The local inter-bank money market came under pressure Sunday as banks saw a sudden rise in demand for cash over maintaining their mandatory Cash Reserve Requirement (CRR) with the central bank and mobile phone operators' withdrawal of money from the banking system, sources said.

The call money rate went up on the day as most of the commercial banks turned to the inter-bank money market to meet their excess demand for cash, banking sources said.

"Nearly all the commercial banks had to borrow while few banks were able to lend on the day," a senior fund manager of a second generation commercial bank told the FE.

The inter-bank call money rate slightly rose and hit the day's high at 9.25 per cent from 6 to 7 per cent on Thursday, the previous working day.

Experts said mainly two things drove up the call money rate on the day.

Firstly, the banks had been in need of money from the inter-bank market to adjust their CRR with the Bangladesh Bank (BB) after the recent prolonged vacation.

Secondly, some mobile phone operators withdrew a large chunk of money from the banks for depositing it in a government account.

In addition, the government borrowed Tk 10 billion through the weekly auction of treasury bills from the commercial banks on the day.

News: The Financial Express/Bangladesh/03-Sep-12

Southeast Bank Limited expanded its horizon of customer service through establishing ‘ATM Booth’ at its Mouchak Branch, Mouchak, Dhaka Sunday. Mahbubul Alam, Managing Director of Southeast Bank Ltd formally inaugurated the ‘ATM Booth’.

News: The Financial Express/Bangladesh/03-Sep-12

The classified loans of 38 state-owned enterprises (SoEs) to the four state-controlled commercial banks (SCBs) stood at Tk 2.94 billion until July this year, according to the latest compiled data of the central bank.

Until February this year, the classified loans of the SoEs amounted to Tk 3.0 billion, says the data.

Of the classified loans, an amount of Tk 2.41 billion was owed to Sonali Bank, Tk 37.90 million to Janata Bank, Tk 148.80 million to Agrani Bank and Tk 342.10 million to Rupali Bank.

The total amount of the outstanding loans of such SoEs to the SCBs until July, 2012 stood at Tk 338.62 billion, the Bangladesh Bank (BB) data indicated.

The central bank recently completed the update on the outstanding and classified loans of the SoEs with the banks and financial institutions coming under the operational domain of the concerned division of the ministry of finance (MoF).

The central bank has been giving regular instructions to the high-ups of the SCB to downsize their amount of default loans, a senior official of the BB told the FE.

"We are trying to help reduce the classified loans of the SoEs through various steps. The banks have been asked to consult the SoEs so that they can make timely repayments of loans," he said.

Statistics show that the Bangladesh Textile Mills Corporation (BTMC) tops the list of defaulter-SoEs with Tk 2.60 billon as classified loans, out of its total amount of Tk 67.09 billion as outstanding loans to the four SCBs.

Almost the entire amount of loans of Bangladesh Jute Mills Corporation (BJMC) owed to the SCBs have become classified. The total amount of outstanding loans of BJMC until July, 2012 reached to Tk 1.73 billion while its default amount of loans stood at Tk 1.59 billion.

The default loans of Bangladesh Chemical Industries Corporation (BCIC) amounted to Tk 900 million against its total outstanding amount of loans at Tk 34.46 billion.

The amount of classified loans of Bangladesh Agricultural Development Corporation (BADC) stood at Tk 212.70 million against its total outstanding amount of loan portfolio at Tk 16.09 billion. The Bangladesh Telegraph and Telephone Board (BTTB) had Tk 105.20 million as classified loans with the SCBs in July, 2012.

The break-up of the SCBs' credits that are lying as outstanding loans of the SoEs, according to the latest compiled data of the BB, was as follows: Sonali Bank -- Tk 176.21 billion, Janata Bank -- Tk 67.23 billion, Agrani Bank -- Tk 72.66 billion and Rupali Bank -- Tk 18.78 billion.

The officials in the MoF told the FE that the International Monetary Fund (IMF) had set conditions not to ask the SCBs to sanction fresh loans in favour of the loss-making SoEs. The MoF is no longer going to request the SCBs for fresh loans to the SoEs, fearing a further rise of the amount of default loans, the sources said.

