Bangladesh Bank yesterday asked all banks not to offer any interest rate on deposits beyond the declared rate.

Some banks offered depositors interest rates beyond the declared ones, the central bank said in a letter to banks. The BB asked the banks to forward the interest rate on deposits every week in order for BB to monitor.

The interest rate on deposit and lending can be changed only once a month, according to the letter.

The Daily Star/Bangladesh/ 1st March 2012

Bangladesh Petroleum Corporation (BPC) owes state-owned banks more than Tk 17,000 crore as of January 12, making the banks reluctant to open further letters of credit meant for fuel import.

The banks have already conveyed their stance on LC opening at a high level meeting with Finance Minister AMA Muhith on Tuesday night.

Bangladesh Bank Governor Atiur Rahman, officials of the four banks, and other senior government officials were present at the meeting.

Officials of the banks said the BPC's overdues to the banks have gradually been rising in the recent times. As a result, the banks are facing a liquidity dearth.

On December 31, 2010, the state-run BPC owed the banks Tk 8,780 crore, and the amount more than doubled in just one year.

A finance ministry official who attended the meeting said they have requested the finance ministry to arrange the BPC's overdues in cash, not in bond.

Earlier the BPC made its payment in bond but it was not helpful in solving their liquidity crisis.

However, the finance minister told the banks that the Finance Division is working on their accounts and will take a step soon for repayment.

An official of the energy ministry said the BPC's losses were three times higher last fiscal year than the previous year.

The amount of losses stood at Tk 7,208 crore last fiscal year due to a big difference between BPC's purchase price of fuel and selling price in the local market, he added.

The official also said fuel prices were hiked several times in the current fiscal year, but the amount of losses did not decrease due to a huge depreciation of the taka against the dollar.

To offset the losses, fuel prices need to be increased further, he said.

The meeting also discussed the issue of taking credit for the BPC from a foreign lender, Islamic Trade Finance Corporation (ITFC).

The ITFC has decided to raise the credit limit for the BPC to $2.5 billion from this year.

Of the amount, $500 million will be taken for this year through special arrangement, and the amount will have to be repaid in nine months.

In line with the new conditions of the ITFC, it will now open LCs worth $500 million.

Usually the state banks open the LCs under the ITFC credit limit.

At the meeting, the state banks were also told that they will have to repay $500 million credit. However, the banks set three conditions for paying the loan.

The conditions are -- the BPC will have to pay the amount in local currency; the BPC will inform the banks about the repayment date at least 15 days ahead of the payment; and if the banks have a dearth of foreign currency at that time, the central bank will supply the foreign exchange.

The Daily Star/Bangladesh/ 1st March 2012

A plaque of DBBL financial support was unveiled by Diabetic Association's President Prof AK Azad Khan, its vice president and veteran jurist Barrister Rafique-ul Huq and Dutch-Bangla Bank Foundation's Chairman M Shahabuddin Ahmed Tuesday.

Country's first 'Organ Transplant Centre', set up at Ibrahim Cardiac Hospital and Research Institute, has been more equipped and modernised with the financial support of Dutch-Bangla Bank Ltd (DBBL).

The Bank provided Tk 93.6 million, under its Corporate Social Responsibility (CSR) activities, to Diabetic Association of Bangladesh to modernise the centre by setting up a cath lab, operation theatres and beds for organ transplant surgery.

In this regard, a plaque of the financial support was unveiled Tuesday by the diabetic association's President Prof AK Azad Khan, its vice president and veteran jurist Barrister Rafique-ul Huq and the Dutch-Bangla Bank Foundation's Chairman M Shahabuddin Ahmed at a ceremony held at the hospital premises.

Presided over by Chairman of Board of Management of Ibrahim Cardiac Hospital Prof Mahmudur Rahman, the function was addressed, among others, by Mr Azad, Mr Huq, Chairman of Executive Committee of the DBBL Board Sayem Ahmed, DBBL Managing Director KS Tabrez, Secretary General of the diabetic association Mohammad Saif Uddin and Chief Executive Officer and senior consultant of the hospital Dr MA Rashid.

The function was also attended by a good number of senior officials and staffs of the hospital.

Since inception of the organ transplant centre, Bangladeshi surgeons of BIRDEM in the Ibrahim Cardiac Hospital successfully conducted two liver transplant surgeries for the first time in the country on June 3, 2010 and August 6, 2011.

