The agriculture sector contributes more than 20 percent to Bangladesh's gross domestic product.

Bangladesh Bank (BB) yesterday said banks that fail to disburse targeted farm loans would be penalised.

Bankers also demand an impact assessment study against their farm loans to the economy.

“We will cut 3 percent of undisbursed farm loans from the respective banks' accounts,” BB Governor Dr Atiur Rahman told top bankers at the launch of the Agriculture and Rural Credit Policy and Programme for fiscal 2012-13 at the bank's office.

If a bank fails to disburse Tk 20 crore out of its annual target of Tk 100 crore, the BB will cut Tk 60 lakh (Tk 3 lakh per Tk 1 crore) from the bank's accounts with it. The BB introduced the measure last year and 13 banks failed to disburse their targeted loans.

These banks requested the governor to reconsider the punishment and vowed not to repeat the failure.

Rejecting the bankers' requests, Atiur said: “We should maintain it… After all, non-compliance has a cost.”

The central bank has set the farm loan disbursement target for all the 47 banks operating in Bangladesh at Tk 14,130 crore for fiscal 2012-13, up by only 2.39 percent from the previous year.

All the banks collectively disbursed Tk 13,137 crore or 95 percent of the target at Tk 13,800 crore in farm loans by June of fiscal 2011-2012, according to the BB.

“The punishment measure of keeping 3 percent of non-disbursed loans will be maintained to keep pressure on the banks,” said SK Sur Chowdhury, deputy governor, who briefed the media after the meeting.

Chowdhury said this year's loan disbursement target was set in line with the GDP (gross domestic product) growth rate. He said the meeting also discussed priority and new areas for farm loans.

He said private and foreign commercial banks that were reluctant to given farm loans a few years ago have performed relatively better in 2011-12 than the state-owned banks.

“Many private banks disbursed 100 percent of their targeted loans,” he said. Foreign banks are also coming forward despite limited branch network, he added.

The farm sector plays a key role in Bangladesh's economic development as it contributes more than 20 percent of GDP. On an average, the country's GDP growth rate has been 6.35 percent in the past three years.

After Rahman became the governor of the central bank in May 2009, he kept pressing the banks to go to rural areas with funds. Rahman also introduced several refinance schemes, including cultivation of spices and lending to sharecroppers, to encourage the banks in this regard.

“Agriculture plays a significant role in creating domestic demand. A good harvest also helps contain food inflation,” said Rahman.

The governor urged the private banks to open accounts for the poor people.

Responding to the central bank's measures, the bankers said they want to see how their loans impact the rural people.

“We have requested the central bank to carry out an impact assessment study on our farm loans in the economy,” said Nurul Amin, managing director of NCC Bank and chairman of Association of Bankers Bangladesh.

The Daily Star/Bangladesh/ 25th July 2012

National Bank Limited recently took over Worldlink Payment Foundation SA, Greece to facilitate Bangladeshi expatriates send their hard earned money in a faster, safer and secured way.

With this, Worldlink has become NBL’s subsidiary exchange company, said a press release.

Parveen Haque Sikder, Director and Chairperson of Executive Committee of the Board of National Bank Limited was present at the function as chief guest.

Lisa Fatema Haque, Director and Theudorus Venetanasos, Executive Director of Worldlink Payment Foundation SA, Greece, and Neaz Ahmed, Managing Director and CEO, Shamsul Huda Khan, Deputy Managing Director and Divisional Head and Mir Mosharref Hossain, Senior Assistant Vice President of National Bank Limited were present at the ceremony.

The function was also attended by the leaders of Bangladeshi community in Greece.

The Daily Sun/Bangladesh/ 23th July 2012

Golam Hafiz Ahmed, Additional Managing Director of NCC Bank, inaugurates an ATM booth at Kandirpar in Comilla.

NCC Bank Limited opened a new ATM booth at Kandirpar in Comilla recently.

Golam Hafiz Ahmed, Additional Managing Director of the Bank inaugurated the booth as chief guest, said a press release Sunday.

Among others, Mohabbat Khan, Deputy Managing Director, Md. Omar Faruque Bhuiyan, Executive Vice President and Manager of Comilla branch Farhad Akhter Md. Shahriyar were present.

The Daily Sun/Bangladesh/ 23th July 2012

LONDON: A scandal erupting at Europe's biggest bank HSBC has added to concerns over the state of Britain's financial sector amid the Barclays rate-rigging affair and as the industry faces a major shake- up.

HSBC last week apologised and its head of compliance David Bagley resigned after US lawmakers accused the London-based bank of failing to apply anti-laundering rules, benefiting Iran, terrorists and drug dealers.

The HSBC affair follows hot on the heels of the Libor interest rate rigging scandal that has brought down top executives at Britain's Barclays bank-most notably its chief executive Bob Diamond and chairman Marcus Agius.

Regulators are reportedly investigating HSBC, as well as Credit Agricole, Deutsche Bank and Societe Generale, over alleged manipulation of the Libor rate after Barclays was recently fined 290 million over the affair.

Britain's financial regulator the Financial Services Authority (FSA) has said its Libor probe is looking at seven groups, which are not only British institutions.

Bank of England governor Mervyn King has meanwhile proposed that central bank governors and regulators discuss Libor reform at their upcoming meeting in Basel, Switzerland, on September 9.

The Daily Sun/Bangladesh/ 23th July 2012

Finance Minister AMA Muhith, seen at a seminar on ‘Depositors’ Safety Fund’ at CIRDAP auditorium in Dhaka.

Finance Minister AMA Muhith Sunday underscored wider insurance coverage for the bank depositors in order to increase savings by the people.

Currently, an insurance of Tk 100,000 exists in the country for the bank depositors.

“The amount is still too insignificant to protect a depositor when the bank becomes unable to pay its debts,” said finance minister at a seminar on ‘Depositors’ Safety Fund’ at CIRDAP auditorium in the city.

He said it is high time to increase insurance coverage to a bigger amount.

Microcredit Regulatory Authority (MRA) organised the function.

MRA has undertaken an initiative to raise a Tk 300 million depositors’ safety fund for micro-finance institutions (MFIs).

The borrower-cum-depositors of 517 registered MFIs across the country can benefit from the fund.

“Though in late, it’s a good initiative,” AMA Muhith said.

Bangladesh Bank Governor Dr Atiur Rahman said the MFIs have total deposit of Tk 300 billion at present.

They are operating under MRA, Grameen Bank, BRAC and PKSF.

“We must make it sure that the depositors’ money is secured,” Dr Rahman said.

MRA has proposed a provision of providing maximum Tk 3,500 to a MFI depositor as insurance coverage.

A recent MRA study revealed that over 80 percent of the MFI depositors keep a deposit of around Tk 3,500.

Of the fund, Tk 250 million will come from the MFIs’ premium and investments while the rest Tk 50 million will be collected from the government sectors.

“We need a ‘seed fund’ for a start now. Gradually, we will be able to broaden the fund to all MFIs’ deposits, if the government helps us,” said Khandakar Mujharul Haque, the executive vice-chairman of MRA.

The Daily Sun/Bangladesh/ 23th July 2012