Banks of Bangladesh will introduce an electronic fund transfer system on February 24 to speed up transactions and payment, the central bank said yesterday. The system will be introduced under the central bank's automated clearinghouse project. With the automation, the corporate entities will be able to make faster payment of salaries to employees and make refund warrants in the case of initial public offerings and company dividends.

It will also take remittance and various government allowances such as those for freedom fighters, widows and elderly, easily to the beneficiaries. People will also be able to use the system to pay utility bills quickly. The decision was taken at a meeting of chief executives of all commercial banks at the central bank premises. Governor Atiur Rahman presided over the meeting.

Bangladesh Bank launched the automated system for settlement of paper cheques on October 7 last year. The meeting also decided to settle high-value cheques -- Tk 5 lakh or more -- from January 31 at 1,200 bank branches in Dhaka region. Besides, all cheques in Sylhet region will come under automated clearing system from January 20 and the Chittagong region from February 3. BB chief urged the banks to take technical preparations for the sake of modernising the payment system. He underscored cooperation among banks.

Rahman directed state-run banks to take special steps quickly to this effect to survive in the competition.

News: The Daily Star Bangladesh/05 Jan 2011

Grameen Bank has been appointed by a Chittagong-based packaging company as their managing agent in a deal, dating back 20 years, giving the poor borrowers' bank a job having nothing to do with its core business. Muhammad Yunus signed the deal for Grameen Bank, granting the microlending entity all rights-just ownership aside-to run and manage the packaging business, reports bdnews24.com. His father, Muhammad Dula Meah Saodagor, represented Packages Corporation as its managing director, in an apparent case of conflict of interest. He along with his sons owned the company incorporated in 1961 as Pakistan Packages Corporation.

The family still owns the company, and Yunus still sits on the board as a shareholder director, according to documents obtained by the news agency. Signed on June 17 1990, the contract was initially valid for 15 years. Three of Yunus' brothers-Muhammad Ibrahim, Muhammad Azam and Muhammad Jahangir-signed as witnesses to the contract between the father and the son who would secure a Nobel peace prize 16 years later. In 1997, the management of the packaging business was handed over to Grameen Shamogree, a sister concern of Grameen Bank.

"The handover," Grameen Bank deputy managing director Nurjahan Begum said in response to bdnews24.com queries sent to Yunus, was executed "with consent of the owners" of Packages Corporation. The Grameen Bank managing director has evaded the news agency's requests for a face-to-face interview. Meanwhile, Prof Muzaffer Ahmed, an economist and former chairman of the trustee board of Transparency International, Bangladesh, has sharply reacted over the Grameen Bank controversy in selecting beneficiaries.

"I do not consider it an act of any moral standards," said Prof Ahmad.

"Nor was it legal," he said.

"Grameen Bank was mandated to dispense micro loans for poor people. Getting into such a contract with a family business was not morally right," said Prof Ahmad.

Mr Muzaffer, also chief of Sujan, a citizens' platform for justice, asked, "Why didn't Bangladesh Bank take any action then? Why didn't those who ran the government at the time take any steps?"

News Source: Financial Express/05 Jan 2011

Al-Arafah Islami Bank Limited (AIBL) opened its 78th branch at Panchdona in Narsingdi recently, said a press release. Member of Al-Arafah Islami Bank Foundation and Director of AIBL Capital Market Services Ltd Engr Khandoker Mesbahuddin Ahmed inaugurated the branch as the chief guest.

AIBL Managing Director Ekramul Hoque delivered the welcome address. Among others, vice presidents of the bank Engr Md Habib Ullah and Abed Ahmed Khan and First Assistant Vice President Jalal Ahmed were present at the inaugural ceremony. Directors of the bank Harun-ar-Rashid Khan and Sabrina Farah Ahmed, Founder Chairman AZM Shamsul Alam, president of Narsingdi Chamber of Commerce and Industry AK Fazlul Haque and social worker Doctor Khandoker Mohiuddin Ahmed also addressed the inaugural function.

