Private Commercial Banks (PCBs) and Foreign Commercial Banks (FCBs) have so far settled around 70 percent of disputed inland bills purchases (IBPs) through mutual negotiations.

But state-owned commercial banks (SoCBs) are going slow in this regard due to delay in examining relevant documents before payments, a high official of Bangladesh Bank (BB) said Wednesday.

As of August 31’ 2012, the outstanding non-funded IBPs stood at Tk 30 billion, according to Association of Bankers, Bangladesh (ABB) data.

Of the total outstanding amount, the stake of PCBs is over Tk 8 billion while Tk 7 billion is of FCBs. The value of disputed IBPs of SoCBs stands around Tk 15 billion.

Of the amount, Sonali Bank alone owes over Tk 10 billion, as it provided acceptance on fake IBPs of the Hallmark Group that swindled an amount of Tk. 26.67 billion from different banks recently, as per ABB data.

The non-payment against accepted IBPs by different banks has come at the centre-point of discussions after the Hallmark’s loan-scam was discovered and the BB authority took a rigid stance on regulatory actions against responsible persons.

Sonali Bank management is under tremendous pressures from the ABB for making payments against accepted IBPs. But, the bank could not make payments due to fund shortage, sources inside the bank said.

Commenting on this matter, central bank deputy governor SK Sur Chowdhury told daily sun that PCBs and FCBs have cleared about 70 percent of the disputed IBPs by reaching understanding.

“Only 30 percent remains unpaid, which are claimed to be not genuine; and concerned banks are examining these that implies a little delay. But, disputed IBPs will no more remain unsettled at the end of this month,” Chowdhury claimed while talking to daily sun Wednesday.

He said a directive has been issued to Sonali Bank Tuesday asking it to make payments against the genuine IBPs claimed by other banks.

The fact is, there are many fake IBPs and banks, which made final payment seeing the acceptance of the Sonali Bank, are responsible for making the payment without necessary checking of their authenticity, he said. When asked about progress in clearance of IBPs, managing director of Islami Bank Bangladesh Limited (IBBL) Md Abdul Mannan, who is heading an arbitration committee to monitor and negotiate disputed IBPs, said the outstanding IBPs that are pending with Sonali Bank are of many private banks that involves over Tk 10 billion.

“Sonali Bank yet to make payment despite the ABB is pursuing its bank management since last August. Still we are pursuing,” he said.

The central bank had issued a 15-day timeline for banks to make payments against accepted IBPs upon the request of the ABB executive body at a meeting held on September 12.

The BB authority also directed the ABB to initiate arbitration approach in case of non-compliance of any bank to pay for IBPs. The BB-set deadline ended on September 27 without any significant progress in reducing the liabilities against IBPs.

Following the BB directives, a committee has been formed by bank CEOs (Chief Executive Officers) headed by IBBL managing director for arbitration on receiving of any written complaint regarding non-compliance of any bank.

The committee head said the progress in reducing the burden of outstanding IBPs has been narrow due to non-compliance of banks including the state-run Sonali Bank.

News: The Daily Sun/Bangladesh/08-Nov-12

The government has asked Bangladesh Bank (BB) to open an investigation into the allegations of illegal fund transfers of Destiny Group by its 22 directors to their personal accounts.

The Banking Division under finance ministry asked the central bank to initiate a probe on how the funds were transferred and where the money was deposited later to bring the swindlers to book.

“The Banking Division sent a letter to BB Governor Dr Atiur Rahman Wednesday to take necessary actions against those directors of Destiny Group followed by proper investigation.” said a senior official of the banking division said.

The Financial Intelligence Unit (FIU) and Department of Off-site Supervision of the central bank will operate the investigation, the official added.

If the allegation is found to be true, the central bank may seize the funds of the MLM firm and return the money to the company’s clients, sources said.

Cases will also be filed by central bank against the high-ups of Destiny for displacing Tk 18.64 billion from the company’s fund through violating the anti-money laundering act 2012.

Finance Minister AMA Muhith Tuesday said that he was examining the summary of commerce ministry report on the illegal activities of Destiny 2000.

He also said “I will ask the Bangladesh Bank to take legal action against the illegal activities of directors of Destiny Group.”

The commerce ministry last month requested the Banking Division to take necessary measures as per the recommendations of a report on the defiant activities of Destiny Group, prepared by a government-formed body headed by register of the Registrar of Joint Stock Companies and Firms (RJSCF).

