Some politically appointed directors in state-owned banks in collusion with management officials demand bribes to clear outstanding commissions for loan recovery agents, leading banking expert Khondkar Ibrahim Khaled complained yesterday.

"I have information in this regard and those who have informed me do not lie," Khaled, chairman of Bangladesh Krishi Bank, said at a programme at the Jatiya Press Club.

Without mentioning any name, he said one of the directors of a state-owned bank demanded 30 percent commission from the due charge of a loan recovery agency to present the related papers at the board meeting and pass it.

"As the agency has not agreed to pay bribe, it is yet to get its due commission from the bank for recovery of the default loan," he added.

The former deputy governor of Bangladesh Bank (BB) disclosed this at a discussion on “Success and failure in default loan recovery under private initiative,” organised by People's Development Services Corporation Ltd (PDSC), a default loan recovery agency.

PDSC Chairman MA Rahman alleged that state-owned Sonali Bank and Agrani Bank are yet to pay it Tk 2.30 crore in due commission as per contracts.

Khaled said private banks gladly pay the commissions to these agencies for helping them recover classified loans. But the state-owned banks show reluctance to pay the bills of loan recovery agencies.

Citing a default loan of Agrani Bank, he said, the bank provided the loan to a politically-influential person and could not recover it for 25 years.

Failing to collect the money, it later gave the job to recover the money to an agency.

After the recovery, the then managing director of the bank claimed all credit for the recovery and declined to pay the commission.

The agency, said Khaled, at one stage sought his help in obtaining the due commission. But the bank did not even entertain his request.

Some loan recovery agencies have already suspended activities, frustrated by non-payment and non-cooperation from the state-owned banks, he mentioned.

He suggested Bangladesh Bank try moral persuasion on banks for payment of the commission.

"State-owned banks had been steeped in corruption in the past. Even today, they are steeped in graft," said Khaled, citing that a deputy managing director of the Sonali Bank was involved in the loan scam related to Hall-Mark Group.

"We have also heard that some government-appointed directors are also involved in the scam," he noted.

Khaled urged the government not to appoint any MD, DMD and director on political consideration. Rather they should be picked by search committees.

Toufiq Ahmad Choudhury, director general of Bangladesh Institute of Bank Management, and SK Sur Chowdhury, deputy governor of Bangladesh Bank, also spoke.

News: The Daily Star/Bangladesh/09-Sep-12

Bangladesh must rely on loans of the World Bank to build the proposed Padma bridge as the idea of constructing the South Asia's biggest infrastructure with domestic resources seems unworkable, The Economist said in a report published yesterday.

"Without the bank, there can be no bridge," the report says, as Bangladesh relies heavily on Western aid for a vast array of projects that otherwise would not exist.

The report from the British popular magazine came while the ruling Awami League-led grand alliance has desperately been trying to revive talks with the Washington-based lender to fulfil its one of the key electoral promises.

The report quotes Prime Minister Sheikh Hasina as saying that Bangladesh would “not beg” from the WB. A sense of injured national pride has given rise to the unworkable notion that the bridge must now be built with Bangladesh's “own resources,” it says.

In June this year, the bank cancelled its $1.2 billion loan, citing alleged corruption by Bangladeshi public servants. "The World Bank has identified various officials as being unable to leave the money for the bridge alone," as the report puts it.

Sacking crooked-seeming officials is, for the WB, a precondition for resuming the lending. The Asian Development Bank, a co-financier of the project, is more ready than the WB to be a cheerleader for the government and is keen on resuscitating the project. Like the Japan International Co-operation Agency, another backer, it has kept the door open, said the report.

The Economist said the Bangladeshi government would probably return to talks with the WB after hectoring its perceived enemies first.

Hasina had accused Muhammad Yunus, a pioneer of microfinance and a Nobel peace laureate, of putting the WB up to walking off, says the report. Yunus had already denied that allegation.

To meet the WB's conditions for reviving talks for the loan, Abul Hossain, a former communications minister, has already resigned and a couple of secretaries have been sent on leave.

Prime minister's chief economic adviser Mashiur Rahman seems to be the last barrier to the talks, although the former bureaucrat said he had done nothing wrong and would only resign if the prime minister told him to.

Regardless of Rahman's case, Bangladesh has a culture of impunity, the report says, citing that only one senior politician has ever gone to jail under an elected government for corruption, and that was a former dictator.

It adds the project has also got caught in the global and regional complex politics.

"Western governments do not want to see the Padma bridge project snapped up by a state-backed Chinese company (in return, perhaps, for an equity stake and for economic influence, as has happened with ports in Sri Lanka and Pakistan)."

"India, with which Bangladesh has usually had good relations, would do its best to block a high-profile Chinese involvement in its neighbour's economy."

