Post and Telecommunication Minister Advocate Shahara Khatun Sunday seen at inauguration of ‘Post e-Pay (Mobile Banking)’ at GPO headquarters, Gulistan in city Sunday.

Post and Telecommunications Minister Advocate Shahara Khatun Sunday said the hands of 120 million able citizens of the country could turn into the hands of prosperity through utilising the prospects of Information Communication Technology (ICT).

“Telecommunications industry has now become a thrust sector for foreign investment,” she said, adding, ‘The whole world has become a global village with the auspices of the ICT.’

The Minister was addressing while inaugurating a pilot project styled ‘Post e-Pay (Mobile Banking)’ jointly run by Postal Department and Bangla Phone at the GPO headquarters, Gulistan in city.

Sahara said the telecom business previously was confined with a particular segment of businessmen, but after assuming in power in 1996, the then Awami League government created opportunity for opening up the sector for all which have bring revolutionary changes over the years.

3G mobile technology, and availability of Laptops at cheap rates has enhanced tele-density from 29 percent to 67 percent and internet density from 9 percent to 20 percent during last 4 years which has ensured easy telecommunication, e-banking, mobile banking across the country, Shahara added.

Necessary steps will be taken shortly to reach the facilities of mobile banking up to the grassroots people, she mentioned.

Director General of Postal Department, Nayeb Delwar Hossain presided over the inaugural ceremony while Secretary, Ministry of Post and Telecommunication, Abu Bakar Siddik, Additional Secretary, Shawkat Ali, Additional Director General, Fazlur Rahman, Managing Director of Bangla Phone Md. Mobarak Ali also spoke on the occasion.

While addressing Nayeb Delwar Hossain said the Postal Department and Bangla Phone have jointly started this pilot programme on a joint revenue-sharing basis, initially which will be run in seven divisional cities. It will gradually be expanded across the country, he added.

Speakers said opening of Post e-Pay (Mobile Banking) will usher in a chapter in the arena of cloud based Electronic Platform who’s main services will be e-payment gateway, e-commerce platform, document management system and tracking and delivery of goods.

The services will distributed among the people through 10,000 outlets and 100,000 targeted agents across the country.

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

YV Reddy

In September, an Indian newspaper ran a report, titled “If you go by their ad, YV Reddy could become the next governor of Bank of England”. How do you feel after reading the report?

Dr Reddy grinned.

"Well, the report was actually to describe the process of recruiting the central bank chief in the United Kingdom," said Reddy, the former governor of the Reserve Bank of India.

"I think this is important. They make an advance succession plan for important positions.”

“You probably know that finally the UK government appointed Mark Carney as next governor. He was the governor of the central bank of Canada. And Canada is one of the few developed countries not heavily jerked by the global financial crisis. It is Mr Carney who skilfully managed the monetary stability,” Reddy said.

Do you think it is a good practice?

"Yes, I think, it is a good practice."

"In South Asia as well as in developing countries, we need to adopt such practice to some extent so that we can learn from one another. In the era of globalisation, central banks need to have globalised expertise."

Reddy was in Dhaka last week to deliver the Nurul Matin memorial lecture at the Bangladesh Institute of Bank Management.

He last came to Dhaka in 2007 to join ACU (Asian Clearing Union) annual board meeting and the Saarc Finance meeting when he was serving as the governor of the RBI. At the time, he didn't agree to speak to the press separately.

Nevertheless, he told us, as I along with a colleague of mine approached him for an interview, that next time he would talk with us exclusively.

After serving RBI as the governor for five years (2003-2008), he is now dedicated himself to the academic world. His two books -- "India and the Global Financial Crisis: Managing Money and Finance" (2009) and "Global Crisis, Recession and Uneven Recovery" (2011) -- are appreciated across the world.

The first is an account of his five years at the helm of RBI and outbreak of the financial crisis in the USA. The second book, a sequel to the first, is a detailed analysis and lessons from the crisis as well as recovery process. Both the books contained a careful and coherent selection of Reddy's speeches and papers he delivered several times along with necessary updates.

SOUTH ASIA
During the interview, Reddy talked about the regional economy and the role and activities of the central bank in South Asia.

The biggest problem in South Asia is the fiscal management, not monetary supervision, according to him.

"If you don't have headroom, you will be in the problem of handling shocks. This is the common problem in the countries of the region," Reddy said.

He also said worker remittance was a common strength in South Asia and the external sector is helping the regional economy.

South Asia has taken advantage of globalisation in terms of the movement of people but not in trade in supply chain. "The future of South Asia will depend on three things: fiscal consolidation, trade integration and moderation of social tension."

At this point, Reddy lauded social and human development indicators of Bangladesh.

