The International Monetary Fund (IMF) has expressed its reservations over a number of provisions, including those relating to acquisition of problem banks and the tenure of bank directors that were incorporated in the proposed Bank Company Act (BCA)-2012, official sources said.

Besides, the multilateral capital donor has also raised questions on the proposed regulation about maintenance of capital adequacy and suggested that the authorities concerned should specify appropriate and relevant criteria for directors and officials of banks and also for establishing new banks.

The observations of the IMF, along with its specific proposals, have recently been submitted to the Bangladesh Bank (BB), the relevant sources added.

The IMF said any acquisition of problem banks, if necessary under certain circumstances, should be made by the BB, instead of the government which was proposed in the BCA.

'Section 58(b) gives the government the decision-making authority, instead of the BB. Also the government may acquire the banking company or one or more of its branches or its undertakings; any intervention\resolution should be considered on a least-cost-to-the-government basis and this section appears to disregard a market-based solution to problem banks," reads the observation of the IMF.

However, top BB officials said, taking lessons from the global financial crisis in 2008, the involvement of the government should be preferred when acquisition of any bank becomes inevitable.

About the tenure of bank directors, the IMF has suggested for two consecutive terms for a director, each spanning for a period of three years.

According to the proposed amendment, the maximum tenure of a bank director has been fixed at three years. The provision, however, will not be applicable to the managing directors of banks, who are also ex-officio bank directors.

The current provision under the BCA, 1991 allows bank directors to serve up to six years in two consecutive terms.

The BB officials concerned said the final decision on this specific issue would be taken later, taking the suggestion of the IMF into consideration.

They, however, said the IMF has endorsed the proposal for restricting the number of directors of a bank company up to a maximum of 13 and also for abolishing the provision for having independent directors in the boards of banks.

The Bangladesh Bank (BB) has recently prepared the draft of the amended act and submitted the same to the Ministry of Finance (MoF) for completion of all the necessary formalities.

Officials in the MoF said a high-powered committee, headed by former Secretary, Mr Abdul Mubin, has been formed to scrutinise the proposed amendments. Upon the completion of this examination, the amendment would be placed before the cabinet and then before the parliament for its approval.

In its suggestions, the IMF said the proposed two-year grace period for fulfilling the requirement for the minimum level of capital should be shortened.

'The minimum capital requirement provides the minimum amount of capital to ensure depositors' confidence and a bank's credibility, irrespective of the amount of a bank's deposits and risk assets,' reads the suggestion of the IMF.

The multilateral body, in its note, said additional criteria are needed in the amendment of BCA (2012) for the licensing of new banks, the sources said.

The BB officials concerned, talking about this particular issue, said the BB has a separate guideline about it.

"It is not essential to enumerate every single detail in the statute," a top BB official told the FE.

Financial Express/Bangladesh/ 8th May 2012

M Reazul Karim, Additional Managing Director and Md. Iftekhar Hossain, Head of HR of Prime Bank, are seen with the participants of a training course in Dhaka.

The 57th foundation training course for trainee assistants (Cash) of Prime Bank Limited concluded at the HR Training and Development Centre of the Bank.

M Reazul Karim, Additional Managing Director of the Bank was present at the session as chief guest, said a press release on Monday.

Md Iftekhar Hossain, Head of HR, was present as special guest. Senior Vice President Md. Fakhrul Islam was the coordinator of the training programme.

The Daily Sun/Bangladesh/ 8th May 2012

Recipients of a competition of HSBC Young Entrepreneur Challenge, pose for photograph at a function in Dhaka.

The Hong Kong and Shanghai Banking Corporation (HSBC) Limited, Bangladesh awarded three wining teams at the Bangladesh Finale of the 'HSBC Young Entrepreneur Challenge (YEC)', says a press release.

According to the release, having contested through multiple rounds of workshops and assessments, six finalist teams presented their business ideas in front of an expert jury panel at the YEC Bangladesh finale.

Of the six competing teams, three best teams were awarded with cash prizes and trophies.

The winners of this year's Bangladesh Finale are: (1) Gold winner: Team Fireflies, IBA, University of Dhaka, (2) Silver winner: Team Concept Crew, IBA, University of Dhaka and (3) Bronze winner: Team Foresight from IBA, University of Dhaka.

The Daily Sun/Bangladesh/ 8th May 2012

SA Chawdhury, CEO and Managing Director of BCBL, presides over a business development meeting of the Bank in Dhaka.

Bangladesh Commerce Bank Limited (BCBL) held its Business Develop-ment Meeting-2012 of Dhaka Divisional Managers at the head office on Thursday.

Managers from 17 branches of Dhaka division & high official executives of the head office were present.

Chief executive officer and managing director of BCBL S.A. Chawdhury presided over the meeting.

The Daily Sun/Bangladesh/ 8th May 2012

The government is going to make local Taka currency convertible in capital account, a move which, central bank sources say, will allow overseas investment by Bangladeshi entrepreneurs.

This initiative is part of a proposal to amend the Foreign Exchange Regulation Act (FERA) to upgrade it in line with what is called international standard, sources in the finance ministry told daily sun.

Bangladesh is set to see convertibility of Taka in capital account two decades after the country had made the provision to make Taka convertible in current account in 1993.

The government has sought assistance from the International Finance Corporation (IFC), a member of the World Bank Group, to amend the forex act (FERA).

“We have sought technical assistance from the IFC to bring certain changes in the law to make it time-befitting,” Banking Division Secretary Shafiqur Rahman Patwari said on Monday.

Bangladesh Bank (BB) has earlier proposed some amendments to the FERA and requested the finance ministry to seek assistance from the IFC since, the sources said, the act contains some complex issues.

The matter of convertibility of current account is a key issue in the proposal alongside amendment to the provisions on foreign trade and current account as well.

“All types of foreign exchange transactions will be brought under the jurisdiction of the law when it would be amended,” reads the draft proposal.

It said definition of resident and non-resident foreign currency account holders need to be included in the amended act to guide the banks in opening accounts.

The draft amendment proposal said the central bank should be given authority to impose financial penalty on banks or their employees for violation of any provision of the proposed act.

Bangladesh has pursued an apparently conservative policy in allowing a completely floating exchange rate fearing fluctuation in exchange rate. Also restriction on outflow of investment is there to avoid exchange rate volatility and keep foreign exchange reserve stable. Mohammad Rizwanul Huda, deputy secretary of the finance ministry, recently wrote a letter in this regard to the programe manager of IFC’s advisory services, South Asia.

The government may sign a “cooperation agreement” with the World Bank to receive the technical assistance from the IFC, sources in the banking division said.

In the letter, the government requested the IFC to engage some consultants to propose amendments to the existing FERA.

The government wants to work with IFC to ensure rising flow of foreign direct investment in Bangladesh.

The Daily Sun/Bangladesh/ 8th May 2012