As part of its condition for the revival of the Padma bridge loan deal, the World Bank wants its expert panel to be present when the Anti-Corruption Commission interrogates the persons allegedly involved in corruption in the project.

The panel will comprise three experts in the field of international investigation and prosecution and two WB staff members, according to the draft Terms of Reference (ToR).

The ACC and the WB are expected to sign the ToR when a WB delegation visits Dhaka next week, finance ministry officials told The Daily Star yesterday.

The draft was prepared in June but was not signed then, which was one of the reasons for the WB to cancel its $1.2-billion credit deal on June 29, they added, requesting anonymity.

According to the officials, the WB wants for its expert panel full access to all investigative findings, including documents and materials or any other information related to the alleged graft, by the ACC inquiry team.

Based on the advice and input from the panel on whether the investigation and related legal processes are proceeding in a full, fair and expeditious manner, the WB will decide on whether to delink future procurement and contracting decisions from the progress of the inquiry, according to the draft ToR.

On Sunday, Economic Relations Division Secretary Iqbal Mahmud told reporters, "Normally investigation and implementation remain separate. We hope that the two issues will not be linked."

The WB team, which is expected to be in town next week, will hold talks with the co-financiers, ADB and Jica, about the investigation and implementation of the project. An ADB official has already flown to Dhaka from Manila to join the talks, a finance ministry official said.

The WB had first suspended its deal in September last year, raising allegations of corruption in the project and asking the government to take action against those involved.

In June this year, the bank cancelled the deal, setting four conditions for its return to the project. The conditions included sending former communications minister Syed Abul Hossain and prime minister's adviser Mashiur Rahman on leave.

On September 20, the bank in a statement said it had revived the deal after the government "took actions necessary to fulfill the measures."

To probe the WB allegations, the ACC will set up a special inquiry and prosecution team.

During the final negotiations with the Bangladesh delegation in Washington last week, the WB sought to include its representative in the ACC team but the Bangladesh side disagreed with the proposal, a top government official with knowledge of the negotiations said.

Meanwhile, Jica yesterday welcomed the WB decision to return to the project.

In a statement, Jica also appreciated the Bangladesh government's "firm commitment" to build the bridge and its efforts toward meeting all the measures set by the WB to ensure a corruption-free and transparent implementation of the work.

Although considerable time has been lost, Jica strongly believes that it can be compensated through the concerted efforts of all the stakeholders, said the statement.

At the same time, Jica hoped that the government would continue its efforts to ensure a graft-free completion of the project.

News: The Daily Star/Bangladesh/26-Sep-12

Sonali Bank has to pay other banks the undisputed overdue bills it has given acceptance to. The decision was taken at a meeting on Sunday by the Bangladesh Foreign Exchange Dealers' Association (BAFEDA) which has some quasi-legal power in the inter-bank foreign exchange market.

BAFEDA took the decision after it was instructed by the central bank last week to deal with the issue of unsettled bills among the banks.

“Sonali Bank has to pay the money against genuine bills in 15 days,” said SM Aminur Rahman, chairman of BAFEDA.

A seven-member arbitration committee of BAFEDA has been formed to settle the disputed bills, said Rahman, also the managing director of Janata Bank.

The Hall-Mark Group loans will get the priority among the disputed bills, he said.

Sonali has been declining to pay those payments during the last 4-5 months and banks wanted the Bangladesh Bank (BB) to intervene in the issue.

According to BB, the Hall-Mark Group swindled more than Tk 2,600 crore by selling inland letters of credit (ILC) -- accepted by Sonali Bank's Ruposhi Bangla Hotel branch -- to other banks, mostly the private ones.

A number of banks on several occasions had accepted foreign and local bills against letters of credit, but did not pay the dues of other banks in time.

The amount of such unpaid bills stood at $363 million or Tk 2,976 crore, as of June 30 2012.

Of the overdue bills, around Tk 700 crore is of the Hall-Mark Group's, a BB official said.

Banks said they bought Hall-Mark Group's bills based on Sonali's acceptance of them.

When the fraudulence was detected in May this year and it became newspapers' headlines Sonali stopped honouring those bills.

“Disputed bills will go to arbitration committee of Bafeda and Sonali has to pay other overdue bills in 15 days,” said Nurul Amin, vice-chairman of Bafeda and the managing director of NCC Bank.

“Bafeda has some quasi legal power that the member banks are bound to follow,” said Amin, also a member of the arbitration committee.

At present, of 47 banks, 44 are members of BAFEDA.

