The Lok Sabha passed a bill on Tuesday aimed at drawing foreign investment to the banking sector by increasing shareholders' voting rights, after dropping a controversial clause allowing banks to trade in commodity futures.

Prime Minister Manmohan Singh's government is in a race against the clock to pass reforms economists say are needed to breathe life into Asia's third-largest economy, which is headed for the worst year of growth in a decade.

But progress has been slow. The banking bill is the only piece of major reform legislation to be passed in a parliament session once again disrupted by protests and shouting matches.

The banking bill will increase shareholders' voting rights to 26 percent from 10 percent in private sector banks, making investment more attractive to foreign players. The bill will now move to the Rajya Sabha for voting on Thursday, where it is also likely to be passed as it is backed by the Congress and the Bharatiya Janata Party (BJP), India's two biggest parties.

The bill also clears the way for more corporate houses to run banks by enabling the Reserve Bank of India (RBI) to issue new bank licenses. That will boost the government's drive to expand access to financial services in a country where more than half the 1.2 billion population is without a bank account.

"The raising of voting cap will have a positive impact in attracting funds as it will help foreign investors to have more say in banks," said Jagannadham Thunguntla, head of research at brokerage firm SMC Global Securities.

News: The Daily Star/Bangladesh/19th-Dec-12

HSBC's $1.92 billion payment to US authorities to avoid prosecution for money-laundering practices, including transferring funds for Mexican drug cartels, raises serious questions about the flow of narco-cash in the international banking system. The time has come to tackle the culture of impunity that allows these illegal transactions.

The illicit drug trade remains international organised crime syndicates' most lucrative source of income. Drug traffickers may be laundering up to 70 percent of the estimated $320 billion they make from illicit drugs annually, according to United Nations Office of Drugs and Crime (UNODC). Yet officials have been able to seize less than 1 percent of this.

In Central America, for example, we have all seen the effects of crime and drug trafficking. When criminals fight, it is innocent bystanders who often die. The homicide rate in El Salvador is 69 killings per 100,000 citizens; in Guatemala it is 39 per 100,000; and in Honduras it is 92 per 100,000. By contrast, in Great Britain, the homicide rate is roughly 1.2 per 100,000.

Shutting down the cartels' cash flow could deal a significant blow to their operations and help rein in their lethal power. In 2010, UNODC put the value of the US cocaine market at around $33 billion, closely followed by the European market at $31 billion.

But our efforts will come to nothing if implementation is ineffective, compliance is inadequate and vigilance poor. When legal and institutional weaknesses are exploited, effective regulation is crucial. Without this, sophisticated criminals can always find ways to push dirty money into the legitimate financial system.

Some governments, such as Switzerland, have made great strides in addressing money -laundering and corruption through improved regulatory frameworks. But these regulations are only as strong as the compliance mechanisms at financial institutions, which are crucial in implementing them.

There has been progress. In some countries, including the United States, bank secrecy laws have effectively been scrapped and are no longer obstacles to money-laundering investigations. More financial companies are establishing ethics and compliance programs to build an accountable workforce that has the knowledge and tools to serve as a bulwark against illicit money.

But more needs to be done.

It would help to create a regulatory environment in which breaches are systematically punished. However, the tone must be set at the top. The commitment to deal with institutional failings and strengthen corporate social responsibility must begin with boards of directors and chief executive officers.

A shift in culture cannot happen soon enough. It requires leadership and determination. UNODC can help.

My office is engaged with top international banks in our common fight against money laundering and corruption. They need to adopt policies in line with the United Nations Convention against Corruption, and create checks and balances that reduce the opportunities for wrongdoing. The international legal instruments provide a common framework for cooperation. Let us use it.

Through the Stolen Asset Recovery Initiative of the World Bank and UNODC, we are helping governments confront criminals who launder the proceeds of crime through the international financial system. These are challenges that no country or region should face alone.

With the public's attention focused on the financial system, regulators and policymakers are eager to improve its robustness and integrity. In this climate, we need to make bankers aware of their obligations to support national and international efforts to combat organised crime, drug trafficking and corruption.

Transparent practices make good business sense. They build credibility and promote investor confidence. But far more is at stake than balance sheets. The laundered drug money is tainting the reputations of leading financial institutions.

Do banks really wish to help the drug kingpins who deal in death and destruction across continents? This moral argument should not be ignored.

News: The Daily Star/Bangladesh/19th-Dec-12

Mohammad Lutfar Rahman, Chairman of Executive Committee of the Board of Directors of IFIC Bank, inaugurates the 105th branch of the bank at Konapara in Matuail under the Demra thana Monday.

IFIC Bank Limited opened its 105th branch at Konapara in Matuail under Demra thana in Dhaka Monday with an aim to attain satisfaction of customers by bringing state-of-the-art and cost-effective banking services at the doorsteps of the customers.

Mohammad Lutfar Rahman, Chairman of Executive Committee of the Board of Directors of IFIC Bank inaugurated the branch as the chief guest, said a press release.

Monirul Islam, Director, Shah A Sarwar, Managing Director, Mati-ul Hasan, and Wakar Hasan, Deputy Managing Directors and AKM Mozharul Hoque, Company Secretary, other top executives of the bank and local dignitaries were present.

While speaking Lutfar Rahman said, “IFIC Bank has taken initiatives to introduce cutting-edge technology-based banking services in order to cope with the demand of the time. Real-time online banking services are being offered to customers from all of 104 branches.”

News: The Daily Sun/Bangladesh/18th-Dec-12

Argentina slapped a 30 million peso ($6 million) fine on a local subsidiary of global banking giant HSBC for failing to report suspicious transactions, authorities here said Sunday.

Justice officials said that the fine had been levied against HSBC Bank Argentina SA for failing to disclose a three million dollar transaction by a bread bakers' association, in what regulatory officials said was a clear-cut case of money laundering.

Officials said the sum said should have raised red flags at HSBC, given the group's relatively modest "profile." "The amount of transactions investigated was a 5800 per cent higher than the amount of total income declared by the association for the years 2005 to 2006," the agency.

Just last week, officials in the United State found that HSBC's parent flouted US sanctions on Iran and other countries and laundered Mexican drug money to build its business, and hit it with a massive $1.92 billion in fines.

News: The Daily Sun/Bangladesh/18th-Dec-12

Helal Ahmed Chowdhury, Managing Director of Pubali Bank Ltd, presides over a workshop at Nabab Nawab Ali Chowdhury Senate Auditorium at Dhaka University recently.

A-day-long workshop titled "New Performance Management System (PMS)" for managers of Comilla, Noakhali and Mymensingh regions of Pubali Bank was organised at Nabab Nawab Ali Chowdhury Senate Auditorium at Dhaka University recently.

Pubali Bank's Human Resources Division arranged the workshop, said a press release. Helal Ahmed Chowdhury, Managing Director of the bank, inaugurated the workshop.

News: The Daily Sun/Bangladesh/18th-Dec-12