The country’s leading economists and bankers have recommended for slashing interest rates spread through ensuring perfect competition among the banks, saying that rational level of spread would help boosting business activities across the country, says a press release. 

The recommendations came at a three-day long Bankers’ Summit-2012, organized by the Financial Excellence Limited (FinExcel), a private advocacy organization, held at BRAC CDM Saver in Dhaka from April 12 to April 14. They also said that the commercial banks would have to take effective measures to minimize asset-liability mismatch by improving their fund management efficiency.

The speakers also urged the government to ensure operational independence of the Bangladesh Bank (BB) for better monitoring and supervision of the banks. They feared that the new banks might face difficulties in recruiting skilled manpower particularly to manage their foreign exchange operations.

The FinExcel organised the summit for the first time in Bangladesh in cooperation with the Data Edge Limited, a leading IT Company, to discuss ‘50 Year of Banking in Bangladesh –Vision 2021.’  “Nearly half of our population still remains deprived of banking services, and poverty still afflicts nearly a third of the country’s population,” BB Governor Atiur Rahman said while speaking as the Chief Guest at the opening session of the Summit on Friday morning.

The central bank chief said lending resources of banks continued being channeled largely to well off borrowers, often with insufficient diversification and inappropriate asset-liability maturity mismatches. 

“Corporate governance weaknesses linger in many banks, allowing dominant equity holders to manipulate credit access, credit appraisal and internal control processes to their own advantage,” he said, adding that the banks would need to carry out stress testing exercises regularly to identify and address emerging institutional vulnerabilities against shocks from both internal and external origin.

The BB Governor also said the Banking Sector in Bangladesh had grown several times since independence in 1971. Citing statistics, he said that credit and investment assets of scheduled banks amounted in December 1972 to a minuscule Tk 7.07 billion whereas this stood 654 fold higher or Tk 4,625.85 billion in December 2011.

“The banks should ensure the quality services with reasonable cost,” former BB Governor Salehuddin Ahmed said stressing on effective measures to overcome challenges. He said the banks would have to improve their fund management for minimising assets-liabilities mismatch, which was still a challenge in the banking system.

He also said discloser of audit reports and financial statements of all financial institutions should be transparent to ensure their accountability. “The quality of financial statement is not good in Bangladesh,” former BB Governor said, adding that cross board financial management has to be strengthened.

“The introduction of non-conventional pro-poor monetary policy in a country like Bangladesh will be a challenging task, not purely for scarcity of resources or lack of institutional capacity but most importantly for the lack of political will,” he said while presenting a paper titled ‘Challenges for Sustaining Growth and Equitable Development: Monetary Policy Issues”.

Former Advisor to the Caretaker Government Akbar Ali Khan said the interest rate spread was still higher in Bangladesh compared to other South Asian and East Asian countries due to lack of perfect competition. Mr. Khan also suggested the authorities concerned to tag the interest rate spread of the banks with income tax measures.

Regarding approval of the new commercial banks, former BB Governor Mohammad Farashuddin said the new banks would mop up fresh liquidity from rural areas across the country. “NRB banks will also help to boost flow of inward remittances,” he noted.

Former Adviser to the Caretaker Government Mirza Azizul Islam does not think that the banking system would be collapsed after the emergence of more commercial banks. He also said the size of financial market was not large enough.

Glenn Tasky, Banking Supervision Advisor of the Central Bank, supported by the International Monetary Fund (IMF), said the bank has an asset-liability management committee (ALCO) that oversees liquidity management, meets frequency, and records accurately all discussions and decisions made. 

“The banks should diversify both their funding and their liquid assets,” Mr Tasky said while presenting his paper titled Liquidity Governance, Policies and Limits at the concluding session Saturday morning. He also said treasury ensures that the bank’s structural liquidity profile enables the bank to comply with limits and targets. “Asset-liability and Core Risk Management should be addressed properly to run the banks smoothly,” Senior Banker and Professor of BRAC University Mamun Rashid said while giving vote of thanks.

The Daily Sun/Bangladesh/ 16th April 2012

RAJSHAHI: Rajshahi Krishi Unnayan Bank (RAKUB) launched tree plantation programme aimed at beautifying its headquarters premises with eco-friendly tree ‘Debdaru’ here today.