"A rich nation may be inefficient in social indicators, but Bangladesh has proved that social indicators can be improved despite limited resources and relatively week macro-and micro economic conditions," he said.

“Social development along with social banking in Bangladesh is praiseworthy,” he added.

Reddy also stressed regional integration in South Asia. "I think there is a consensus and support on different levels as research and analysis reveals huge benefits of regional integration by expanding trade and investment.”

"I have a feeling that people of the countries are also ready for such integration. But somewhere political will is not coming up across the border."

Reddy favoured equity in resource distribution in the development process. "It is important to evaluate incentives properly. When money goes to rich people, it is dubbed incentives. But when money goes to the poor, it is termed as subsidy," he said.

“Just think about tax relief to entrepreneurs for setting plant in an economic zone. This is actually a tax subsidy. And when government provides some financial support for the farmers, it is called subsidy, not incentive. But both have fiscal implication.”

“So the attitude matters and we need to evaluate the real benefits of such incentives or subsidies. We need to examine the level of waste.”

Asked about how Reddy managed to assert the authority of RBI and still have a good relationship with Indian Finance Minister P Chidambaram, he said he was asked similar questions even when in office.

"I used to say then that I was in fact an independent central banker and RBI is independent. And I have taken permission from the finance minister to tell you this.”

On a serious note, Reddy said, the independence of a central bank depends on the will of the government. Most central banks of the world are created by law and are not constitutional bodies, he said. "And it is the government and the finance ministry that are responsible to parliament."

"I can assert, I can discuss, I can convince. I am independent in operational area. In the final analysis, the central bank is independent only to the extent that the law and practices of the government permit it to be," he said.

Reddy was of the view that a central bank is created by the government to convince the people that some important things would be done in an apolitical manner. So, governments restrict own authority in favour of authority for the central banks.

Regarding differences and disagreement with the government, Reddy said: "If the Reserve Bank always agrees with the government, then it would not be a central bank, it becomes a division of the finance ministry. But independence doesn't mean lack of coordination and always taking the opposite stand."

Reddy referred to a personal experience about the issue that occurred when he and Chidambaram were at a bank-fund meeting in Singapore.

"We were rarely together on policy and I never spoke when the minister was present. After the meeting, somebody said that he was confused as the finance minister was saying one thing and the governor another."

Chidambaram replied, “What is your problem? I have been assuring you on fiscal consolidation and growth and delivered. The governor has assured you macroeconomic stability and control of inflation. He is also delivering. So what is your complaint?”

"In fact, there should be always discussion and consultation. Finally, there should be trust. Once you have trust, once you have confidence, it works out smoothly," Reddy said.

Asjadul Kibria is the business page editor of Prothom Alo and can be reached at asjadulk@gmail.com.

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

Mark Gongloff is not a fan of the idea that corporations are people. Except, that is, when the corporation in question is HSBC: he's extremely angry at the fact that the UK bank won't face criminal prosecution as a result of its money-laundering shenanigans.

Gongloff's take is pretty mainstream: the NYT editorial page said that the decision is “a dark day for the rule of law”, adding that “clearly, the government has bought into the notion that too big to fail is too big to jail”.

But here's the thing: you can't jail a bank, or any corporation; a criminal indictment of a corporation is a bit of a peculiar fish at the best of times. Even if the bank survived, which Gongloff thinks is possible but no one knows for sure, there would certainly be massive job losses and we can be sure that somewhere between 99% and 100% of those job losses would fall on people who had absolutely nothing at all to do with the money laundering that HSBC was getting up to.

What's more, it's important to put HSBC's crimes in context. The United States, in its role as global hegemon and guardian of the world's only real reserve currency, has unapologetically taken the opportunity to use its economic power to push its geopolitical agenda. For instance, if you're an Iranian business and you want to do business in dollars, the US is determined to make your life as difficult as possible. The US might have no jurisdiction over Iranian businesses, but it does have jurisdiction over nearly all the important banks in the world, since it's impossible to be a global bank without having some kind of presence in the US. And as Argentina is finding out right now in its court case against Elliott Associates if you want to send dollars around the world, you basically have to send them through the USA.

To put it another way, the laws that HSBC broke were laws designed to bolster the international standing of the US relative to Iran and other countries: they were geopolitically motivated, and the intended target was not the international banking system, with which the State Department has no particular beef, but rather countries the State Department doesn't like.

In general, the laws have had their intended effect: they have depressed commerce in the relevant countries. But after HSBC has been caught breaking the laws, is there really any point in then pursuing a scorched-earth criminal prosecution against the bank? Remember, the bank was not the real target of the laws in the first place and what HSBC did was perfectly legal in, say, the UK.

