The proposed Bank Company (amendment) Act (BCA), 2012 seeks to restrict the maximum number of directors of a bank company to 13, fix the maximum tenure of a director for three years and abolish the provision of independent directors on bank boards.

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

Justifying the proposal for the abolition of the provision for independent bank directors, the BB said the necessity of being an independent director on a bank board is met through securities law. In order to establish good governance in the banking sector, the number of bank directors should be limited, it added.

The BCA, 1991 stipulates that a bank company could appoint as many as two bank directors on its board among the depositors.

However, clause 15(5) of BCA, 1991 did not make this provision mandatory for any bank. But the securities law, a top banker in the BB said, has made it mandatory.

"The provision of independent director on the bank board stipulated in the Securities and Exchange Commission (SEC) law is enough to serve the interest of bank depositors," said the BB in support of its proposed abolition of the provision relating to independent directors.

Furthermore, the amendment to the BCA, 2012 has proposed not to appoint more than one director in a bank at a time from a single family to contain the family influence on banking companies. The present BCA, 1991 has no such provision.

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 considered as bank directors.

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

Senior bankers in the BB said the current provision on tenure of bank directors has a number of flaws that create scopes for enjoying extra facilities by sponsor directors of a bank company.

They said due to the absence of any stringent and specific provision on number of bank directors, many commercial banks even has 30 directors on their respective boards giving rise to indiscipline in the banking sector.

"Most of the proposals included in the proposed act are similar to those of the BCA (Ordinance), 2008, which was not endorsed duly by the current parliament," a top BB official told the FE.

"We have prepared the draft amendment to the Bank Company Act after intensive consultations with stakeholders including bankers, International Monetary Fund (IMF) and the World Bank (WB)," he added.

The Ministry of Finance (MoF) is now busy scrutinising the amendment proposals of the BB, sources said.

Officials in the MoF said they have formed a high-powered committee, headed by former Secretary, Abdul Mubin, to scrutinise the proposed amendments. After the examination is completed, the amendment would be placed before the cabinet and than before the parliament.

"Amending act is a necessity as the IMF has asked to amend the BCA, 1991 to become eligible for proposed $1.0 billion loan under its Extended Credit Facility (ECF)," a high finance ministry official told the FE.

Financial Express/Bangladesh/ 26th March 2012

Ngozi Okonjo-Iweala

Emerging economies must be given a fair shot at leading the institutions at the heart of global finance or they will end up going their own way, a challenger for the top job at the World Bank said.

"The balance of power in the world has shifted and emerging market countries are contributing more and more to global growth -- more than 50 percent -- and they need to be given a voice in running things," Nigerian Finance Minister Ngozi Okonjo-Iweala said. "If you don't, they will lose interest.

Okonjo-Iweala, 57, was nominated on Friday by African power houses Nigeria, South Africa and Angola to lead the poverty-fighting institution when its current president Robert Zoellick steps down in June.

She is going up against Jim Yong Kim, a Korean-American health expert whose name was put forward by US President Barack Obama on Friday, and former Colombian finance minister Jose Antonio Ocampo, who was nominated by Brazil.

It's the first time the post has ever been contested.

Under an informal agreement between the United States and its allies in Europe, Washington has laid claim to the top post at the World Bank since its founding after World War Two, while a European has always led the International Monetary Fund, its sister Bretton Woods institution.

Okonjo-Iweala, a respected economist and diplomat, painted the convention as a vestige of a bygone era.

"We're not asking the US not to compete, we're just asking for a level playing field where candidates can be evaluated on their merits," she said.

A former World Bank managing director known for her colourful African head wraps and dresses, Okonjo-Iweala contrasted her experience with that of Kim, who made his mark battling disease in some of the poorest corners of the world.

She noted that she has hands-on experience running one of Africa's largest economies, as well as a proven track record at the World Bank helping nations in Asia, Africa and the Middle East tap financial markets to fund development.

"I don't have a learning curve because I know how the institution works and I know what needs to be done to make it work better and faster for developing countries," she said.

"I know what its strengths are, its weaknesses and importantly I know what policymakers need. I've actually done it."

US Treasury Secretary Timothy Geithner told Reuters over the weekend that he was confident that Kim, president of Dartmouth College, would win global support for the job. Through his work in fighting HIV/AIDS, tuberculosis and getting health care to the poor, Kim had shown an ability to get things done in tough environments, said Geithner.