Managing Director of the Bank Pradip Kumar Dutta inaugurated the programme as the chief guest.

The Daily Sun/Bangladesh/ 16th April 2012

Syed Mahbubur Rahman, Managing Director and CEO of BRAC Bank Limited, and Jamie Harper, President, Microsoft (Southeast Asia), exchange documents after signing agreements recently.

BRAC Bank Limited recently signed two agreements - the Enterprise agreement and Select Plus agreement with Microsoft.

Syed Mahbubur Rah- man, Managing Director and CEO of BRAC Bank Limited, and Jamie Harper, President, Micr- osoft Asia Pacific, signed the agreements on behalf of their respective organisations, said a press release.

Mohammad Mamdudur Rashid, Deputy Managing Dir- ector, Nawed Iqbal, Chief Technology Officer, Zeehsan Kingshuk Huq, Head of Corporate Affairs and Service Quality and Senior Officials from BRAC Bank were also present at the signing ceremony.

Mohammed Asif, Head of Enterprise Sales and other senior officials of Microsoft Bangladesh were present on this occasion.

Under these agreements, Microsoft will deliver various applications and server software to BRAC Bank and its subsidiaries to use their Office productivity, identity and network management, datacenter management, advance messaging and collaboration solutions across their organisations.

The Daily Sun/Bangladesh/ 16th April 2012

National Bank Training Institute (NBTI) organised a short training course on ‘Leadership in Management Process’ in the city recently.

A number of 29 mid-level executives participated in the course, said a press release.

Neaz Ahmed, Managing Director and CEO of the Bank, distributed certificates among the participants where SM Jaffar, deputy managing director, was present as special guest.

Md Majibur Rahman, principal of the NBTI, and Zahir Uddin Md. Babar, SAVP, and senior faculty members of the institute, among others, also attended the function.

The Daily Sun/Bangladesh/ 16th April 2012

Bangladesh Bank has requested the Banking Division to ask the law enforcers for taking legal action against the closed-down Mulit-Level Marketing (MLM) Company Revnex which was found doing ‘illegal banking’ in different name and ‘deceiving’ people .

“The Revnex (BD) is now running under the name of ‘Simantu Multipurpose Cooperative Society (SMCS)’ and cheating the people by making attractive offers which are not legal,” said a recent report of Bangladesh Bank.

General Manager of Foreign Exchange Inspection and Vigilance Department of Central Bank, Saiful Islam sent four pages inspection report to the secretary of the Finance Ministry’s Banking Division Shafiqur Rahman Patwari.

The report suggested the authority concerned should go for action under the Bank Company Act 1991 using its provision of 41.

The finance minister AMA Muhith, last week, said: “Not only Destiny but other MLM companies will also be brought under proposed direct sales law.”

The government wants to end MLM business in Bangladesh, aimed at stopping financial fraudulences in the name of trading and money-making, he added.

According to the BB report, Revnex shut down operation in October last year after their accounts in two private commercial banks –Prime Bank Limited (PBL) and Dutch-Bengal Limited (DBBL)- were frozen.

Revnex resumed its operation in the name of Simantu Multipurpose Cooperative Society (SMCS) by opening offices at Banani and Mohakhali in the city.

The central bank’s report said: “The SMCS illegally transferred its money stuck in the frozen accounts in two commercial banks through SA Paribahan.”

According to the report, a Revnex official withdrew Tk 310 million from PBL and DBBL. The shut-down Revnex (BD) deposited Tk 519.7 million in beginning of 2011. The Bangladesh Bank report said Revnex is now offering 213 per cent profit against six-month deposit of Tk 5 million.

The current number of Revnex clients stands at 0.3 million and deposit reached Tk 1500 million, although the company was registered in the Register for Joint Stock Companies and Firms (RJSCF) with condition that it would not do business more than Tk 500 million per year, the report mentioned.

According to the report, chairman and managing director of Revnex ( BD) Pintu Biswas told the inspection team that he would go to Bangladesh Bank for giving Revnex information rather than talking over phone .

Bangladesh Financial Intelligence Unit (BFIU) of the Bangladesh Bank is now looking into the Revnex activities, the report said.

Last November, the government formed a three-member committee to investigate into the ‘illegal business’ of Revnex which was accused of cheating the people.

The Daily Sun/Bangladesh/ 16th April 2012