BRAC Bank handed over on the spot loan to small and medium enterprises (SME) entrepreneurs at a conference of SME entrepreneurs and bankers in Barisal recently, says a press release. Md Abul Quasem, deputy governor of Bangladesh Bank, inaugurated the ‘SME entrepreneurs and bankers conference’ organised by SME Foundation and Bangladesh Bank at Barisal Club.

He also handed over loan sanction documents of BRAC Bank to the local entrepreneurs.The entrepreneurs receiving loan sanction documents from BRAC Bank were –Sikder Enterprise, Lamia Clothes and Fima Fashion and Tailors. BRAC Bank disbursed Tk 27.50 lakh as SME loan to these entrepreneurs.  

Advocate Shawkat Hossain Hiron, mayor, Barisal City Corporation, Syed Rezwanul Kabir, managing director of SME Foundation, Sukamal Sinha Choudhury, general manager, SME and special programmes department, Bangladesh Bank, were also present.

Abdur Rahman, head of SME Banking, BRAC Bank, senior officials of different Banks and local entrepreneurs attended the programme.

BRAC Bank gives priority to lending in small and medium enterprises in rural areas. Within 10 years of operation, the Bank has disbursed more than Tk 18,000 crore loan to over 3.76 lakh SME entrepreneurs in the country realizing million dreams and creating huge employment opportunities in the country.

The Daily Independent/Bangladesh/ 4th March 2012

Bangladesh Krishi Bank (BKB) has geared up its loan disbursement drive in order to boost agricultural production in the country.

The Bank disbursed loan of Tk 37.31 billion during last eight months of the current fiscal year which is 62 percent against the annual target.

During the period, the Bank recovered loans amounting to Tk 28.34 billion, 54 percent more than the target and Tk 4.89 billion more than that in the corresponding period of last fiscal. It is mentionable that Krishi Bank has taken all steps to fulfill the target giving emphasis on disbursing loans in crop, fisheries, livestock and SME with other sector.

The Daily Sun/Bangladesh/ 4th March 2012

SA Chowdhury, CEO and managing director, Muhammad Asaduzzaman, DGM of Bangladesh Commerce Bank Limited and Md Sirajul Haque, principal, Md Eskandar Miah, DGM of Financial Intelligence Unit of Bangladesh Bank, seen at the inaugural function of an anti-money laundering workshop in the city recently.

Bangladesh Commerce Bank Limited (BCBL) recently arranged a workshop on “Prevention of Money Laundering and Terrorist Financing” for its officials.

SA Chowdhury, CEO and managing director of the Bank, formally inaugurated the workshop at the training institute of the Bank, said a press release.

The Daily Sun/Bangladesh/ 4th March 2012

The crisis at Kingfisher Airlines escalated further with the Service Tax department here freezing as many as 40 bank accounts of the already crippled airline for non-payment of dues to the tune of Rs 400 million.

“Over Thursday and Friday, we froze 40 bank accounts of Kingfisher Airlines. They failed to meet the February 29 deadline to make the payments. The airline owes Rs 400 million to the department,” Service Tax Commissioner S.K. Solanki told PTI on Saturday.

This is the fourth time in the past four months that the service tax depart has frozen its bank accounts. Late last month, the income tax department had also frozen the bank accounts for not depositing the TDS.

Asked if the airline had communicated with the department, he said, “Not yet as today being a Saturday. We hope to hear from them on Monday.”

The move follows as the airline failed to make Rs 200 million payment by February 29, as promised. However, Kingfisher spokesperson could not be immediately reached for comments.

The airline was given time till February 29 to clear part payment and March 31 to pay off all the arrears to the tune of Rs 700 million.

Since the account was frozen first time in early November last, the airline had paid only a little over Rs 300 million, Mr. Solanki said.

It had paid Rs 100 million in December, after its accounts were frozen in the early that month; Rs 200 million in January and they had promised to pay Rs 200 million in February.

Chairman of the Central Board of Excise and Customs, under which the service tax department falls, S.K. Goel had on February 22 said the airline had to clear this indirect tax dues of Rs 700 million before March 31.

