Golam Hafiz Ahmed, Additional Managing Director of NCC Bank, inaugurates an ATM booth at Kandirpar in Comilla.

NCC Bank Limited opened a new ATM booth at Kandirpar in Comilla recently.

Golam Hafiz Ahmed, Additional Managing Director of the Bank inaugurated the booth as chief guest, said a press release Sunday.

Among others, Mohabbat Khan, Deputy Managing Director, Md. Omar Faruque Bhuiyan, Executive Vice President and Manager of Comilla branch Farhad Akhter Md. Shahriyar were present.

The Daily Sun/Bangladesh/ 23th July 2012

LONDON: A scandal erupting at Europe's biggest bank HSBC has added to concerns over the state of Britain's financial sector amid the Barclays rate-rigging affair and as the industry faces a major shake- up.

HSBC last week apologised and its head of compliance David Bagley resigned after US lawmakers accused the London-based bank of failing to apply anti-laundering rules, benefiting Iran, terrorists and drug dealers.

The HSBC affair follows hot on the heels of the Libor interest rate rigging scandal that has brought down top executives at Britain's Barclays bank-most notably its chief executive Bob Diamond and chairman Marcus Agius.

Regulators are reportedly investigating HSBC, as well as Credit Agricole, Deutsche Bank and Societe Generale, over alleged manipulation of the Libor rate after Barclays was recently fined 290 million over the affair.

Britain's financial regulator the Financial Services Authority (FSA) has said its Libor probe is looking at seven groups, which are not only British institutions.

Bank of England governor Mervyn King has meanwhile proposed that central bank governors and regulators discuss Libor reform at their upcoming meeting in Basel, Switzerland, on September 9.

The Daily Sun/Bangladesh/ 23th July 2012

Finance Minister AMA Muhith, seen at a seminar on ‘Depositors’ Safety Fund’ at CIRDAP auditorium in Dhaka.

Finance Minister AMA Muhith Sunday underscored wider insurance coverage for the bank depositors in order to increase savings by the people.

Currently, an insurance of Tk 100,000 exists in the country for the bank depositors.

“The amount is still too insignificant to protect a depositor when the bank becomes unable to pay its debts,” said finance minister at a seminar on ‘Depositors’ Safety Fund’ at CIRDAP auditorium in the city.

He said it is high time to increase insurance coverage to a bigger amount.

Microcredit Regulatory Authority (MRA) organised the function.

MRA has undertaken an initiative to raise a Tk 300 million depositors’ safety fund for micro-finance institutions (MFIs).

The borrower-cum-depositors of 517 registered MFIs across the country can benefit from the fund.

“Though in late, it’s a good initiative,” AMA Muhith said.

Bangladesh Bank Governor Dr Atiur Rahman said the MFIs have total deposit of Tk 300 billion at present.

They are operating under MRA, Grameen Bank, BRAC and PKSF.

“We must make it sure that the depositors’ money is secured,” Dr Rahman said.

MRA has proposed a provision of providing maximum Tk 3,500 to a MFI depositor as insurance coverage.

A recent MRA study revealed that over 80 percent of the MFI depositors keep a deposit of around Tk 3,500.

Of the fund, Tk 250 million will come from the MFIs’ premium and investments while the rest Tk 50 million will be collected from the government sectors.

“We need a ‘seed fund’ for a start now. Gradually, we will be able to broaden the fund to all MFIs’ deposits, if the government helps us,” said Khandakar Mujharul Haque, the executive vice-chairman of MRA.

The Daily Sun/Bangladesh/ 23th July 2012

Private banks that almost went out of the capital market at the end of 2010 have decided to come back as they found the present market is good for investments.

Four such banks have already announced that they would invest Tk 900 crore in next two months. Many banks are in the pipeline to announce their investment plans, bankers said.

“We believe institutional investments would stabilise the ailing market and bring back investors' confidence,” said SA Farooqui, managing director of Standard Bank.

Explaining Standard Bank's announcement to invest Tk 100 crore in two months, Farooqui said, “The market looks very lucrative for investment.”

Like Standard Bank, Pubali, EXIM and NCC have got a green light of their boards to invest Tk 500 crore, Tk 200 crore and Tk 100 crore respectively in two months.

“Other banks are also thinking to make a comeback,” said Farooqui.

