National Bank Limited (NBL) has arranged a five-week training programme for its newly recruited officers in the city. Neaz Ahmed, Ma- naging director and chief executive officer of the bank, formally inaugurated the training programme titled ‘Foundation Course for Probationary Officers’ at the bank’s training institute in the city’s New Eskaton area, said a press release.The training institute’s principal Md Majibur Rahman and senior faculty member Zahir Uddin Mohd Babar, among others, were present on the occasion. A total of 28 probationary officers are participating in the training course.

News: Daily Sun/ Bangladesh/ Aug-15-2011

Rejaul Karim Byron

The credit-deposit ratio (CDR) of commercial banks came down to a safe limit in June, as the surplus inter-bank deposits were included in total deposits.

The banks increased deposits and reduced credit, trimming the CDR further, said an official of the Bangladesh Bank.

Commercial banks are not allowed to invest more than 85 percent of their deposits, while Islamic banks cannot exceed the 90 percent limit.

On June 30, the CDR of 43 local and foreign commercial banks fell to 79.68 percent from more than 85 percent in December last year. In many banks, the ratio was above 100 percent.

The banks' overall deposits increased by 11.22 percent on June 30, compared to six months ago. Credit fell 6.20 percent.

The banks included Tk 7,605 crore in the total deposits in June, according to the central bank.

The banks increased deposits aggressively, and every bank cut lending consciously, which pared down the CDR rate, said K Mahmood Sattar, president of the Association of Bankers Bangladesh.

He said a few banks could reap the benefit of inter-bank deposits but most of the banks' CDR fell as they reduced credit.

The BB set a deadline for the banks to bring down the CDR to the safe limit by June to restore credit discipline. The bank owners met with Prime Minister Sheikh Hasina with an appeal to relax the rules.

The central bank relaxed the rules and said the banks can calculate inter-bank deposits in their total deposits.

The CDR by state commercial banks was 72.9 percent on June 30. Those banks included Tk 4,580 crore inter-bank surplus deposits in their total deposits.

The CDR of the private commercial banks was 82.92 percent and they included Tk 2,992 crore in the inter-bank deposits, while that of foreign commercial banks was 76.96 percent and they added only Tk 32 crore in the inter-bank deposits.

Of the 30 private commercial banks, only nine included inter-bank deposits of over Tk 100 crore in their CDR.

Analysts held the banks' excessive investment in the stockmarket as one of the causes, which pushed share prices to an unsustainable high. The central bank had since the first half of 2009 warned banks against parking excessive money in stocks.

Some officials of the Securities and Exchange Commission, stockmarket leaders and influential businessmen piled pressure on the BB to let the banks pour money into the stockmarket.

A total of 47 banks made operating profits of Tk 16,486 crore in 2010, with Tk 2,504 crore coming from the stockmarket, according to the central bank statistics.

The BB discourages the banks from any risky investment in an effort to cut credit growth, the high official of the central bank told The Daily Star yesterday.

As part of its overall monetary policy, the central bank takes steps to bring down credit growth to control soaring inflation, the official said.

News: The Daily Star/ Bangladesh/ Aug-14-2011

Dhaka Bank Limited recently signed a participation agreement with Bangladesh Bank under refinance scheme for setting up agro-processing rural industries in the country.

The main purpose of the refinance agreement is to boost country’s agro-processing industries through disbursement of SME loans at easy terms and conditions in the rural areas. Managing director of Dhaka Bank Limited Knondker Fazle Rashid and general manager of SMESPD, Bangladesh Bank Sukomol Sinha Chowdhury signed the deal on behalf of their respective organisations while Chowdhury Mohidul Hoque, executive director of Bangladesh Bank was the chief guest on the occasion.

Neaz Mohammad Khan, DMD (RM), Sirajul Hoque, EVP of Dhaka Bank and Ali Ahmed, joint director, Bangladesh Bank together with other officials from DBL and the central bank were present. The agreement will add new dimension to Dhaka Bank’s financing strength under SME.

News: Daily Sun/ Bangladesh/ Aug-14-2011

The banking division of the finance ministry has rejected the Bangladesh Bank (BB) recommendations on non-banking financial institutions (NBFIs) in the proposed act alleging that the central bank has not taken opinion from the stockholders.

“There is no sign of discussion with the stockholders of NBFIs in the proposed “Financial Institutions Act 2011,” said a senior official of the finance ministry.

He also said that the BB authority has not prepared the proposed financial institutions act with 35 provisions.

The banking division last week sent a letter to the governor of BB Atiur Rahman to revise the proposed Financial Institution Act 2011.

As per the letter, the banking division asked the BB authority to prepare the draft of the Financial Institutions Act 2011 with the consent of the stockholders of the non-banking financial institu-tions.

Earlier, the BB authority sent the proposal seeking opinion from the finance minister AMA Muhith.

According to the draft, the scope of business of NBFIs is going to be widened to enable those to contribute more to the economy and provide better services to clients. The range of the proposed “Financial Institutions Act 2011” is being expanded by including development finance, credit card, factoring and forfeiting under the law.

The proposed act imposes various restrictions regarding tenure and number of directors of the NBFIs like that in banks.

The government has taken an initiative to enact a new law replacing the 18-year-old Financial Institutions Act 1993.

According to the proposed act, in case of development financing, the NBFIs would be able to invest in new industries, agriculture and trade or any type of financial initiative. The NBFIs can get involved in factoring and forfeiting business also.

Factoring is a financial transaction whereby a business house sells its accounts receivable (such as invoices) to a third party (called a factor) at a discount in exchange for immediate money with which it continues business.

It is different from forfeiting only in the sense that forfeiting is a transaction-based operation involving exporters in which the firm sells one of its transactions, while factoring is a financial transaction that involves the sale of any portion of the firm's receivables.

As per the draft, no person, company or members of a same family can hold more than 10 percent of shares of any NBFIs either alone or collectively.

News: Daily Sun/ Bangladesh/ Aug-14-2011

Bangladesh Bank is set to release banknotes of five denominations with the portrait of Bangabandhu Sheikh Mujibur Rahman on Thursday.

The notes of Tk 2, Tk 5, Tk 100, Tk 500 and Tk 1,000 will be issued initially from the central bank's Motijheel office counter in Dhaka, the regulator said in a statement yesterday.

The banknotes will later be released from other offices of the central bank and all commercial banks.

Alongside the new notes, the banknotes and metal coins now in circulation will also remain valid, according to the statement.

The Tk 2 note will bear the signature of Finance Secretary Mohammad Tareq, while the other bank notes will carry the signature of BB Governor Atiur Rahman.

All the notes have been printed on a more durable paper mixed with synthetic fibre. The portrait of Bangabandhu has been printed on the front side of the notes while the National Memorial has been printed in light colours in the background.

The Tk 2 note has the picture of the Central Shaheed Minar, Tk 5 note has the picture of Kusumba Mosque in Naogaon, Tk 100 note has Star Mosque, Tk 500 note contain the scenery of agricultural farming. The Tk 1,000 note contains the image of Jatiya Sangsad.

Except for the Tk 2 note, Bangladesh Bank is written on the backside of all notes.

The Tk 500 and Tk 1,000 notes have seven lines in special ink on the right side, which can be easily felt on touch. The Tk 500 note has four small dots for the benefit of the visually impaired people while the Tk 1,000 note has five small dots.

News: The Daily Star/ Bangladesh/ Aug-02-2011