The Banking Division yesterday sent the names of 29 persons to the central bank who were primarily selected for appointment as directors of state-owned commercial banks (SOCBs) to check whether any of them was loan defaulter.

Among them, five are government officials and the rest 24 are non-government personalities, including economists, business leaders, educationists, former civil servants and bankers.

The appointment will be made today with the banking regulator's clearance, said a high official of the finance ministry.

The list includes some people with political links, but the number of such nominees is lower than previous appointments, the official said.

About 40 posts of directors in different state banks and financial institutions, including 26 with Sonali, Janata and Agrani, remained vacant since the first week of September, as the government failed to make appointments in the banks' highest policymaking panels.

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

A farmer ploughs a paddy field, while women sow seedlings at Godagari upazila in Rajshahi.

Private and foreign banks increased their farm loan disbursement in the first five months of fiscal 2012-13 to avoid the central bank's punitive measures.

In July-November, private and foreign banks lent Tk 1,820 crore to the agriculture and rural sector, a 28 percent rise from last year, according to Bangladesh Bank data.

The figure is 33 percent of the bank's agricultural credit target for the full year, up from 27 percent a year ago.

SM Moniruzzaman, executive director of the central bank, linked the private and foreign banks' farm credit disbursement growth to a directive issued last year, which stipulated banks lend 2 percent of their loans and advances to the farm sector.

"As we have made lending to the farm sector mandatory, the private and foreign banks have become more cautious than in the previous years in achieving their targets."

Failure to comply with the directive would not only lead to fines for banks but also depositing of that amount to the central bank at 5 percent interest rate for a year.

The directive was to ensure sufficient credit to the agriculture sector, which accounts for nearly one-fifth of the country's gross domestic product and employs the highest number of the nation's workforce directly and indirectly.

In recent years, resilience of the farm sector, mainly crop, vegetables and fisheries, helped accelerate the country's economic growth and contain domestic demand.

Increased production of rice has also cut the country's import dependence largely in the last fiscal year, according to data from the food ministry.

Over the years, the sector got little attention from private banks, currently the main supplier of credit for economic activities.

Private banks, fearing defaults, were shy in lending to the farm sector. The state commercial and specialised banks, such as the Bangladesh Krishi Bank, were the main supplier of credit.

To address the issue, BB had earlier taken punitive measures against some foreign and private banks, Moniruzzaman said.

He said the private and foreign banks would gain more from lending to the farm sector, adding: "If they fail to attain their targets, they will be the losers."

Loan disbursement target for all the 47 banks is Tk 14,130 crore for fiscal 2012-13, up only 2.39 percent from the previous year.

Of the amount, private and foreign banks will have to lend Tk 5,523 crore, with the state and specialised banks disbursing the rest.

"The farm sector is a priority for the economy and private banks should come forward and lend more to it. Otherwise, it will be difficult to meet the sector's credit demand.”

Haikal Hashmi, deputy managing director of Trust Bank Ltd, said private banks are shaking off their reluctance to lend to the agricultural sector.

"Private banks' capacity to monitor loans to the farm sector used to be low and hence the wariness to lend to them. Now, there are many branches that allowed us to monitor better."

"So far, our experience in terms of recovery is very good," said the executive of Trust Bank which started lending to the farm sector in 2010.

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

The foreign commercial banks (FCBs) operating in Bangladesh are yet to make any significant contribution to the growth and promotion of small and medium entrepreneurs (SMEs), official sources said.

"Most FCBs are still unwilling to disburse SME loans because of low level of profits out of operations in the sector," a concerned high executive admitted, preferring anonymity.

There is no presence of FCBs outside a few major cities. "We have only some branches in selective urban areas. As a result, the FCBs are not able to get themselves directly involved in credit operations for the SME sector, unlike the other banks," a bank official said.

"All banks should do more for SMEs, which are the economic lifeblood of the country. The more the SMEs will be operationally active, the better the national economy will perform", a Bangladesh Bank's (BB) official said.