The central bank also sees no problem with the banks' plans to invest depositors' money in the speculative market.

“Legally, a bank can invest 10 percent of its deposits in the stockmarket, but most of the banks now have it within 1-3 percent,” said SK Sur Chowdhury, deputy governor of the Bangladesh Bank (BB).

Though Bangladesh's stockmarket is retail-driven, institutions, especially banks, made hefty profits in 2009 and 2010 at the cost of these retail investments. At that time, according to BB reports, many banks invested up to 30 percent of their deposits in the stockmarket violating the law.

A huge flow of banks' money had fuelled the market and everyday transaction reached more than Tk 3,000 crore.

The benchmark DSE General Index soared to 8,918 points on December 5 2010, more than double compared to a year ago.

“Our board has approved Tk 500 crore to invest in the capital market. They are willing to boost the ailing market,” said Helal Ahmed Chowdhury, managing director of Pubali Bank.

Chowdhury said they would invest the money by complying with all regulatory requirements.

However, as listed companies, banks were bound to disclose the information on their investment plans to the SEC and the stock exchanges within 15 minutes of their respective board approvals. But in this case, this regulation was not followed.

The banks' plans about their investments in the stockmarket has already boosted the market as the retail investors think institutional investors have the capacity to bring back confidence in the market.

Investors, however, look cautious if the banks do not invest despite announcements through newspaper advertisements.

But the central bank said the banks cannot backtrack on their plan after making public announcements.

“Regulators -- the Securities and Exchange Commission and the BB -- can catch them (banks) if they don't invest after making the announcements,” said the BB deputy governor.

The Daily Star/Bangladesh/ 23th July 2012

The Microcredit Regulatory Authority (MRA) plans to form a fund to minimise the risk of losses of small savers in the event of failure of a microfinance institution (MFI).

The Tk 30 crore fund, known as the Depositors Safety Fund, will be raised in six years. The government will provide Tk 5 crore to the fund and the rest will come from premiums paid by licensed MFIs.

Under the fund, a poor saver is likely to get up to Tk 3,500 in coverage if an MFI goes out of business. The amount of coverage will provide security to 80 percent of depositors in the MFI sector, the regulator said yesterday.

"It's a very good initiative. I expect the Depositors Safety Fund will be effective soon and become a support for small savers," Finance Minister AMA Muhith said at a seminar on the fund, organised by MRA at the CIRDAP auditorium yesterday.

Bangladesh Bank Governor and MRA Chairman Atiur Rahman and Palli Karma-Sahayak Foundation (PKSF) Chairman Qazi Kholiquzzaman Ahmad also spoke at the occasion that was chaired by MRA Executive Vice Chairman Khandakar Muzharul Haque.

This is the first time MRA plans to open a fund to secure the deposits of poor savers in MFIs in line with the Deposit Insurance Scheme opened by Bangladesh Bank (BB) in 1984 to provide cushioning to depositors in banks.

The idea of floating a fund to cushion micro-savers, mostly poor, comes after the fraud at Jubok, which began operations in 1994 by providing microcredit to its members and raised deposits.

MRA says the fund will protect customers. It will also build public confidence in depositing money with the institutions and reduce the risk of systematic crisis such as panic withdrawal of deposits from sound MFIs, it adds.

Under the fund, an MFI will have to pay premiums to MRA semi-annually. The premium will be determined based on the risk based rankings of MFIs.

An MFI with low risk will require paying low premiums and an MFI with high risk will have to pay higher premium, said Fahim Anwar, chief executive of Index Capital Group, consultant of MRA for DSF.

Muhith said the proposed threshold (support to depositors) should not remain static forever.

"It may be necessary to revise the threshold from time to time," he said.

Currently, nearly 600 MFIs operate on licences from MRA. The total outstanding loans of authorised MFIs and Grameen Bank have exceeded Tk 40,000 crore and total savings stand at nearly Tk 30,000 crore, said Governor Atiur Rahman.

The number of depositors in licensed MFIs stands at 2.6 crore, according to MRA.

However, still a majority of the MFIs, the number of which would be over 3,500, do not have licences from the regulator, according to MRA data.

Muhith said MRA has done good job in fixing the interest rate or service charges on loans by MFIs.

The Daily Star/Bangladesh/ 23th July 2012