The Economist report says Sheikh Hasina's Awami League is livid enough that it will be unable to keep its electoral promise to build the bridge before the end of 2013. "Yet it would be even more appalled if the Bangladesh Nationalist Party, led by Sheikh Hasina's arch-rival, Khaleda Zia, took office at the next election, bagging credit for the bridge. (That prospect is real: no elected government has won a second term).

"So, in the end, Sheikh Hasina has no strong incentive, other than the country's best interests, to mollify the World Bank," said the report.

The biggest infrastructure project in South Asia to be paid for by foreign donors is a $3 billion bridge in Bangladesh intended to span the Padma river.

The bridge is the stuff of donors' dreams, aiming to end the isolation of Bangladesh's poor south-west, home to three crore people who are cut off by these vast waters from the capital, Dhaka, and the rest of the country.

The report says the proposed 6.15-km bridge could be a gateway to India, tying Dhaka to the great metropolis of Kolkata. It is also a crucial piece of an even more ambitious dream of connecting South Asia with South-East Asia, via Bangladesh and Myanmar.

According to official estimates, the bridge could raise Bangladesh's annual growth rate by 1.2 percentage points.

News: The Daily Star/Bangladesh/09-Sep-12

Rejaul Karim Byron

The surplus capital in banks stands at Tk 4,218 crore, setting them at good stead for the Basel III preparations starting next year.

Of the country's 47 banks, all except five have surplus capital as per the international Basel II standards, which stipulate, as a rule of thumb, a capital base of 10 percent of the bank's liabilities.

As of June 30, the banks had a total capital of Tk 56,201 crore, whereas the capital requirement was Tk 51,983 crore, according to central bank statistics.

Of the 30 private commercial banks, three have a capital deficit: Bangladesh Commerce Bank of Tk 177 crore, First Security Islami of Tk 136 crore and ICB Islami Bank of Tk 1,192 crore.

Of the specialised banks, Krishi Bank and Rajshahi Krishi Unnayan had capital deficits -- of Tk 4,100 crore and Tk 359 crore respectively.

“Most of the commercial banks do not have capital deficits,” said a central bank official, asking not to be named.

“The few who do are problematic banks to begin with. Various measures are being taken to improve their capital adequacy.”

From 2015, the banks will have to maintain capital as per Basel III requirements, preparation of which will start next year, the official added.

The Basel Committee, named after the city of Basel in Switzerland, consists of central banks of 27 countries, including India, and sets the international standard for capital requirement.

“Globally the preparation for capital requirement as per Basel III has already started, but in Bangladesh it will start in the beginning of next year,” said Helal Ahmed Chowdhury, vice chairman of the Association of Bankers Bangladesh.

“The global financial of 2007-08 has compelled the Basel III to incorporate many risk factors in setting the capital requirements,” said Chowdhury, also the managing director of Pubali Bank.

Given the rise in loan defaults in Bangladesh, Bangladeshi banks would face many challenges to meet the Basel III requirements, he thinks.

“However, as per the Bangladesh Bank guidance most of the banks do not have any capital deficit. As a result, most of the banks will be able to maintain their capital to Basel III standards,” said a hopeful Chowdhury.

News: The Daily Star/Bangladesh/09-Sep-12

Minister without portfolio Suranjit Sengupta on Friday said steps will be taken against people involved in Hall-Mark scam after proper investigation and the swindled money will be returned to government coffer.

"The government will not hesitate to take measure against those who involved in this scam after conducting a proper investigation," said Suranjit.

He was addressing a discussion organised by the Bangabandhu Sangskritik Jote on the occasion of 120th birth anniversary of Hossain Shaheed Suhrawardi at the capital's Central Public Library auditorium.

According to a functional audit report as of May 31 this year, the Ruposhi Bangla Hotel-branch of the Sonali bank had disbursed Tk 3,606 crore as loan to Hall-Mark Group and other entities without maintaining banking rules.

News: The Daily Star/Bangladesh/07-Sep-12

In May, a central bank investigation also revealed massive irregularities by the bank in sanctioning and disbursing of loans, especially to little-known Hall-Mark Group and others, and instructed it to take necessary actions.

Sonali Bank on August 30 suspended 17 of its officials for their alleged involvement with the loan scam.

News: The Daily Star/Bangladesh/07-Sep-12

The government has appointed Prof Santi Narayan Ghosh as the new chairman of Bangladesh Development Bank Ltd (BDBL) for the next two years.

Ghosh has been serving the bank as a director since its inception. He is also currently the treasurer of Bangladesh Open University, said a statement.

He joined as a lecturer of the accounting department of Dhaka University in 1968 and became a professor in 1992.

He was also a lecturer at Government Tolaram College, Naryangonj, for a year after completion of his honours and masters degree from the accounting department of Dhaka University.

Ghosh obtained Masters of Business Administration (MBA) degree from University of Saskatchewan, Canada, in 1974.

News: The Daily Star/Bangladesh/07-Sep-12