Bangladesh Bank on Wednesday removed Nobel Peace Prize winner Dr Muhammad Yunus from the post of managing director of Grameen Bank.

A BB letter to the Grameen Bank’s board said it did not take approval from the authorities when it reappointed Yunus the bank’s MD on 12 March 1999 for an indefinite period, which violated the Grameen Bank Ordinance 1983.

Yunus was already 60, the government-fixed age limit for retirement.

The decision of Yunus’ removal came following criticism he has been facing at home and abroad after a Norwegian television aired a documentary exposing that Yunus diverted funds meant for poor people to another venture, Grameen Kalyan.

BB General Manager KM Abdul Wadud in the letter said appointment of the MD to the pioneering microcredit agency requires the Grameen board to obtain the central bank’s prior approval, which it failed to do.

“There shall be a Managing Director of the Bank who shall be appointed by the Board with the prior approval of the Bangladesh Bank,” stipulates the provision of the Grameen Bank Ordinance 1983.

Receiving the letter, Grameen Bank Chairman Khondaker Muzammel Huq called a meeting of the board on coming Sunday. He said the regulator’s decision was conveyed to Yunus.

The BB also directed the Grameen Bank chairman to take necessary steps regarding Yunus’ removal.

“At the meeting we will inform other members of the board about the Bangladesh Bank directives,” he said.

Meanwhile, the Grameen information and mass media coordinator in a press release said the removal of Yunus is a legal issue and Grameen Bank is consulting with its lawyer.

“Grameen Bank has consistently been abiding by the law,” said the release signed by Grameen’s General Manager Jannat-e-Quanine.

It claimed that the Grameen authority followed proper procedures to appointment Yunus as its MD.

Officials of Grameen Bank said Dr Yunus might file a writ petition against the central bank’s decision.

Bangladesh Bank had sent a letter to the finance ministry, saying Yunus should be removed from Grameen Bank he had founded in 1983.

At Grameen Bank’s last board meeting, the chairman read out the letter, which said Yunus no longer could stay as the chief executive of the bank because its retirement age is 60.

A Bangladesh Bank official said the finance ministry could not remove Yunus because the govern-ment holds 25 percent stakes in the micro-lender. The move comes as Yunus faces intense pressure from the government to quit his post.

In early February, Finance Minister AMA Muhith asked the Nobel laureate to go.

The government also formed a review committee to look into the matter.

Prime Minister Skeikh Hasina accused Yunus, who briefly set up his own political party during the military-backed caretaker government in 2007, of using “tricks” to avoid taxes and “sucking blood of the poor” through his microcredit organisation.

Grameen Bank is widely regarded as the pioneer of micro-finance, which consists of lending small amounts to the poor at rates slightly higher than other banks without collateral. The system, praised for reaching those who are excluded from normal commercial credit, has come under criticism in recent years for encouraging debt and taking excessive profits.

News: Daily Sun/ Bangladesh/ Mar-03-2011

The authority of Islami Bank Bangladesh Limited (IBBL) has rejected a media report on financing 8 per cent of the bank's dividend to militant organisations in the country.

Earlier on February 28, several electronic media broadcast the news quoting State Minister for Home Affairs Shamsul Haque Tuku.

Several print media also published the news on Tuesday.

The bank was never involved in any sorts of militant financing, said a press release signed by Muhammad Sakhawatur Rahman, senior vice president of the bank. It claimed that the bank's books of accounts and annual reports are open to all.

