Bangladesh Bank Governor Dr Atiur Rahman yesterday came down heavily on senior BB officials for not taking stern actions against errant banks and NBFIs, and stressed on strict monitoring to ensure financial stability in the sector.

“I see most of you are young. Have you lost your teeth? How many banks have you fined so far or tracked frauds there?” the Governor aksked BB officials.

He was speaking at the inaugural session of a workshop on “Contemporary Challenges in the Banking Sector and Supervisory Stance” at city’s Bangladesh Bank Training Academy (BBTA) auditorium in the morning.

“You shouldn’t have any hesitation in taking tough actions against any irregularities in the banking sector while you are being continuously assured of full support from the top level,” he said, adding that any professional problems regarding this will be looked into. “You don’t need to be too much humane to those who are violating the laws,” he told the officials.

Department of Off-Site Supervision of BB and BBTA jointly organised the meeting with concerned officials to formulate a timely supervisory framework.

News: Daily Sun/ Bangladesh/ 18-Sep-11

The Bangladesh Bank board on Wednesday approved fresh guidelines for setting up new banking companies, agreeing in principle to issue licences to new banks, sources in the know said.
The new banking guidelines will work in tandem with the Banking Companies Act 1991.  However, the BB board meet, which was presided over by governor Atiru Rahman, did not specify how many new banking licences would be issued.
 “It is a long process. The central bank cannot promptly decide on the issue, as applicants must meet several formalities conforming to the new guideline and the BCA,” a senior BB official said.
 “After signing the meeting minutes on Thursday, the central bank will float advertisements seeking applications for new banking licences,” he further said adding, the central will thoroughly scrutiny every application received and then take a decision on them.
 The new guidelines incorporate some additional duties for new banks, including mandatory expenditure of 10 per cent net profit for corporate social responsibility (CSR) activities, he pointed out.
 According to the BCA 1991, a new bank shall not have a paid-up capital of less than Tk. 400 crore, he added.
 The new guidelines say a director or advisor to any banking company, other than the proposed bank, shall not be a director of the proposed bank. The number of directors on the board shall be restricted to 13. The chief executive officer (CEO) of the proposed bank shall have at least 15 years of experience in the banking profession.
 The ratio of urban to rural bank branch has to be 1:1, or as per instructions issued by the BB from time to time. A new bank has to channel at least five per cent of its total lending into the agricultural sector, or as per instructions issued by the central bank. Issuing licences to new banks has been a much-debated point ever since finance minister AMA Muhith took a stand in favour of it. Incidentally,  the chairman and the other members of the BB board felt there was no need to rush the issue.

News: The Independenr/ Bangladesh/ 15-Sep-11

Bangladesh Bank should exercise its authority to ensure merchant banks do not pose any operational risk to their parent companies through their involvement in the stockmarket, said a top IMF official yesterday.

“Banks have exposure to the capital market. It has to be ensured that Bangladesh Bank is doing its part to properly manage the exposure,” said David Cowen, chief of the International Monetary Fund's delegation to Bangladesh.

“We will encourage Bangladesh Bank to truly develop a supervisory framework with the Securities and Exchange Commission.”

On merchant banks' roles as subsidiaries of banks, Cowen said they are perhaps falling outside the regulatory reach of either Bangladesh Bank or SEC.

“Bangladesh Bank does have the authority and it should exercise that authority to ensure these institutions do not pose any operational risk to their parent banks.”

“We do see there is a need for considerable capacity building at SEC. We are looking more closely in this area.”

The comments came at a roundtable discussion on “Medium-Term Macroeconomic Outlook and Reform Priorities” at the Policy Research Institute of Bangladesh (PRI) in the city.

On the much-talked-about public private partnership, Cowen said: “PPP is not going to be a panacea. The experience about the issue is mixed around the world.”

“I think it does have a place in Bangladesh. But PPP is going to face a number of the same challenges like those seeking to bring foreign direct investment into the country face.”

“We are encouraged by the fact that the government has set up a PPP cell. It will however take sometime before it makes any meaningful contribution to infrastructure development in the country.”

Cowen also said the government should pay attention to the quality of the spending. “Our new managing director says IMF should not only talk about growth. When you talk about inclusive growth you cannot avoid talking about quality of spending.”

Former Finance Secretary Siddiqur Rahman Chowdhury said the government should revisit quality of spending of its annual develop programme. “It is not just about spending; it is poor implementation.”

“There is a pressure on a line ministry to have the money released and spend. It is wasteful expenditure,” he said.

PRI Executive Director Ahsan H Mansur said he is really concerned about the government finance this year. “Despite the very high level of bank borrowing last year, the domestic financing was within the planned target of the budget.”

He said in the last two months last year a lot of money was injected into the economy. “We will be seeing that down the line this time around.”

“What is going to happen this year is a matter of concern because there is very serious lack of action on the subsidy front. We will see a huge government borrowing if something is not done very quickly.”

Mansur said if fiscal policies are not corrected without further delay the country will face trouble in macroeconomic front in the coming days. “There are serious challenges ahead they need to be addressed now. Or things will really go bad.”

Former finance minister M Syeduzzaman said: “Although monetary policies seem to be loose I think they are moving in the right direction.”

He said the balance of payment is in the negative territory for the first time for a decade, which warrants sincere attention as it would put pressure on exchange rates.

Former caretaker government finance adviser AB Mirza Azizul Islam said there is a debate whether the country would allow private sector borrowing from international sources amid credit crunch. “Recently, Bangladesh Bank has moved in that direction to some extent. It is a policy issue that needs to be addressed.”

Former Bangladesh Bank governor Salehuddin Ahmed also spoke.

News: The Daily Star/ Bangladesh/ 15-Sep-11

Bangladesh Bank managing committee yesterday decided to honour 10 experienced officials for their outstanding contributions to the banking sector for the years 2009-2010.

Bangladesh Bank Governor Dr Atiur Rahman will distribute gold medals and certificates to the officials for recognition to their outstanding role to respective fields.

Kamal Hossain, deputy director, money laundering protection division, played an important role in enhancing Banglade- sh’s rating in six recommendations out of 10 at a survey on Mutual Evaluation Report by conducted by Asia Pacific Group (APG) on Money Laundering. Among others, Khandker Millat, Md Rafiqul Islam, Md Osman Gani, Munir Ahmed Chowdhury, Md Julkar Nayen, Hosne Ara Shikha, Md Shahriar Sddiqui, Nurul Alam, and Md Aminur Ahman Chowdhury were nominated for the awards.

News: Daily Sun/ Bangladesh/ 15-Sep-11

National Bank Training Institute of National Bank Limited has arranged a foundation training course for its probationary officers in the city recently.

Neaz Ahmed, managing director and CEO of the bank addressed the inaugural function as chief, said a press release. A total of 27 probationary officers participated at the training programme.

News: Daily Sun/ Bangladesh/ 15-Sep-11