Amid growing unauthorised financial institutions, Bangladesh Bank Governor Dr Atiur Rahman on Friday urged people to remain alert against illegal banking.

“The institutions that are doing business without approvals aren’t banks…their transactions are illegal. People need to understand which institutions are banks and which aren’t,” he said.

The central bank governor was speaking as the chief guest at a bankers’ summit, ‘Fifty Years of Banking in Bangladesh-Vision 2021’, organised by Financial Excellence Ltd at Brac CDM centre in Savar.

Former central bank governor Dr Salehuddin Ahmed was present at the programme as a special guest while Nasser Bukhteare, chairman of Financial Excellence Ltd, presided over the programme. Leading banker and economic analyst Mamun Rashid was also present.

Dr Atiur said some strategic aspects should be considered for development of the banking sector. “New technology should be introduced in the banking system and the weak sides must be identified,” he said.
“More challenges are coming for the banking sector and we’ll have to face those strongly,” he said.

Atiur said the country’s banking sector has grown several-fold since independence in 1971 in tandem with the uninterrupted spell of steady, stable growth of the economy.

“Just one indicator may be enough to demonstrate the spectacular magnitude of banking business growth. Credit and investment assets of scheduled banks amounted in December 1972 to a minuscule Tk 7.07 billion; this stood 654 fold higher at Tk 4625.85 billion as of December 2011,” he said.

Atiur said excellence in banking services will require quick attention to and remedy to customer’s grievances.
“The central bank of late has attached high priority to consumer interest protection concerns in banking services. Banks will need to attach the same high priority to this in their own strategic plans, putting in place processes and access channels like help desks; and above all, sensitising bank personnel to respond properly and swiftly to customer grievances.”

Atiur said the central bank is looking forward to steadily increasing openness and integration of our financial markets with the global financial  system, for widening the cost effective access to investment resources from the global savings pool.

“Strategic plans of banks will need to have corresponding objectives and action agenda for strengthening external contacts and correspondent relationships,” he said.

The central bank also said banks will need to carry out stress-testing exercises regularly to identify and address the emerging institutional vulnerabilities against shocks of both internal and external origins.

The Independent/Bangladesh/ 15th April 2012

Syed Mahbubur Rashid

Bangladesh Bank has given permission for opening new banks. A few days back permission was accorded for opening three banks to be financed by NRBs. If these nine banks start functioning the total number of private sector banks will be 56.

A lot of hiccup has been raised over the issue. It has been alleged that all the new banks have been awarded in favour of sponsors belonging to the ruling party. This is also not a new story. During the first tenure of Khaleda Zia some banks and insurance companies were given permission. The then BNP high ups were the skippers of the sponsors of the proposed banks and insurance companies. Earlier during the Ershad’s regime some new banks and insurance companies started operation under the private sector.

In fact the private sector insurance companies made debut during Ershad’s rule. Probably that was the only time when genuine and professional insurance personalities were the prime sponsors. But after the restoration of parliamentary democracy the politicians have become sponsors replacing the professional businessmen. So it has now become a legacy. In the meantime both the major parties auction the tickets for parliamentary seats among the businessmen. This has resulted in alarmingly increasing the number of businessmen in the Parliament. At present probably more than 60 percent members of the Parliament belong to the business community. Full time politicians are also joining the fray in the capacities of sponsor directors of the bank, insurance company and other financial institutions.

Though Bangladesh Bank grants licence for banking, yet it is invisibly guided, instructed or asked by the government. So it is useless to argue about the so-called independent and neutral decision of the central bank i.e. Bangladesh Bank. It is natural that the political government will interfere in things like. I have already discussed the legacy. However in our present political scenario the situation sometimes boils down to revenge. A mobile company got the permission for operation. Machineries were brought and installed. The date for formal opening was fixed. Meanwhile, the government changed. The new government stopped the inaugural ceremony on groundless ground. The operation of licence was kept in abeyance for a long time. When the embargo was lifted, the scenario was totally changed and the company could never see the light. The gentleman did not borrow any money from the bank. Earlier, he stayed in Japan for long and amassed some fortune. Everything was lost. It is needless to say that he had also to spend invisible money while obtaining permission from the then government. When he applied for permission, some officials from the Ministry of Post and Telecommunication proposed to visit Tokyo to see the technology of the proposed company. The abortive sponsors had to bear all the expenses including the gala shopping of the mandarins of the ministry.

If you speak from the legal point of view, you can not stop a citizen from applying for opening a bank. It is his personal right. Now the question may come as to the saturation of the requirement of the banking service. Earlier the banks which have been allowed to work have not been working properly. They have hardly turned their shoulders towards the rural areas. Moreover some of them were villains in the latest share markets scam. Neither the government nor Bangladesh Bank provides money to the sponsors of the proposed banks. That is also a very strong ground to accord permission to them. So it can be emphatically said that there is nothing to give licences for new banks.

