The immediate past acting managing director of the Grameen Bank yesterday refuted the claims that the microcredit lender has never paid dividends to its shareholders.

Dividends were paid to all the shareholders, said Nurjahan Begum who had taken over the charge of acting managing director of the Grameen Bank after Dr Muhammad Yunus stepped down from the bank in May last year.

The bank gave 100 percent dividend in 2006 and 20 percent in 2007 and 30 percent in 2008, 2009 and 2010, she said in a statement.

Nurjahan, who also retired last year, had been with the bank for 35 years since its inception.

Her comments came a day after Law Minister Shafique Ahmed said Grameen Bank founder and Nobel laureate Prof Yunus did not pay dividends to its shareholders.

Of the 84 lakh borrowers of the bank, 55 lakh borrowers have so far bought shares of the bank, Nurjahan said.

The borrowers bought shares of Tk 55 crore to become owners of 97 percent shares of the Grameen Bank, whereas the government owns the rest 3 percent as it bought shares worth Tk 1.80 crore.

The Grameen Bank has so far paid Tk 2.52 crore to the government as dividends and Tk 63 lakh each to Sonali Bank and Bangladesh Krishi Bank.

Nurjahan said the Grameen Bank could not pay dividend until 1996 as it did not earn enough profit to do so.

She said dividend could not be given between 1997 and 2005 to meet the government's conditions.

To obtain income tax waiver, all profits were deposited in the rehabilitation fund as per government condition. As a result, the board did not give any dividend.

News: Daily Star/Bangladesh/27-Aug-12

Janata Bank has finally withdrawn the chief executive officer of its UAE operations on charges of fraud worth nearly $1.3 million.

Shafiqul Islam, the Bank's CEO in the United Arab Emirates, has been withdrawn and asked to report to the Bank's head office in Dhaka on September 1, a senior official said yesterday.

“Ismail Hossain has been appointed as the new CEO to look after the Bank's UAE operations,” said SM Aminur Rahman, managing director of the bank.

The removal and new appointment came at a time when a three-member team headed by a senior official of the Bangladesh Bank is in the UAE to further investigate the fraud related to opening of an LC (letter of credit) in 2010.

State-owned Janata Bank is one of the largest banks in Bangladesh with a network of 860 branches. It has four overseas branches, all in the UAE. The branches are located in Abu Dhabi, Al-Ain, Sharjah and Dubai.

Janata Bank appointed a CEO and branch managers to look after the branches in the UAE.

During a bi-annual inspection in 2011, the central bank detected gross irregularities in the operations of Janata Bank's Dubai branch.

The investigation found that the Bank's Dubai branch opened an unapproved LC worth around $1.30 million (Tk10.54 crore) for M/S Steven Frost LLC, which the bank could not recover.

Later, the central bank wrote to Janata Bank to take action against Shafiqul Islam along with Abdul Momen, manager of Dubai branch, and Mohammad Shahbuddin, an officer at the same branch.

But the Bank failed to take action against any of the officials charged with the irregularities. The finance ministry also asked Janata to punish the officials.

“We cannot take action keeping the CEO there,” said Rahman. “There was a possibility of damage to our business reputation,” he said.

“Now the CEO is withdrawn and we will go for action against him,” said the Janata Bank boss.

News: Daily Star/Bangladesh/27-Aug-12

Finance Minister Abul Maal Abdul Muhith has said the government is in the final
stages of reaching an agreement with the World Bank to get the global lending agency
back on board to fund the Padma bridge project. He also expressed the hope to be successful
in such efforts within a week. Speaking with bdnews24.com on Saturday at his
Minto Road residence in the capital, Muhith said: "All obstacles to reach the agreement
are being cleared. I hope the matter will be resolved within one week."

The Washington-based lender cancelled its promised loan of $1.2 billion for the country's
biggest-ever infrastructure project in June alleging corruption. Although the government
later decided to bridge Padma river with its own resources, the Finance
Minister has also been trying to bring back the global lender to fund the infrastructure
project.