News: The Daily Star/Bangladesh/26-Sep-12

The government may appoint more than 30 directors for the state-owned commercial banks in a week, said a high official, in the wake of a call for a thorough top-level management change following the detection of forgeries.

The posts fell vacant as the holders completed their tenures on the 9th of this month, without renewal or extension of their jobs by the government.

After the meeting with the finance minister Monday, Banking Division secretary Shafiqur Rahman Patwari said the appointments will be made following the return of the Prime Minister from New York on 27th September.

The secretary said the Division would like to see the new directors as expert and efficient in banking.

Last month, the government, however, extended the tenure of the chairmen of six state-run banks, although there were questions about their performance.

Recently, the state-owned banks came under harsh criticisms after discoveries of several anomalies, including a stunning scam involving a Sonali Bank loan amounting to over Tk 35 billion given to a little-known company—Hallmark Group.

The tenures of Rupali Bank chairman Ahmed Al-Kabir, Janata Bank chairman Abul Barkat, Agrani Bank chairman Khondoker Bazlul Hoque, BASIC Bank chairman Sheikh Abdul Hye Bacchu and Ansar-VDP Development Bank chairman MA Taher have been extended for two more years.

But Sonali Bank Ltd chairman Quazi Baharul Islam has been asked to continue until further notice.

After assuming power, the present government constituted the boards of directors of these six public-sector banks.

News: Daily Sun/Bangladesh/26-Sep-12

Bangladesh Bank (BB) is planning to form a new ‘temporary cell’ for effective supervision on nine new banks scheduled to enter the market during October-November period this year.

Officials said the central bank has taken the initiative aiming to ensure healthy competition in the banking sector as well as to shield the depositors’ money.

According to a proposal, at primary stage at present, the new cell will be comprised of skilled inspectors of the central bank and its duty will be to monitor whether new banks comply with the requirements as per regulatory guidelines.

Sources said the proposal was tabled at a meeting held Monday between the top executives of the central bank and the visiting delegation of IMF (International Monetary Fund) for discussion.

“Though it was not discussed in the meeting seriously because of time constraint, I think we must go for such initiative to monitor activities of new banks in order to ensure healthy competition in the sector,” said a BB high official, seeking anonymity.

However, another high official supplements saying, “It is too early. We will need to think of stronger supervision after new banks launches operation by fulfilling regulatory conditions.”

The central bank on April 17 last had issued letters of intent (LoIs) to nine newly-approved commercial banks, including three NRB (Non-Resident Bangladeshi) banks, and given six-month time limit to fulfill BB guidelines that will be ending on October 16.

The BB would award license to those who could fulfill the regulatory guidelines.

According to new guidelines, the BB allows maximum 20 directors in the bank boards instead of 13, as per existing provision. The paid-up capital of a new bank will not be less than Tk 4 billion, which will be provided by its sponsors.

An individual will not be eligible to apply as a sponsor of any proposed bank if he/she or any member of his/her family is or had been a loan defaulter with a bank or a financial institution at anytime during the past five years.

An individual awaiting verdict of any undisposed lawsuit in any court/tribunal against his/her loan default status will not be eligible to apply as a sponsor of the proposed bank, the guideline said.

The BB would check financial statements that contain source of income of the sponsored money, provided by new banks, by the National Board of Revenue whether the income was legal?

Meanwhile, the IMF delegation led by Deputy Division Chief of Asia and Pacific Department David Cowen arrived in the city on September 12 and had talks with various government agencies, other stakeholders and the central bank authority to evaluate the progress in implementing IMF recommendations to bring consistency between fiscal and monetary policies.

The delegation would compile a report to the meeting of the IMF board after wrap-up its visit on September 25, according to sources. The IMF last year had opposed licensing new banks but later altered its stance by saying that, “Allowing new banks may be justified if they (new banks) cover more people under banking services and strengthen healthy competition in the sector.”

Bangladesh secured $ 987 million loans under Extended Credit Facility programme of the IMF and the visit of its high-powered delegation is significant considering that its evaluation can make easy the delivery of second installment of the loan in November.

The country received the first installment worth $ 141 million in last May. The credit will be disbursed by the IMF under seven installments, each by end of every six months, upon satisfactory evaluation report.

News: Daily Sun/Bangladesh/26-Sep-12

Islami Bank Banglad- esh Limited, a leading private bank of Bangladesh, enlisted in top among 1,000 banks across the world.

The UK-based century-old financial magazine 'The Banker' recently published the list in its evaluation, said a press release Tuesday.

This selected list is becoming highly esteemed in the world as an appreciated assessment on the basis of overall activities, operational performance and asset value.

News: Daily Sun/Bangladesh/26-Sep-12