Bangladesh Bank Governor Dr Atiur Rahman, hands over scholarship to a student at a function at BB Head Office in Dhaka Thursday.

Bangladesh Bank (BB) has asked all the banks to introduce scholarship programme for poor but meritorious students as they are not capable of continuing their higher education, a high official of the central bank told reporters Thursday.

The objective of the central bank initiative is to bring more underprivileged students under the coverage of CSR (Corporate Social Responsibility) activities implemented by banks.

The central bank is likely to send a letter to all 47 banks operating in the country asking implementation of the scholarship programme from the current calendar year.

“We are to send letters to all banks soon, more likely by today, in this regard,” said deputy governor of the central bank, SK Sur Chowdhury.

Chowdhury said the number of students receiving scholarship annually by few banks including Dutch Bangla Bank Ltd, South East Bank Ltd and Prime Bank Ltd at present is merely 5,000 in total.

“Of them, DBBL alone covers 4,000 students every year while the numbers of students getting scholarship by other banks is meager,” he said.

Chowdhury said the amount the DBBL disburse under scholarship programme has been curtailed last year compared to the previous year which is affecting the bank’s reputation.

“I don’t want to see a declining trend in scholarship coverage. I want, DBBL will increase the amount again so that more students can be benefited,” he said.

Chowdhury said the scholarship coverage for underprivileged students may be increased significantly if all the banks came ahead with the initiatives.

He said, banks’ CSR in scholarship programme would contribute to develop human resources in the country.

News: The Daily Sun/Bangladesh/21th-Dec-12

The constitution does not allow a minister to hold the position of chairman of any bank, Bangladesh Bank Governor Atiur Rahman said yesterday. The central bank will go by the constitution, he said.

"There is no scope for a minister becoming chairman of a bank,” Rahman told The Daily Star, referring to Home Minister Muhiuddin Khan Alamgir's move to be the proposed chairman of the newly approved Farmers' Bank.

It is among the nine new banks approved by the central bank on April 8. Seven of them, including Farmers' Bank, have already applied for license and two others have been granted time to submit their applications.

Alamgir would not be able to hold the position of the bank's chairman after it has been given the license, said a Bangladesh Bank official. However, there was no legal bar to Alamgir being a shareholder of the bank, he added.

Article 147 (3) of the constitution strictly imposes a ban on the president, the prime minister, ministers and some other constitutional officials from holding any office, post or position of profit or emolument or taking part in the management or conduct of any company, association or body having profit or gain as its object.

If the documents submitted by the seven proposed banks are found to be valid they might be given the license by January next year, the BB official said.

BB Board would take the decision after scrutinising the business plan and other documents submitted by them, the central bank governor said.

"We are collecting all relevant information with due diligence," he said, adding the National Board of Revenue has been examining the source of the money that sponsor directors of these banks are going to invest.

News: The Daily Star/Bangladesh/21th-Dec-12

Mahbub-ur-Rahman, head of HSBC's corporate banking in Bangladesh, and Md Nurul Alam, managing director of Ashuganj Power Station Company, exchange documents of a loan agreement signed at a ceremony in Dhaka yesterday. Tawfiq-E-Elahi Chowdhury, energy adviser to the prime minister, was also present.

HSBC Bangladesh has arranged $420 million loans for Ashuganj Power Station Company Ltd (APSCL) to help the state-run electricity producer set up a 450-megawatt combined cycle power plant.

HSBC signed an agreement with APSCL yesterday at Radisson Hotel in Dhaka to help the power producer use the fund backed by the Export Credit Agency and the Multilateral Investment Guarantee Agency.

The project is the first transaction of its kind in the power sector in Bangladesh, the bank said in a statement.

Ashuganj Power Station is the second largest power plant in Bangladesh with installed capacity of 724 megawatts and de-rated capacity of 642-megawatt, meeting 15 percent of the country's electricity requirements.

“The credit arrangement is a reflection of HSBC's ongoing efforts to support infrastructure growth in public sector in Bangladesh, especially bolster government activities to enhance power supply in order to sustain the current economic growth momentum,” the bank said.

Tawfiq-E-Elahi Chowdhury, energy adviser to the prime minister; Muhammad Enamul Huq, state minister for power, energy and mineral resources; Anwar Hossain, chairman of Ashuganj Power Station Company; and Mahbub-ur-Rahman, head of HSBC's corporate banking in Bangladesh, were present at the deal signing ceremony.

News: The Daily Star/Bangladesh/21th-Dec-12

Bangladesh Bank has appointed a fraud detection adviser and taken some other supervisory steps to stop irregularities in the banking sector in the backdrop of the recent Hall-Mark loan scam.

The details of the 28-point supervisory measures were presented at a meeting of the BB board yesterday.

A web-based corporate memory management system (CMMS) has also been developed to record violation of banking rules by the officials and directors of banks and other financial institutions, the BB told its board.

Some irregularities by bank officials and directors have already been recorded in the CMMS and these will be reviewed later for taking further actions, the board was told.

Earlier, the BB board advised the authorities to find out the reasons behind the Hall-Mark scam and wanted to know about the measures the central bank is going to take to stop such frauds, a central bank official said.