The problem lies somewhere else. Bangladesh Bank is the supervision and regulatory authority of all banks and financial institutions. They will have to be vigilant. Certain conditions have been imposed in case of the proposed new bank. First of all six months’ time has been allowed for completing the formalities and start operation. The central bank must stick so far the timeframe is concerned. Secondly the money to be deposited with the central bank must be white. This is to be examined by the central bank with a clear conscience and high sense of ethics and also imbibed with patriotism. Earlier we have seen income tax clearance for a sponsor of either a bank or an insurance company. But actually the sponsor in question is an undergraduate student studying abroad, obviously son of a rich parents. It is widely alleged and true that in Bangladesh thousand ways are discovered for frustrating the purposes and objectives of any law, rule or regulation. It is needless to say that the concerned government officials connive with the perpetrators. Another condition is that five percent loan amount will have to distribute in the agriculture sector. The banks will also have to be active in the rural sector. Whatever may be the number of condition, these will be of no use unless properly monitored by the central bank and the banks are compelled to follow them. Two progressive and renowned economists of the country Dr. M A Barakat and Dr. Atiur Rahman very elaborately spoke of the money laundering and extensive utilising by the terrorists and fundamentalists. Of course both of them were not holding any office. Now Dr. Atiur Rahman is the Governor of Bangladesh Bank and Dr Barakat is the Chairman of Public Sector Bank. They are more than qualified for the posts they are holding now. But our frustration is that they have not able to take actions against the crimes earlier mentioned to the fullest satisfaction.

Bangladesh Bank could not saddle the commercial banks with regard to their investment in the share market. The bank was clearly found responsible for burgling with B.O. accounts but neither Bangladesh Bank nor Securities and Exchange Commission (SEC) could take action against that bank. In this connection it may be mentioned that as a listed companies a bank is to comply with certain instructions of the SEC. Usually BB wants to shake off their hands regarding the non-compliance or faulty compliances of those instructions. Let us cite an example all listed companies including the banks are to appoint independent directors in the Board of Directors. This issue has now got global importance. The US government compelled the US corporate institutions after the bust of Enron and some other big companies and dreaded cheating by the world’s one of the leading audit firm Anderson. An independent director who did not or can not have any stake on interest in the concerned organisation. Here I found an independent director in a bank who was earlier managing director of the same bank. I raised this issue to a member of the SEC. He made a very innocent reply that they can not do anything if the board of directors send such a name. Is there anything to say if such a negative reply is received? Bangladesh Bank may also give a reply in different ways if it wants to stave off his responsibility. It may say that it has nothing to do in the case of a circular/instruction of SEC. That can not be acceptable. As a supreme regulatory authority Bangladesh Bank owns power of original jurisdiction. The question is if it is willing to exercise that power for the greater good of the country.

We hope that none of the newly-proposed banks will fail to fulfill their conditions. They all shall be in the field. Let there be level playing round for all. The question should be for the survival of the fittest. Bangladesh shall have to be pro-active and vigilant. Let the good doers be rewarded and shenanigans be punished.

(The writer is a former Secretary

of DSE and a stock

market analyst).

The Daily Sun/Bangladesh/ 15th April 2012

Stocks continued to gain for a third day, with the highest turnover since July 31 last year, as institutional and small investors are injecting fresh funds into the market amid optimism. Turnover rose 26.7 percent to Tk 1,079 crore from the previous day.

The benchmark General Index of Dhaka Stock Exchange crossed 5,300 points for the first time since January 8.

The gauge of the Dhaka bourse finished the week at 5,343.59 points, after gaining 116.98 points or 2.24 percent, according to DSE data.

“The day's surge in activity was largely a continuation of the last few days' upbeat market sentiment,” IDLC Investments said in its daily market analysis.

Investors actively invested fresh funds in the fuel and power sector, non-bank financial institutions, banks and engineering demonstrated significant improvements in daily turnover, the stockbroker said.

“Investors have high hopes centred around this market as their confidence grows,” Green Delta Securities said in its daily market analysis.

The week had a good run as retail investors were actively participating, and nullifying almost all of the selling pressures, Green Delta said.

Of the total 263 issues that traded on the DSE, 182 advanced, 69 declined and 12 remained unchanged.

A total of 2.17 lakh trades were executed with 16.93 crore shares and mutual fund units changing hands on the Dhaka bourse.

All major sectors went green, with engineering going up 4.40 percent, followed by non-bank financial institutions 3.95 percent, telecomm 3.83 percent, pharmaceuticals 3.82 percent, life insurance 3.64 percent and fuel and power 2.85 percent.

Grameenphone, which represents the telecoms sector, topped the turnover leaders with 23.89 lakh shares worth Tk 51.37 crore changing hands.