News: The Daily Sun/Bangladesh/08-Nov-12

The central bank of Bangladesh asked the state-owned Sonali Bank Limited (SBL) to take necessary action in the event of any forgery of inland bills in consultation with legal experts, official sources said.

In a letter issued Monday, the Bangladesh Bank (BB) also reminded the SBL of making payment to the country's 32 local and foreign commercial banks against only genuine overdue inland bills.

The BB in the letter sent to the SBL managing director said, "In the event of payment against an inland bill if you think it is genuine, make payment on your own responsibility and take steps to collect the money from your clients," the BB letter said.

"You also may take recourse to legal action in case of any forgery of inland bills in consultation with legal experts," the letter added.

The BB collected information on inland bill purchase (IBP) in a bid to find out any such bills' link with the Hallmark loan scam that involved the Ruposhi Bangla Hotel branch of the SBL and other bank branches in Dhaka and Narayanganj, official sources said.

A total of 19 inspection teams of the BB collected the information from 50 branches of 27 commercial banks located in the capital and in Narayanganj.

Last month the Sonali Bank submitted to the BB a list of the overdue 'inland bills' seeking the central bank's clearance about making payment against the bills.

Thirty-two banks claimed about Tk 15 billion with extra charges against the bills.

The SBL also pointed out that a large number of the claims made by the banks were not genuine.

Either the SBL branch in question had no record against such claims or the branch officials had assisted the traders concerned in supplying fake documents against the bills.

However, it was not known immediately how many 'inland bills' were fake.

"We are now working on recourse to legal action in the fraudulence and the inland bill forgeries," an SBL high official said.

"We are now looking into genuineness of the bills. We'll settle payment against the genuine inland bills," he also said.

The Bangladesh Bank authorities after a formal meeting with the apparel sector leaders last month verbally instructed the banks to settle all 'overdue payments' and buy fresh 'inland bills' to restore confidence of both bankers and traders.

In September the Anti-Corruption Commission (ACC) took a legal move against the officials suspected to be involved in the Hall-Mark loan scam.

News: The Daily Financial Express/Bangladesh/07-Nov-12

The central bank has increased the allocation of the export development fund (EDF) to US$ 600 million from $500 million earlier to meet the growing demand of the country's exporters, officials said Tuesday.

"We've enhanced the amount of EDF aiming to facilitate export of the country," a senior official at Bangladesh Bank (BB) told the FE, adding that other provisions related to EDF will remain unchanged.

The BB official also said the central bank was providing the re-financing facilities to the exporters through commercial banks as short-term liquidity support.

"The EDF financing is allowed for input procurements against back-to-back import letters of credit (LCs) or inland back-to-back LCs in foreign exchange, by manufactures producing final output for direct export and also by producers of local deliveries to manufacturers of the final export," the central banker noted. The country's exporters welcomed BB's latest move, saying that the increased amount of EDF would help the export businesses retain its position in the global market.

"It will help the country's exporters to meet their short-term liquidity crunch," president of Exporters Association of Bangladesh Abdus Salam Murshedy told the FE.

Mr. Murshedy, also former president of Bangladesh Garment Manufactures and Exporters Association (BGMEA), said the central bank should increase the allocation of EDF considering the country's overall export growth.

News: The Daily Financial Express/Bangladesh/07-Nov-12

The government will reconstitute the boards of state-owned banks next week, Finance Minister AMA Muhith said on Tuesday.

Currently, about 50 posts of directors in 10 state-owned commercial banks (SCBs) and specialised banks are lying vacant.

"The boards of state-owned banks will be reconstituted next week," Mr Muhith told reporters at his Secretariat office.

The selection of bank directors will be made in consultation with Prime Minister Sheikh Hasina, he added.

The tenure of most of the directors and the chairmen of four SCBs ---Sonali Bank, Janata Bank, Agrani Bank and Rupali Bank --- expired in early September last. The government reappointed all four chairmen of the SCBs for a period of one to two years in mid-September.

The Ministry of Finance (MoF) also reappointed four directors to four SCBs for a period of two years.

Besides the SCBs, most of the posts of directors in state-owned specialised banks - Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank (RAKUB), Ansar-VDP Bank, BASIC Bank, Bangladesh Karmashangthan Bank and Bangladesh Development Bank have also been lying vacant for long, sources said.

Officials at MoF said they have received a list containing the names of potential bank directors from the Prime Minister's Office (PMO) recently. A few individuals who became controversial as directors of a number of SCBs, including those on the board of Sonali Bank Ltd, have also found a place in the list, sources confirmed.

News: The Daily Financial Express/Bangladesh/07-Nov-12