Okonjo-Iweala admitted that if the United States, the nation with the largest World Bank voting bloc, and Europe held together, her candidacy would be doomed. But she expressed hope the World Bank's 187 member nations would hold true to their pledge for an open, merit-based process.

"We are not just going into this saying to ourselves we are already defeated," she said, speaking by telephone from Abuja. "We are hoping that the Bretton Woods institutions and their shareholders will keep their word."

"My biggest hope is that this will be a fair contest."

Okonjo-Iweala, who was named by Forbes magazine last year as one of the world's 100 most powerful women, said African leaders would be discussing her nomination with other developing and emerging economies including China, the World Bank's third-largest shareholder.

Her political situation in Nigeria is difficult. She left the World Bank last year to become the lead economic architect in Nigerian President Goodluck Jonathan's cabinet.

A long-time anti-corruption campaigner, she immediately sought to implement politically tough reforms. One of her first moves was to remove fuel subsidies, a step that sparked widespread protests that forced the government to back down in January

Now, her opponents are attacking her over the World Bank nomination, saying it showed disloyalty to her country and its president. Jonathan backed Okonjo-Iweala's nomination after calls from South African President Jacob Zuma and West African nations led by Ivory Coast's president Alassane Outtara.

"Several African leaders called my president and asked for my name to be put forward because they felt they have someone really qualified to do this job," she said, adding that she remains deeply committed to Nigeria.

Last year, Okonjo-Iweala was behind a World Bank plan to create so-called diaspora bonds to raise money from the estimated 23 million Africans living abroad, who hold more than $30 billion in savings. The money would help African countries fund essential services and fight poverty.

She was also instrumental in launching a fund to provide emergency loans to countries hit by a record jump in global food prices in 2008 and was pivotal in creating an infrastructure fund for roads, railways and power grids in developing countries.

In Nigeria, she is credited with securing a deal with the Paris Club of creditor nations in 2005 that wiped out $30 billion in the country's debt. It was the second-largest Paris Club debt relief deal ever.

Okonjo-Iweala said a critical issue for many developing countries is job creation, especially among unemployed youth. High unemployment, corruption and political oppression sparked the "Arab Spring" protests that toppled leaders in such countries as Egypt, Tunisia, Libya and Yemen, she noted.

"If we do not come to terms with this problem, we're not going to have (just) the Arab Spring, we will have many other Springs," she said. "This is a very important challenge that demands us to go beyond the usual poverty eradication and fighting tools to ask ourselves what is needed."

While the World Bank's main mission is to fight poverty, it has increasingly sought ways to help emerging economies that need policy expertise more than money, and Okonjo-Iweala said it had to become more nimble in this task.

"Emerging market countries ... need the Bank to be a provider and intermediator of knowledge from one country to another," she said. "To do that we need to organise the experts from the Bank in a much smarter and faster fashion."

"When you are a policymaker and you have a question facing you, you don't have three weeks to wait for a (World Bank) mission to arrive."

The Daily Star/Bangladesh/ 27th March 2012

Bangladesh spent only 7.3 percent of foreign aid in the first seven months of the current fiscal year, which is the lowest in the last three fiscal years.

The Economic Relations Division (ERD) found a number of reasons behind the slow pace in using foreign aid, including delays in bidding process on the government side.

However, the ERD said both the government agencies and the development partners were responsible for the failure, which will be discussed at a donors' meeting tomorrow.

ERD Senior Secretary Iqbal Mahmud will lead the Bangladesh team at the meeting, while the development partners will be represented by World Bank Country Director Ellen Goldstein.

ERD Additional Secretary Arastoo Khan is likely to make a presentation on “unblocking aid disbursement for better results”.

The ERD has already prepared a report on aid disbursement and the causes of low expenditure.

The average disbursement over the years hovered around 23 percent of the "opening pipeline", according to ERD statistics.

Opening pipeline is the amount of unused foreign aid on the first day of a new fiscal year.

Data from last three years show that the disbursement has gradually been shrinking. In the first seven months of fiscal 2009-10, the amount of disbursement compared to the opening pipeline was 25.18 percent. During the same period in fiscal 2011, the amount was 17.87 percent.

An ERD official said, at the beginning of the current fiscal year, the opening pipeline was nearly $14 billion, which may cross $16 billion at the beginning of the next fiscal year.