First Bangladesh Shilpa Rin Sangstha Mutual Fund was the biggest gainer of the day as it rose 9.98 percent. The biggest loser was Bay Leasing and Investment that slumped 10.48 percent.

The Daily Star/Bangladesh/ 15th April 2012

The high value cheque clearing has doubled and the duration of clearing time has reduced significantly maximising speedy payments as Bangladesh Bank is clearing high value cheques and regular value cheques with an automated cheque processing system, officials said.

Through the automated system, the central bank cleared an average 85,000 regular value cheques and high value cheques worth Tk 4,700 crore in a day while some cases earlier took 7 to 30 days.

According to BB, of the total 85,000 cheques, 80,000 are regular value (below Tk 5 lakh) and the remaining 5,000 are high value (worth Tk 5 lakh and above) cheques.

"Currently all regional clearing houses of BB have been brought under one central clearing system and clears items within a day," said Nazneen Sultana, deputy governor of Bangladesh Bank.

The number of high value cheques rose to 5,000 in the automated system from 2,000 in the manual system, and the number of regular value cheques also increased to 85,000 from 70,000 in the previous system.

Sultana said the automated cheque processing system of BB clears all the intra and inter-regional cheques in a day in regular value session, which used to take 7 to 30 days to clear with the manual system.

"Priority items of entire Dhaka clearing zone are now cleared within the business date under high value session which previously covered a two kilometre area of Motijheel and Dilkusha only for clearing priority items within the same day," said Khandaker Ali Kamran Al Zahid, deputy director of the Department of Currency Management and Payment Systems.

He said with its two wings, Bangladesh Automated Cheque Processing System (BACPS) and Bangladesh Electronic Fund Transfer Network, Bangladesh Automated Clearing House (BACH) acts as the most sophisticated electronic channel for settling inter bank financial transactions throughout the country.

"Automated clearing house saves time and cost and also widens the range for exchange of cheque throughout the country," Zahid said.

He said the BB introduced BACH with the financial assistance of British donor agency DFID to modernise the payment system infrastructure.

The BACPS started operations in October 2010 by replacing the manual cheque clearing system with image and date-based cheque truncation system where Magnetic Ink Character Recognition encoded cheques are exchanged in encrypted form between the participating banks through a secured communication link.

The Daily Star/Bangladesh/ 15th April 2012

Some 51 corrupt officials of 13 private banks have misappropriated Tk. 29.67 crore over the last 15 years, according to a document obtained by The Independent from the Bangladesh Bank (BB). Of the total amount, banks’ stake is Tk. 19.52 crore, Tk. 6.34 crore of the government and Tk. 3.63 crore of clients of the banks.

Some of the officials involved in alleged misappropriation of the huge money are still in service while some others are under ‘temporary suspension.’ Departmental cases are pending with the courts. 

Meanwhile, the Anti Corruption Commission (ACC) is investigating into all the cases.

While talking to The Independent last week, ACC chairman Ghulam Rahman said officials of the commission are working on it and the next course of actions will be initiated after completion of investigations.

He told The Independent that the commission was often receiving complaints of misappropriation of money by bank officials which is alarming with regard to discipline of the country’s financial sector.
“Recently, complaints against bankers regarding services and honesty is on the rise and I think the respective management of each bank should strengthen the functions of supervision to check it,” Rahman said.

Regarding the investigation, the ACC has informed officially the ministry of Finacne and Public Administration. Later, the ministry of finance has sent a letter to the central bank requesting to dig out the severity of corruption in other banks. 

A BB official, seeking anonymity, said the central bank accordingly has asked managements of all the banks to take initiatives to check embezzlement of public money and that of the bank clients; and to save respective bank from incurring loss of money.

“The BB is constantly monitoring the ‘stress testing’ strength of the banks and it is a routine duty. But, bank itself should take appropriate initiatives in this regard,” said the official.

Meanwhile, a top official of a private bank has said recovery of the embezzled money could not be commenced because of non-disposal of cases.

“In my view, it will not be possible for a bank management to check such corruption without proper training on integrity and proper discharge of duties by its officials,” said the official, wishing not to be named.  

Meanwhile, banks incurred loss of money due to corrupt officials are Uttara Bank Ltd, AB Bank Ltd, Islami Bank Ltd, Pubali Bank Ltd, United Commerce Bank Ltd, Prime Bank Ltd, Social Investment Bank Ltd, Southeast Bank Ltd, Bangladesh Commerce Bank Ltd, Bangladesh Development Bank Ltd, Commerce Bank of Ceylon and Jamuna Bank Ltd and Al Baraka Bank.      

Besides, three Grameen Bank (GB) officials have embezzled around Tk. 20 lakh by preparing fake documents. The report does not mention whether the sum is owned by GB itself or its clients.

The Independent/Bangladesh/ 12th April 2012