The global lender had spelt out a number of conditions for the government to fulfil
after raising the allegations and suspended the fund for the project in September last
year after Canadian authorities launched an investigation into SNC-Lavalin, a firm
short-listed as a consultant for the project. The World Bank cancelled the loan on June
30 claiming that the government did not follow their recommendations.

After the deal was scrapped, Information Communications and Technology Minister
Syed Abul Hossain, who was the Communication Minister when the allegations were
raised, resigned and former Bridges Secretary Mosharraf Hossain was sent on leave.
Meanwhile, several newspapers reported on Saturday that Integrity Advisor of the
Padma bridge project and adviser to the Prime Minister Moshiur Rahman was also
excusing himself from the project.

Muhith, however, said: "We will invite tenders in November if the World Bank returns
to the project, and the bridge construction work will begin by April next year." The
Asian Development Bank (ADB) and the Japan International Cooperation Agency
(JICA) extended their agreement to fund the project until Aug 31 even after the World
Bank cancelled its funding. Bangladesh needs to come to an understanding with the
global lender before that.

Muhith said the government did not want to delay any more in inviting tenders once
both parties reached an agreement. "We have also received positive response from
them (World Bank) in this regard." Asked whether a letter would be sent to World
Bank to review its decision, he said, "I already have the draft letter. It will be sent after
we get a positive response from the other side."

On August 22, he had said, "We will issue the letter when we are sure that our proposal
will not be turned down." According to the minister, the World Bank's IndiaBangladesh-
Nepal's Executive Director MN Prasad (former Indian Chief Secretary) had
taken up the case of Bangladesh with the World Bank. He also said Bangladesh's
Alternative Director to World Bank Mohammad Tareque was also joining the dialogue.

Of the proposed $2.9-billion project, the World Bank had agreed to provide $1.2 billion
while ADB pledged $610 million. The Jeddah-based Islamic Development Bank is also
expected to provide $140 million and JICA said it would contribute $400 million to the
project. Before the Eid holidays, Muhith had commented that the allegation the World
Bank had raised was tarnishing Bangladesh's image in the international arena. "We
have to recover it (the image).

News: The Financial Express

WASHINGTON: US prosecutors are looking into whether British bank HSBC was involved in laundering money for Mexican drug cartels and moving cash for Saudi Arabian banks with ties to terrorists, The New York Times reported yesterday.

Citing unnamed federal authorities with direct knowledge of the investigations, the newspaper said the investigators were also probing whether HSBC circumvented US law by transferring money through its American subsidiary for sanctioned nations, including Iran, Sudan and North Korea.

Last month, HSBC announced that its Mexico unit had paid a fine totalling 379 million Mexican pesos ($27.5 million) to Mexico’s banking regulators for breaching anti-money laundering controls.

Earlier, HSBC apologized and a senior executive resigned after US lawmakers accused Europe’s biggest bank of giving Iran, terrorists and drug dealers access to America’s financial system.

In a 330-page report, the US Senate found the lender allowed affiliates in countries such as Mexico, Saudi Arabia and Bangladesh to move billions of dollars in suspect funds into the United States without adequate controls.

The report said HSBC’s Mexican affiliate “transported $7.0 billion in physical US dollars to HBUS from 2007 to 2008 ... raising red flags that the volume of dollars included proceeds from illegal drug sales in the United States.”

According to The Times, eager to resolve the investigation, HSBC reached out to federal prosecutors in July in hopes of securing a settlement by September.

But officials said a settlement in the next couple of weeks was highly unlikely, the paper pointed out.

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

Afaq Khan

Bangladesh can improve its weak infrastructures by utilising Islamic funds available globally, said a senior official of a foreign bank.

The country's stable economy can help attract more Islamic funds from international financiers, said Afaq Khan, chief executive officer (Islamic banking) of Standard Chartered Bank.

Khan was sharing his views on the prospects of Islamic banking in an interview with The Daily Star at Sonargaon Hotel recently.