The state-owned commercial banks (SCBs), the specialised Banks (SBs), private commercial banks (PCBs) and non-banking financial institutions (NBFIs) are now mostly involved in providing the available credit supports to the SME enterprises.

According to Bangladesh Bank data, during the January-September, 2012, the FCBs could disburse only Tk 10.328 billion among the 2,828 SME enterprises, while the SCBs, PCBs and the SBs made available Tk 28.42 billion among 15,476 SME enterprises, Tk 419.399 billion among 3,26,158 and Tk 26.34 billion among 8,542 such enterprises as credits respectively.

Besides, SCBs disbursed to the women entrepreneurs in the SME sector Tk 765 million among 1,002 entrepreneurs and the PBCs, Tk 13.94 billion among 9,550, the SBs Tk 1.67 billion, among 387 entrepreneurs, the NBFIS, Tk. 784.1 million among 844 such enterprises in January-September, 2012.

During this period, the disbursement of credits to the women SME entrepreneurs stood at Taka 107.8 million involving 689 clients.

The FCBs credit operations were largely concentrated in trading operations instead of service and manufacturing sectors, the bankers said.

"There is no alternative to further development of the SME sector to help accelerate the pace of economic growth as the sector is still the main driving force of the economy," Sukomal Sinha Choudhury, general manager of the SME and Special Programmes Department at the Bangladesh Bank's (BB) told the FE.

News: The Daily Financial Express/Bangladesh/16th-Dec-12

As Germany’s biggest lender, Deutsche Bank has for many people long symbolised everything that is wrong and immoral about the banking sector and its perceived culture of limitless greed. However, under the new dual leadership of Anshu Jain and Juergen Fitschen, who took over in June, the bank has been making every effort to clean up that image.

It spent years and many millions of euros (dollars) transforming its twin tower headquarters into an environmentally-friendly, zero-emission building. And Jain and Fitschen pledged to nurture a new corporate culture based on responsibility and accountability.

But Deutsche Bank’s squeaky clean new image was looking distinctly tarnished again when dozens of police vans encircled the sparkling new “green” skyscrapers in the early hours of Wednesday and hundreds of investigators stormed the building in search of evidence of widespread tax fraud.

Particularly embarrassing was the announcement that Fitschen himself was under suspicion of being privy to a scheme to avoid paying sales tax in the trading of carbon emissions certificates.

Fitschen, 64, went on the offensive to proclaim his innocence in a number of newspaper interviews on Friday.

“I’m shattered over the accusations against me. I firmly believe they will prove to be groundless,” Fitschen told the mass-circulation daily Bild.

“I feel I am being unjustly treated and will defend myself,” he said. Asked whether he would resign over the allegations, Fitschen said: “I see no reason to.” He made similar remarks in a different interview published in the business daily Handelsblatt.

The allegations date back to early 2010 and both Fitschen—a member of the management board since 2009 -- and finance chief Stefan Krause are under investigation because they signed off the bank’s 2009 valued-added tax (VAT) declaration. Fitschen told newspapers that he felt the prosecutors’ reaction was “totally exaggerated”. “As soon as we realised that we’d been duped by fraudulent clients, we corrected the tax declaration. At no point was any tax money unlawfully paid to Deutsche Bank,” he said.

Prosecutors said a total 25 Deutsche Bank employees are being investigated and four people were arrested on suspicion of money laundering and perverting the course of justice.

Fitschen’s co-CEO, Jain, suffered a dent to his reputation earlier in the year.
Back in July when the Libor interest-rate rigging scandal sent shockwaves through the financial world, he found himself facing uncomfortable questions about his role in the affair.

Prior to his appointment as Deutsche Bank co-head, Jain headed the group’s investment banking operations in London where one of its traders was allegedly involved in the rigging of the Libor interbank rate which underpins rates on a wide range of lending from mortgages to credit cards.