"The SoEs have to grow or downsize themselves. There will be a full-stop to the culture of spoon-feeding in the near future as the government cannot afford a huge amount of their losses amid a large amount of bank liabilities of the SoEs," said a senior MoF official.

News: The Financial Express/Bangladesh/03-Sep-12

Bangladesh Bank (BB) plans allowing agent banking to gear up farther its drive for financial inclusion, aiming at helping government achieve sustainable economic growth. Talking about the plan, Governor Dr Atiur Rahman told BSS that the agent bank would bring more people under the institutional financial system faster than expanding traditional banking network.

He said the central bank had already created the necessary foundation for the agent banking by introducing mobile banking that already got a good response especially from rural people. Currently, eight banks are providing mobile banking services involving the
country’s major mobile phone operators.

Rahman said the agent banking would be able to provide rural people necessary banking and financial services at their doorsteps at lower cost and faster pace than banks’ branches.

He said the agent could be an employee of banks who would offer people banking services including deposit and withdraw cash, transfer fund, pay bills, receive remittance, salary and government benefits.

Referring to India, the governor said the agent banking had achieved significant success in rapidly expanding banking services and bringing in a large number of unbanked people under the institutional financial network.

A BB official said the agent banking had already been proved a success in many countries including Australia, New Zealand, France and Brazil.

He said postal outlets in Australia are providing banking services to the people who live in the outback. New Zealand Kiwi Bank is rendering services using post offices and lottery outlets when French bank Credit Agricole is using grocery stores to provide financial services.

The official said the agent banking would be equipped with bank card reader, mobile phone, barcode scanner and a personal computer that connect with the bank’s server using a data connection. Clients of the agent banks would be given bank card to access their bank account. Identification of customers is normally done through a PIN, but could also involve biometrics.

News: The Independent/Bangladesh/03-Sep-12

Monirul Alam

The management of state-run Sonali Bank did not act on a warning from Bangladesh Bank (BB) in mid-2010 regarding abnormal ceiling of loan disbursement to Hallmark Group, BB sources said.

During an inspection in June-July period of 2010, a BB team found that the Ruposhi Bangla branch of Sonali Bank had been preparing to provide a loan of Tk 3.5 billion to Hallmark Group against LC bills for import of raw materials for one of its readymade garment unit.

“The branch officials couldn’t justify the loan. Immediately after the matter was detected, we issued an early warning. But, neither the bank board nor its management reported us anything about the matter,” said a member of inspection team, seeking anonymity.

While Commenting on the issue, a BB high official said the central bank has always been alert against abnormal credit growth in different branches of schedule banks and finally detected the single-highest loan-forgery at Sonali Bank and found the bank’s board accountable during a regular inspection in last May.

“But, by this time, huge amount of loans have already been disbursed to the firm (Hallmark group). Most of the loans were disbursed between December 2011 to March 2012,” said the official.

A total of Tk 35.47 billion has been lent illegally to little-known Hallmark Group through different branches of Sonali Bank, the BB inspection found, which was confirmed later in a functional audit by an independent audit firm.

As per the rules of business and BB guidelines, any big loan must be approved by the board of directors of the respective bank. Thus, the Sonali Bank’s board cannot deny the responsibility of disbursing such a huge amount of loan to Hallmark Group, said the sources.

After the loan-forgery prompted a wave of criticism on Sonali Bank top brass, some of the members of the bank’s board of directors claimed that the issues were not brought to the notice of the incumbent board by the previous managing director.

“Such a loan-forgery could have been checked if the previous managing director (Humayun Kabir) would brought the issue to the notice of the board,” the board’s audit committee chairman KM Zaman told reporters at a press conference last Thursday.

Km Zaman denied his responsibility when reporters asked him why the accounts of Rupashi Bangla branch of his bank was not audited.

According to banking rules, every branch must be audited twice every year.

News: Daily Sun/Bangladesh/03-Sep-12