“The total size of the world's Islamic funds is estimated at $1- $1.3 trillion, which is growing at 15-20 percent on average annually,” said Khan, who came to Dhaka to launch the bank's Shariah-based product Saadiq for its corporate clients in the country.

Most shariah-based financiers in the world are eager to invest in large infrastructure projects, he said. Bangladesh can attract these investors, thanks to a positive economic outlook of the country.

“All the ingredients are here to attract the Islamic financiers as you have a stable economy, stable regulations and fast economic growth,” said Khan.

The country needs to tell its success stories and future plans to the Islamic investment community globally, he added.

Standard Chartered Saadiq is ready to cooperate with the government in the processes of bringing in the Islamic investors to the country by utilising its global network, said Khan.

Islamic banking is now an issue of great interest for many, including the western non-Muslims, as the system remained almost unhurt during the global financial crisis, said the official.

Shariah-based banking is growing much faster than conventional banking, he said. Currently, the banking giant has Islamic banking operation in six countries -- Indonesia, Malaysia, UAE, Bahrain, Pakistan and Bangladesh.

Of the countries, Indonesia has the highest annual growth rate at 45 percent, followed by Bangladesh at 25-30 percent, said the 50-year-old official.

“Conventional banking is riskier than Islamic banking because it deals with debt trading and keeps itself involved in market speculations, which the European and American banks experienced,” he said.

“At present 19 percent of the industry assets and 16 percent of the industry deposits are Islamic. So, there is an accelerated demand for Islamic banking products in the market,” said Khan.

The London-based bank started its Islamic banking operation in Bangladesh in 2004 with consumer banking products under the bank's group branding Saadiq.

“Islamic banking operates in real economy. This banking has no room for gambling, speculation, excess leverage, or the greed for windfall profit,” said Khan.

He joined StanChart in 2003 with a mandate to launch the Islamic business division for the bank. Since then, he has been responsible for the strategic build-up of a global Islamic banking business covering retail, corporate and investment banking with a wider product capabilities and award winning solutions.

Khan, who has 22 years of banking experience, believes Bangladesh could be a big market for the Islamic banks. “Around 90 percent people here are Muslims. So, the country has an immense potential for the growth of Islamic banking.”

But he feels the business prospect would depend on diversification of products, services and adequate training of the officials.

"Saadiq" is the brand of this bank's Islamic banking, which has rolled out more than 250 products and solutions relating to consumer and wholesale banking.

An Islamic bank traditionally generates its profits from Sharia-compliant investment activities. This profit is shared back with the bank's customers at a pre-agreed ratio. An account holder is entitled to a share of these profits according to the funds he holds in his account.

Khan said Islamic banking differs from conventional banking, primarily because it does not look to charge or deliver interest.

In Islamic banking, profit is generated through investment and trading, said Khan, who did an MBA from the University of Western Illinois in the US.

The official said this return rate has to match the level of return provided by interest levels of conventional banking.

Islamic banking in Bangladesh continues to show strong growth since its launch in 1983.

At present, out of 47 banks, seven private commercial banks are operating as full-fledged Islamic banks. Besides, 16 conventional banks are engaged in Islamic banking, according to Bangladesh Bank's annual report for 2010-11.

The total deposits with Islamic banks and Islamic banking branches of the conventional banks stood at Tk 67,580 crore by the end of December 2010. This deposit accounts for 17.5 percent of the deposits with the total banking system, according to BB Data.

Total credit of the Islamic banks and the Islamic banking branches of the conventional banks stood at Tk 62,870 crore by the end of December 2010. This was 19.1 percent of the credit of the total banking system.

The global banking giant targets Bangladesh as one of the potential markets for its Islamic financial products and services.

As part of the move, the bank launched its Shariah-based wholesale banking product Saadiq for its corporate clients on August 2. Earlier the product was for retail customers only.

The Saadiq brand will offer a core comprehensive suite of products related to cash management, trade, term and working capital financing for corporate clients to fulfil their banking requirements in a Shariah compliant way.

News: Daily Star/Bangladesh/26-Aug-12