“This can’t go on. Every time there’s a financial scandal, Deutsche Bank is involved. Management has to act urgently,” said Juergen Kurz, spokesman for a lobby group for small shareholders, DSW.

News: The Daily Independent/Bangladesh/17th-Dec-12

Some 20 local Private Commercial Banks (PCBs) have invested an amount of Tk 1.70 trillion till September ofthe current calendar year against the deposits these banks have collected from clients worth Tk 2.12 trillion by the period since inception of respective operations, according to data available from quarterly report of banks.

Of the PCBs, the Prime Bank Ltd (PBL) has become the market leader by holding major stake in deposit mobilisation and disbursement of credit followed by UCBL, National Bank Ltd, South East Bank Ltd and AB Bank Ltd.

The PBL has collected total deposits amounting to Tk 185 billion till the end of November while its investment stood at Tk 157.49 billion by third quarter of 2012, according to the report.

While commenting on performance of the PBL, its managing director Md Ehsan Khasru told daily sun that around 80 percent of his total loans goes to productive persuades which is contributing to the industrial expansion.

“So far, I knew PCBs have invested maximum percentage of respective loans in the industrial sector, which called term loan or current credit, as my bank does,” Khasru said.

The head of the PBL management said the strategy of the management of his bank is keeping deposits safe by not investing in unviable projects.

Khasru said his bank is experiencing a significant rise in deposit mobilisation though the rate of interest has been curtailed to 12 percent from 12.5 percent recently.

“The question is how I have obtained the trust of depositors? —-Simply I have reduced my cost of doing business and providing improved, efficient and some ‘no cost’ services to clients,” he said.

He said his bank now does not charge for maintaining any current and savings accounts in PBL branches. “In the west, the easy way usually applied to reduce cost of doing business is ‘job cut’. But, here I don’t think it as best practice. I have reduced the rate of interests for both the deposit and lending,” he said.

He said the lending rate of his bank is now 15 percent for term loan which is above 16 percent in the market. “My bank is a strong bank now,” Khasru said.

According to the quarterly report, 10 PCBs having strong deposit base are— UCBL (Tk. 164.87 billion), National Bank Ltd (Tk. 148.01 billion), South East Bank Ltd (Tk. 143.94 billion), AB Bank Ltd (Tk. 129.74 billion), BRAC Bank Ltd (Tk. 122.38 billion), DBBL (Tk. 121.81 billion), Mercantile Bank Ltd (Tk. 110.49 billion), Bank Asia (Tk. 104.84 billion) and Dhaka Bank Ltd (Tk. 102.70 billion).

Respective assets of these 10 PCBs are UCBL (Tk. 135.68 billion), National Bank Ltd (Tk. 128.57 billion), South East Bank Ltd (Tk. 119.36 billion), AB Bank Ltd (Tk. 112.82 billion), BRAC Bank Ltd (Tk. 108.93 billion), DBBL (Tk. 89.15 billion), Mercantile Bank Ltd (Tk. 89.16 billion), Bank Asia (Tk. 91.09 billion) and Dhaka Bank Ltd (Tk. 87.90 billion).

However, the quarterly report implies conventional banking of PCBs and it has dropped the Islami Bank Bangladesh Ltd (IBBL) as the latter is providing completely Islamic banking services to clients.

The IBBL has been a single highest stakeholder as private bank in terms of deposit mobilisation, investment and earning profit in the country’s banking sector.

Meanwhile, total domestic credit stood at Tk 5.29 trillion. Out of the amount, credit to private sector stood at Tk. 4.10 trillion by banks (without financial institutions) while that of the public sector rose to Tk. 834.80 billion by banks till September 2012.

According to Bangladesh Bank's (BB) statistics, broad money (m2) circulation at present is slightly above Tk. 5.36 trillion.

News: The Daily Sun/Bangladesh/17th-Dec-12