Bangladesh receives about 70 percent of its total foreign aid from the WB and the Asian Development Bank (ADB).

In the first seven months of the current fiscal year, disbursement to Bangladesh from the WB and ADB is 33.33 percent and 41.84 percent less compared to the same period last year.

The ERD official said they have reviewed a number of problematic projects and identified the causes for less disbursement.

The major reason on the government side is delay in the bidding process. Despite repeated warnings, the ministries failed to reduce the delay.

Another reason is lodging complaints by unsuccessful bidders against the bidding process, which causes a significant delay, the official said.

During the scrutiny of the tenders, unhappy bidders sometimes raise complaints, which are not baseless often, he added.

Other causes identified on the government side are faulty project documents, unrealistic requisition for fund allocation, delay in land acquisition and a lack of manpower for the projects.

On the development partners' side, one of the major causes is the delayed appointment of consultants.

The ERD official said the development partners do not finance any project without appointing a consultant. In many cases, much delay occurs in appointing consultants.

Another reason is delay in giving approval to contracts. The ERD official said the development partners take much time in scrutiny to detect corruption in a project which causes delay.

Another high official of the ERD said, in the tomorrow's meeting they will try to take some concrete decisions to speed up disbursement of foreign aid. Discussion will take place on holding special tripartite review meeting on problematic projects.

The representatives of the development partner concerned and the line ministry will jointly review the projects having problems to quickly solve those.

The bigger foreign-aid projects will be closely monitored round the year. If necessary, a team of the ERD will go for field level inspection.

The Daily Star/Bangladesh/ 27th March 2012

Operation and lending activities of Rajshahi Krishi Unnayan Bank (RAKUB) should be more transparent and accountable for restoring
farmers-friendly banking services in the greater interest of boosting agricultural production in the country’s northwest region. Besides, the bank should render its services for increasing the qualitative and quantitative credit flow towards the potential fields in the region for bolstering its agro-based economy for the sake of sustainable livelihood development of the farmers.
Speakers made these observations while addressing the installation ceremony of newly elected Collective Bargaining Agency (CBA) of the bank at Rajshahi Medical College Auditorium in Rajshahi on Saturday.
Mayor of Rajshahi AHM Khairuzzaman Liton addressed the session as the chief guest laid emphasis on intensifying the bank’s activities to supplement the government’s effort to expand social safety net and ensure poverty reduction and food security.
“We have no way but to boost up agriculture production for more income generation and to reduce dependence on import,” he said, adding that the RAKUB has a vital role to play in this regard.
Besides, he viewed that most of the agricultural sectors and its sub-sectors especially poultry, fishery and livestock should be enriched through bringing the sectors under quality credit support. “You should render yours services for increasing the qualitative and quantitative credit flow towards the potential fields for bolstering the region’s agro-based economy for the sake of sustainable livelihood development of the farmers,” he reminded.
He said pro-farmers banking in the specialised bank must be ensured for cherished development of the region after the best use of its existing natural resources.
The meeting discussed on how to make the bank’s operational and commercial activities more dynamic through strengthening the credit support for both farm and non-farm prospective fields.
To this end, the services must be reached to the doorsteps of the farmers to help them derive benefits from the services side by side with making the services free from all sorts of corruption and irregularities.
Chairman of the bank Prof Dr Shah Newaz Ali, Managing Director Pradip Qumar Dutta, Directors--Khandaker Jahangir Kabir Rana and Dr Rustam Ali Ahmed and Chairman of BMDA Advocate Nurul Islam Thandu also spoke on the occasion as special guests with CBA President Sheikh Towfique Elahi in the chair.

  News: The Independent/ Bangladesh/ 27th Mar 2012

FIC Bank has donated Tk 500,000 to the Biswa Shahitya Kendra for purchasing books.

A chaque was handed over to President and Chief Executive of the Kendra Prof. Abdullah Abu Sayeed at a simple ceremony at the Kendra at Bangla Motor on Tuesday.

Directors of the bank Dr. Mohammad Ali Khan, Managing Director Mohammad Abdullah and Deputy Managing Director (Business) Mati-ul Hasan attended the function.

Member of the Board of Trustee of the Kendra Mahbub Jamil and senior officials from both sides were present.

The Daily Sun/Bangladesh/ 27th March 2012