News: Daily Sun/ Bangladesh/ Mar-03-2011

Bangladesh Bank has selected Jamuna Bank as the best primary dealer (PD) of Bangladesh for its outstanding performance in the government securities market during the last quarter (October-December) and paid the bank Tk 2.85 crore as underwritting commission. The central bank announced this recognition through a letter to the bank authorities recently noting that the underwriting commission money given by the central bank has been transferred to the bank’s account last week.
Jamuna Bank, a leading private commercial bank has been playing vital role in treasury operations of the country’s banking arena. The bank is eqquipped with a very sophosticated treasury rooms and a number of talent young dealers who contributed nearly 40 per cent of its profits which was recorded Tk 254 crore in 2010, compared to Tk 202 crore in 2009.
Terming the central bank recognition as an ‘encouragement toward further improvement’, Mirza Elias Uddin Ahmed, Senior Executive Vice President and Head of Treasury of Jamuna Bank Ltd said this is the first recognition for the primary dealers in Bangladesh who are trying to develop a sound, efficient and vibrant secondary market for government securities.
Currently 12 banks and 02 financial institutions have obtained primary dealership and have formed association named as primary dealers Bangladesh limited (PDBL). The other PDs are Sonali Bank, Janata Bank, Agrani Bank, Jamuna Bank, NCC Bank, Prime Bank, National Bank, Uttara Bank, Southeast Bank, Mutual Trust Bank, AB Bank, Mercantile Bank, Lanka Bangla Finance and Industrial Promotion and Development Corporation(IPDC).
Bangladesh Bank has selected NCC Bank as the second best primary dealer in Bangladesh while other banks and FIs failed to meet the requirements during the period.
“Today’s treasury environment is more challenging than ever. But Jamuna Bank could overcome the difficulties due to prudent guidence of our managing director who is also expert in crucial fund management, said Elias Uddin Ahmed, who is also the former chairman of PDBL Technical Committee and Secretary General of  Bangladesh Money Market Dealers’ Association (BAMDA).
“If the central bank extends its policy supports to us, we would very soon develop a secondary market for government securities and bonds which would excelerate the development activities of the country”, he said.
Jamuna Bank started its journey in 2001 with a paid up capital of Tk 40 crore and obtained primary dealership in 2003. Excellent management performance, prudent credit policy and higher returns of quality assets helped the bank to stand on a sound financial footing. In 2009, the bank declared 23.50 per cent dividend to its shareholders while its capital shot up to Tk 162.19 crore.
Primary dealers are market maker of government securities and able to make business deals with the Bangladesh Bank. They purchase the majority of treasuries at auction and then redistribute them to their clients, creating the initial market in the process. Such dealers must meet certain liquidity and quality requirements.
Primary dealer systems are present in many countries including India, Malaysia, Canada, France, Italy, Spain, the United Kingdom, and the United States. Many former employees of primary dealers work at the Treasury, because of their expertise in the government debt markets.

News: the independent/ Bangladesh/ Mar-03-2011

Commercial Banks of the country have agreed to charge maximum 12 per cent for importing food grains.
Currently the charge is 13-14 per cent. The banks took the decision Wednesday morning following a request by Prime Minister Sheikh Hasina.
The chairmen of the banks, who are members of Bangladesh Association of Banks BAB) called on the Prime Minister at her office.
PM’s Press Secretary Abul Kalam Azad told reporters that the Prime Minister underscored the need for securing sufficient food stock in the country so that the people do not face any crisis.
She put emphasis on relaxing interest rate on the loan of food grains import for building necessary stock through import.
The chairmen of the banks instantly agreed to reduce the interest rate for short-term loan on food grains import. The banks would provide loans for three to four months period.
BAB president Nazrul Islam Mazumder, Mercantile Bank Chairman Abdul Jalil and Salman F Rahman, among others, were present.            

News: the independent/ Bangladesh/ Mar-03-2011

Rejaul Karim Byron and Sohel Parvez

Bank owners yesterday urged the central bank to relax its various rules in a bid to increase their participation in the stockmarket, which has been passing through a tumultuous period for two months.

They also demanded the government keep representatives of bankers in the central bank's policymaking body.

"It's not our prime demand. We mainly want a reduction in the cash reserve ratio (CRR) as almost all the banks are facing a liquidity crunch due to over-investment," Nazrul Islam Mazumder, president of Bangladesh Association of Banks (BAB), told The Daily Star.

The BAB, a body of private commercial banks, placed a 14-point proposal at a meeting with Prime Minister Sheikh Hasina at her office. Finance Minister AMA Muhith and Prime Minister's Economic Affairs Adviser Mashiur Rahman attended the meeting. Mercantile Bank Chairman Abdul Jalil and Salman F Rahman, among others, were also present.

Hasina emphasised relaxing interest rates on loans for food grains imports to build necessary stocks, reports news agency UNB, quoting PM's Press Secretary Abul Kalam Azad.

In the proposal to the prime minister, BAB also urged the central bank to increase the credit-deposit ratios for banks by 5 percentage points. Now the ratios are -- 85 percent and 90 percent of deposits, for commercial banks and for banks engaged in Islamic banking respectively.

The association demanded relaxation of rules for banks to double their exposure to the stockmarket to 20 percent of their liability from 10 percent now. It also suggested allowing merchant banks to invest 10 times of their capital, which is 5 times now.

BAB also suggested calculating banks' investments in the stockmarket based on their purchase prices, instead of market prices measured presently by Bangladesh Bank.

“We want to increase investments in the stockmarket,” he said, adding that banks would be able to buy more shares if these rules were relaxed.

The BAB placed the proposal to Hasina at a time when banks are claiming a liquidity shortage due to over-investment in sectors, such as stockmarket, and tight monetary policies by Bangladesh Bank.

The central bank had earlier increased CRR as part of its move to mop up excess liquidity from the money market and discourage investments in unproductive sectors.

The BAB wants the government to waive the 13-percent cap on lending for one year, and keep the requirement to maintain 9 percent capital against risk-weighted assets unchanged in 2011.

The BAB president said these are not demands rather recommendations. “The banking sector is in trouble, that's why we have placed some suggestions to help banks recover from the difficult circumstances," said Mazumder.

News: The Daily Star/ Bangladesh/ Mar-03-2011