Local elite, businessmen and clients of the bank attended the function. Manager of the branch Shahidul Islam thanked the audience, the release added.

News Source: Financial Express/05 Jan 2011

Islami Bank Bangladesh Ltd (IBBL) collected deposit of Tk 291.31 billion until December 31, 2010 with a rise of Tk 47.66 billion in a year from January 1 making 20 percent growth. Total investment of the bank reached Tk 291.46 billion during the same period increasing Tk 52.46 billion with 22 per cent growth compared to that of the previous year.

IBBL handled foreign exchange business of Tk 609.33 billion with an increase of Tk 146.96 billion in a year taking the growth rate to 32 per cent including import of Tk 246.33 billion, export of Tk 148.43 billion and remittance of Tk 214.58 billion enhancing Tk 85.10 billion in import, Tk 42.00 billion in export and Tk 19.86 billion in remittance respectively against the same period of the last year. The disclosure was made at the bank's year-end meeting at IBBL head office in the city recently, according to a press release.

IBBL deputy managing directors Mohd Shamsul Haque, Md Habibur Rahman, Md Setaur Rahman and Md Nurul Islam, among other top executives, attended the meeting with Managing Director Mohammad Abdul Mannan in the chair.

News: Financial Express/05 Jan 2011

Professor Mohammed Farashuddin, Former governor of Bangladesh Bank, has called for imposing a strict limitation on scheduled banks' investment in Initial Public Offerings (IPOs) only and bringing them out of pre-IPO investment as it is creating only asset inflation in the economy. He was speaking at tenth Nurul Matin Memorial Lecture on 'Ethics in Banking', organized by Bangladesh Institute of Bank Management (BIBM) in a city hotel Monday.

"Banking Ethics has been put in the cold storage by commercial banks in diverting good part of their advances in non-IPO shares and making abnormal margin in a chaotic stock market", Dr. Farashuddin said, adding that such practice bars stock market's capacity of capital or equity formation. "Limiting commercial banks' involvement in IPOs and ensuring the limited exposure is channeled through properly formed and supervised subsidiaries should be in order along with regular surveillance on Small and Medium Enterprise (SME) fund to stop its diversion in consumer goods and non-IPO investment", he suggested.

Dr. Farashuddin also asked for scrutinising SME fund's performance not only in terms of providing working capital, but also from the aspect of creating newer enterprises. He also emphasised on further strengthening of Bangladesh Bank's supervisory capacity as well as additional operational independence and asked the government's attention for separate compensation package for central bank officials. "BB should be relieved from the duty of 'auxiliary assistance in socio-economic development' which will enable it to concentrate more on monetary policy and bank supervision objectives", Dr. Farashuddin said.

The speaker brought the issues of depositor's representation in board of directors, double-digit spread of interest, political intervention in sanctioning and waiving loan, excessive loan taken by equity-holder directors, commercial bank's BASEL-II compliance in his speech. Dr. Farashuddin also suggested for forming Asset Management Company for dealing with Non-performing Assets (NPAs), offloading nationalised commercial bank's share and exposing them in competition for efficiency, BB's involvement in assessment of scheduled bank's chief executives, limiting spread of interest to 6-7 per cent, and finalising merger law and enforcing it simultaneously with capital adequacy requirement. Concurring with the speaker's suggestion, BB governor Dr. Atiur Rahman, chair of the function, said, "BB is pursuing equitable and inclusive growth by engaging private banks in socially desirable lending and creating ground for tomorrow's profitable business".

Former governor A.K.N Ahmed was present as the chief guest and suggested to ensure ethics in policy making level in banks and keeping banks' growth in line with society's growth. BIBM director general Dr. Toufic Ahmad Choudhury welcomed all. Bankers, eminent economists, representatives from civil society and BB top officials were also present.

News Source: Financial Express/05 Jan 2011