The US certainly has the ability to criminally prosecute HSBC. But doing so would not particularly hurt Iran or any of America's other state enemies. And the laws which HSBC broke were not laws against bad banking, they were laws against bad states.

Or, to put it another way: the US is the most powerful sovereign nation on the planet. With a flick of its Justice Department finger, it could wipe a globe-spanning bank off the face of the financial system. It has truly awesome power. And every single bank in America is well aware of just how much power the US has in this regard. The question isn't whether to use that power, it's why. To do so would be bullying, and capricious, and would punish thousands of innocent individuals, and would destroy hundreds of billions of dollars of value, all for the purpose of nothing much in particular. Just because the US can prosecute HSBC doesn't mean that it should prosecute HSBC. And sometimes, forbearance isn't a sign of weakness, it's a sign of maturity.

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

The boards of state banks have remained dysfunctional for more than three months as the government has been unable to appoint directors to the banks' highest policymaking panels.

Officials of these banks said they cannot take important decisions, including those for approving private sector loans and rescheduling loan proposals, in absence of the boards.

Finance ministry officials said the reconstitution of the boards is getting delayed as the finance minister finds it difficult to choose the right people for the posts after the recent scams and the allegation of involvement of their directors in the frauds.

The International Monetary Fund has also asked the government to appoint directors who meet the 'fit and proper' criteria of the central bank.

An IMF mission during its recent visit to Dhaka made the suggestion and the government also committed to go by the recommendation, a finance ministry official said.

Since the first week of September, about 40 posts of directors in different government-owned banks and financial institutions have been vacant. Of the posts, 26 are with Sonali, Janata and Agrani banks.

The managing director of a state bank said the amount of default loan may increase much this year in absence of their boards.

He said loan rescheduling is not possible without the board's decision and for loan recovery, rescheduling is necessary.

The managing director of another bank said they contact the finance ministry almost every week, and the officials at the ministry assure them that the boards will be reconstituted next week but it does not happen.

The finance minister has contacted some eligible people and offered them directorship in the boards but they have rejected the proposals, the ministry officials told The Daily Star.

The officials said the finance minister has been talking unofficially with the central bank on whether some of his choices can be appointed as directors.

They said many of the vested quarters are still lobbying for the posts of directors at the state banks.

There have been allegations that some of the directors take commission from businesses as well as individuals in helping them get loans from the banks.

After coming to power in 2009, the present government appointed some former leaders of Jubo League and Chhatra League, the youth and student wings of the ruling Awami League, as the directors of the banks.

The state banks had made some progress as a result of the implementation of the World Bank's financial sector reform programme but it was hampered in the recent times due to the interference by some directors with political affiliation.

The central bank also warned the boards of the banks and the finance minister several times about such interference.

In December 2010, the central bank's board also discussed the issue of interference by the state banks' directors. The board expressed concern over the matter and decided to convey the concern to the government in writing.

Later in early 2011, Bangladesh Bank Governor Atiur Rahman wrote a letter to the finance minister, saying: “In the day-to-day activities of the banks viz loan approval activities, transfer and promotion, direct interference by the boards and incidences of exerting influence have come to our knowledge.”

The letter also said the issues were very important and needed immediate steps.

But no action was taken. Later the finance minister organised a face-to-face meeting between the BB officials and the directors of the state banks where the directors severely criticised the central bank officials.

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

Bangladesh Bank (BB) has instructed all state-owned commercial banks (SCB) to give interest-free loan to the marginal farmers and poor women of Aila-Sidr and monga affected region under their Social Corporate Responsibility (CSR).

The central bank dispatched the order following the successful implementation of a credit programme by Janata Bank in those regions, sources said. During a recent meeting with SCBs and specialised banks, the central bank asked all SCBs to follow the model of Janata Bank in this regard.

“Marginal farmers of the Aila and Sidr are leaving farming as they are failing to maintain this profession through borrowing from rural lenders at high interest rate. Janata Bank has set a rare example by giving these farmers interest free loan under its CSR programme,” said BB’s Executive Director SM Moniruzzaman.

“As BB wants to effectively implement the programme of Janata Bank, we have asked all SCBs to implement this programme in a limited scale,” he said, adding, “If all the SCBs come forward, this interest free loan programme would help these poor farmers stay in their areas and involve in farming.”

Janata Bank launched interest free loan scheme under its CSR programme in the financial year 2009-10 and it disbursed Tk 3.0 crore among 3,120 marginal farmers in the financial year 2011-12.

Janata Bank has targeted to disburse Tk 5.0 crore in the current fiscal year (2012-2013). Talking to BSS, Md Zikrul Haq, Deputy General Manager of the Department concerned of Janata Bank, said the bank initially constituted a revolving fund to give farmers interest free loan.

News: The Daily Sun/Bangladesh/16th-Dec-12