“Kingfisher has an outstanding service tax dues of Rs 700 million and the company had promised to pay in instalments,” Mr. Goel had said in New Delhi.

The beleaguered airline has been in a financial mess and is unable to meet its obligations, including paying salaries to its employees, for months on end now.

Following continuous non-payment of salaries, late last week a section of its engineers went on a ‘tools-down’ protest for a day. This came even as airline chairman Vijay Mallya in an internal communication towards the middle of last week had promised to clear all the salary arrears at the earliest saying he had made arrangements for that.

As crisis deepened and salaries did not come by, its employees left the crippled organisation en-masse, especially the most critical pilots. Over 60 pilots have left so far in the past few months alone.

As pilots left and the cash flow turned dry, the airline massively reduced its flights beginning mid-October. From 400 flights a day, it is operating only 170 flights now, using just 28 of its 64 fleet.

The airline, which never made a profit since its inception in May 2005, reported a net loss of Rs 4.4426 billion in the December quarter, due to high fuel costs and weaker rupee, up from Rs 2.5369 billion a year ago.

The airline suffered a loss of Rs 10.27 billion in 2010-11 and has a debt of Rs 70.5708 billion in its books apart from over Rs 40 billion of accumulated losses and a restructured long-term loan of around Rs 70 billion.

The Daily Sun/Bangladesh/ 4th March 2012

The central bank has proposed extensive amendments to the banking law, including changes to the definition of default loan and lenders' involvement in the capital market, to ensure better governance in the sector.

A finance ministry official said the central bank sent the 75-page proposal to the Banking Division early this month.

In line with the proposal, Bangladesh Bank (BB) will have to have the right to make public any information regarding loan defaulters in any form.

The existing law does not explicitly allow this disclosure.

The official said the government will form a committee led by a former secretary or additional secretary to scrutinise the BB proposal.

The committee will also include representatives from different ministries and the business community.

The initiative to amend the Banking Companies Act was taken during the immediate past tenure of the BNP government, but it could not be realised due to opposition by various influential quarters.

Even during the immediate past caretaker government, a law was promulgated through an ordinance but after the present government assumed power the ordinance did not get passage in parliament.

Former deputy governor of the central bank Nazrul Huda was actively involved with the formulation of the draft law when it was first introduced in 1991. He was also closely related with the amendment process.

Huda said the world economic system went through a lot of changes in recent times. In light of that, the amendments to the Banking Companies Act are essential, he said.

As per international standard, Bangladesh's banking sector requires to include the new amendments to combat risk. The amendments will also ensure good governance in the banks, he added.

As per the existing rules, if any loan remains overdue for six months, it is identified as default loan. The proposal said the BB will have the powers to redefine the word “default” as and when needed.

Also the definition of borrower will be widened to include guarantor in case the principal borrower defaults. The amended law will give highest emphasis on capital maintenance.

According to the new law, if any bank fails to maintain a minimum paid-up capital and statutory reserve for a long period, it may be closed down.

In case of banking, if any bank fails to comply with the international best practices, heavy fines, restrictions on new deposits, credits or branches will be imposed.

A new clause has also been proposed prohibiting commercial banks to engage in brokerage house, portfolio manager, and merchant banking business, or businesses that require licences from Securities and Exchange Commission.

The amended law will provide that two independent directors will replace depositor-directors. The number of directors in the board will be a maximum of 13.

If any family holds more than 5 percent share, it will have two directors and if the amount of share a family holds is less than 5 percent it will get one director, according to the proposed amendments.

If a director of a bank fails to repay loans taken from any bank or financial institution, he or she will be barred from selling the shares he or she holds until the defaulted loan is paid off. Legal challenges against any actions taken under this clause can only be lodged in a relatively higher court.

In case of subsidiary companies, specific legal provision has been suggested so that commercial banks can form subsidiaries to engage in stock brokerage or merchant banking business with prior approval of the central bank.

The definition of share-holding has been streamlined to avoid ambiguities. Several caps have been introduced to limit the exposure of banks in the capital market, including overall portfolio exposure limit of 25 percent of the banks' capital. At present the exposure limit is 10 percent of the liabilities.

The Daily Star/Bangladesh/ 4th March 2012