team also discussed the overall situation in the banking sector in recent times, especially how the banks’ financial health deteriorated.

The government will soon send a letter to the WB seeking the support, the ministry official said.
Finance Minister AMA Muhith will go to Washington next month to attend the WB’s annual meeting and will hold detailed talks on the matter with the high officials of the lender.

The Banking Division told the WB team that the government has allocated Tk 5,000 crore ($633 million) to recapitalise the banks but the amount is not enough to help them maintain capital at 10 percent of their risk weighted assets.
“The mission was informed that the government appreciated the past involvement of the WB in the restructuring of the state banks through the Enterprise Growth and Bank Modernisation project, and would like the WB to remain engaged,” according to the draft aide-memoire.

The banks’ financial health improved due to the WB project taken during the last BNP regime, it said.
However, the lender said, to get the financial support reintroduced, the BB will have to prepare a list of 150-200 professionals and appoint directors of the state banks from them.

The government will have to divest part of its shares in the state banks to bring down its control of the banks, according to another condition of the WB.
The government will form an expert panel in consultation with the central bank to decide on the amount of capital the banks need. The government will also provide the capital in phases, not in a chunk, the WB said.

Before giving the capital, the panel will evaluate the banks’ performance indicators every three months.
The WB also recommended picking independent directors for private banks from the list to improve the governance of the overall banking sector.

After the present government assumed office, large-scale politicisation in selecting the state banks’ directors, and corruption took a huge toll on the financial health of the banks. The BB also alerted the finance minister to the wrongdoings on various occasions.

However, the Banking Division informed the WB team that some steps have already been taken to bring changes to the top management and boards of the banks.

 Meghna Bank Limited started SWIFT operations at its head office at Doreen Tower at Gulshan recently.

HN Ashequr Rahman, Chairman, Meghna Bank Limited inaugurated the operations, said a press release.

Abdul Alim Khan Selim, Vice Chairman, Meghna Bank Limited, Kaiser A. Chowdhury, Managing Director and CEO, Meghna Bank Limited, Shohudul Haque, Managing Director, Syscom Limited, local agent of Xchanging Limited (India), global partner of SWIFT and high officials of bank were also present.

Md Mehmood Husain, President and Managing Director of Bank Asia and Patricia Riingen, Senior Vice President of Western Union (East and South Asia) exchange documents after signing an agreement at the bank’s corporate office in Dhaka on Wednesday. Western Union (WU) and Bank Asia signed an agreement on transferring foreign remittance direct to Bank Account (D2B) of beneficiaries at the bank’s corporate office in Dhaka on Wednesday.

WU, under this arrangement, has also agreed to route account credit payments from all over the world to all banks in Bangladesh through BFTN of Bank Asia, said a press release.

A. Rouf Chowdhury, Chairman of Bank Asia, Md Mehmood Husain, President and Managing Director of the Bank and Patricia Riingen, Senior Vice President of Western Union (East & South Asia) exchanged the agreement.

Mohammed Lakiotullah, Vice Chairman of the bank, Rumee A. Hossain, Vice Chairman of Board Audit Committee and Head of Foreign Remittance Dept,

Steve Peregrino, Vice President (Marketing APAC) of Western Union (WU) and Mr. Vijayraj Poduval, Country Director of WU and Mr. A.M. Hamim Rahmatullah, Managing Director and CEO of Singer Bangladesh Limited, were present on the occasion. 

 Janata Bank Limited has been awarded 'Perform- ance Excellence Award-2013' by the Citibank, NA recently.

SM Aminur Rahman, CEO and Managing Director, Janata Bank Limited received the award from Khd. Rashed Maqsood, Managing Director and Citi Country Officer, Bangladesh, said a press release on Wednesday.