At the board meeting, the central bank made a presentation, which highlighted its existing and future measures to stop such financial irregularities, BB Director Sadiq Ahmed told The Daily Star.

A BB report placed at the board meeting also portrayed the failure of Sonali Bank's treasury management, and gave details how a huge amount of money was embezzled by dubious Hall-Mark Group when the bank was going through financial crisis.

Sonali Bank gave loans worth Tk 10,883 crore from January to May this year. Of the amount, Tk 5,814 crore went to the private sector although the bank had a huge deficit in maintaining its cash reserve ratio, according to the report.

The adviser to detect fraud and mitigate related risks has already started working, the central bank told its board.

In another move, the BB has asked the banks to form a separate risk management unit. The units will do risk modelling, determining their risk limit, and analysing and supervising all the existing risks.

The financial integrity and customer service department of the central bank has inspected 53 branches of 26 banks that had links with the Hall-Mark scam carried out through the Sonali Bank's Ruposhi Bangla branch.

The department also conducted special inspections of several branches of Sonali, Krishi, Rupali, Agrani and Janata banks.

The BB has already taken actions against the officials concerned of these banks for which the volume of fraud-related bill purchase has come down now.

Regular inspections are being carried out to ensure whether due diligence is being followed in case of inland bill purchase and accepted bills.

The BB also said it has started regular preparation of diagnostic review report of the banks to bring the concerned banks under intensive monitoring after evaluating the gravity of irregularity through distant cautionary signal.

The banking regulator also said an assessment system has been introduced in banks to avert any probable irregularity.

News: The Daily Star/Bangladesh/21th-Dec-12

A recent World Bank study advocated for a bilateral Free Trade Agreement (FTA) between Bangladesh and India as it would bring significant growth in trade between the two next door neighbours. “A bilateral Free Trade Agreement between the two countries could increase Bangladesh’s exports to India by 182 percent, and that of India’s to Bangladesh by 126 percent,” says the study report released on Monday.

According to the report, closer economic cooperation with Bangladesh can be an important stepping-stone for India to reduce the economic isolation of its northeastern states.

On the other hand, if markets were to open up effectively, Bangladesh could increase its exports of leather and ceramic products to India, while India could increase sugar exports to Bangladesh, the report pointed out.

The WB study observed that economic ties between India and Bangladesh were far below the potentials. “Greater access to each other’s markets, improvements in physical connectivity and transit, and energy trade between India and Bangladesh can help unlock this trade potential.”

The report said greater engagement in these areas can also stimulate employment and other economic and social activities, which in turn would help reduce poverty (particularly in the border areas), enhance foreign direct investment (FDI) flows, and generate new business opportunities for the private sector.

“Today, South Asia is one of the least integrated regions in the world. Greater bilateral economic cooperation between India and Bangladesh can serve as a critical step for an integrated South Asia,” said Isabel Guerrero, the World Bank’s vice president for the south Asia region while releasing the report.

India is one of Bangladesh‘s primary trading partners. While Bangladesh has a high trade deficit with India, its imports from Bangladesh have grown more than sevenfold between the year 2001 and 2012, while India’s exports to Bangladesh have grown fourfold.

This notwithstanding, Bangladesh accounts for less than 1 per cnet of India‘s total imports with a small range of items, mostly fertilizers and jute products. Though ready-made garments constitute Bangladesh‘s major global export, their share in exports to India is very small. However, this could change.

To realise this potential, both countries need to further liberalize trade, reduce tariffs (largely in the case of imports into Bangladesh), reduce and remove non-tariff barriers, and reduce trade costs by improving trade facilitation both at borders and inland, the study says.

In fact, the study suggests that the two countries should go beyond trade in goods to deepen cooperation and improve Bangladesh‘s export capability.

To enable larger gains, Bangladesh-India cooperation should go beyond goods trade and include investment, finance, services trade, trade facilitation, and technology transfer.

“This will be a building block toward the larger goal of enhanced regional cooperation” said Sanjay Kathuria, one of the authors of the study and lead economist, regional integration, South Asia region.

The study observes that foreign direct investment would also help bilateral trade between India and Bangladesh. Inflow of direct investment from India would stimulate Bangladesh’s exports, facilitate technology transfer, and generate employment in Bangladesh.

Such investment can also help India gain access to Bangladesh’s market; provide it with a competitive production base; and help India link better with its northeastern states. The energy sector too offers enormous investment and trade opportunities for both countries, particularly in a sub-regional context that includes Bhutan and Nepal.

Lastly, the study points to the very significant potential of trade facilitation. A 10 per cent improvement in the efficiency of clearance processes by border control agencies, including customs, can lead to a 3.9 per cent increase in bilateral trade. A 10 per cent reduction in trade-related documentation can result in a 7.3 per cent increase in bilateral trade. A 1 per cent improvement in overall trade facilitation would result in an almost 4 per cent increase in Bangladesh‘s exports.

“Both governments need to facilitate trade by improving infrastructure at border trading posts, harmonising trade-related documentation, and minimising the restrictive element of non-tariff measures.  With the general decline in tariff barriers, addressing such costs of trading becomes paramount to ensure continued growth of trade that could, in turn, be a major force in poverty reduction, especially in border areas,” Kathuria said.

News: The Daily Independent/Bangladesh/20th-Dec-12