Mr Huq highly praised the Bank's management for the donation in the health and education sectors.

He expected that other Banks and corporate bodies would come forward with their benevolent hands to develop the heath services in the country.

Mr Azad Khan appreciated DBBL for its humanitarian and welfare activities and termed its support as a unique example in fulfilling the medical needs of the people thereby glorifying the noble venture to modernise the health sector of the country.

Thanking the management of Dutch-Bangla Bank and the foundation for their contribution in health sector, he said that a great achievement of the country's health sector was that a significant number of patients would get treatment of such transplantation at home.

Mr Sayem Ahmed praised the authorities of the Diabetic Association for their continuous endeavor in setting up an independent Organ Transplant Centre.

He also thanked them for approaching Dutch-Bangla Bank in partnering with this expansion program of Ibrahim Cardiac Hospital & Research Institute.

Financial Express/Bangladesh/ 29th Feb 2012

The central bank has issued show-cause notices on three commercial banks for their alleged violation of announced interest rates on deposit, officials said Tuesday.

The Bangladesh Bank (BB) has also asked the managing directors and chief executive officers of these banks to explain within a week their positions and why disciplinary action will not be taken against them under the existing Bank Company Act.

The BB's inspection teams are now investigating into allegations of offering higher interest rates on deposits contrary to announcement by three other private commercial banks (PCBs).

"We'll take the next course of action in line with the existing Bank Company Act after receiving replies from the CEOs of the banks within the stipulated timeframe," an executive director of the BB told the FE.

The central bank issued the notice to the MDs of the three commercial banks on the basis of its probe report.

The central bank has conducted the inspections acting on a tip off, the BB executive director said without elaborating.

Currently, four teams are probing into allegations of offering higher interest rates on deposit by the PCBs through violating their announced interest rates.

The commercial banks earlier this month announced their interest rates on deposit maximum at 12.50 per cent in line with the Association of Bankers, Bangladesh (ABB) decision.

"It has been reported that a few banks offered higher interest rates on deposit ranging between 13 per cent and 15 per cent to attract depositors from both public and private sectors to their banks from other ones," another BB official said.

He also said the central bank has advised all concerned to act rationally in fixing both deposit and lending rates to avoid any 'unhealthy' competition in the country's financial sector.

On February 7 last, the ABB called upon its member-banks to re-fix the deposit at a maximum of 12.50 per cent and lending rate at a maximum of 15.50 per cent.

The ABB's decision followed the withdrawal of capping of interest rates by the central bank in early January, 2012. Before that, the central bank had enforced on April 19, 2009, the capping of lending rate at 13 per cent in five specific areas to help mitigate the impact of the then global economic meltdown.

A deposit brokers' class has already been created in the financial sector to deal with cash money from depositors to the commercial banks and non-banking financial institutions (NBFIs), according to some senior bankers.

The deposit brokers' have negotiated with the banks and NBFIs about the deposit interest rate keeping a substantial commission from them, they added.

They also raised a question about higher rates on deposit particularly of the government funds, saying that who are getting benefit from the higher interest rates?

Financial Express/Bangladesh/ 29th Feb 2012

The Securities and Exchange Commission (SEC) has given a green signal to the proposal of Bank Asia to issue subordinated zero coupon bond worth Tk 110 crore.

The raised fund will be used to expand its investment in various sectors and consolidate its capital base in line with the Basel-II framework, said the SEC in a statement on Tuesday.

The six-year tenure bond will be non-listed, redeemable and non-convertible with 13 per cent maturity yield. Each unit price of the bond will be Tk 5,000.

A zero-coupon bond is a bond bought at a price lower than its face value, with the face value repaid at the time of maturity. It does not make periodic interest payments. When the bond reaches maturity, its investor receives its par (or face) value. Infrastructure Development Finance Company is the issue manager, which will be amortised. The institutions can be subscribed to the bonds through private placement.

The SEC also approved the amendment of merchant banker and portfolio manager rules 1996 and capital issue rules 1987 after taking public opinions, said the statement.

Under the amendment of merchant banker and portfolio manager rules, paid-up capital of a full-fledged merchant bank will be Tk 25 crore, instead of the existing Tk 10 crore.

The paid-up capital of a merchant bank with only an underwriting licence will be Tk 2.50 crore, instead of the existing Tk 1 crore, while the capital of a merchant bank with only an issue management licence will be Tk 12.50 crore, instead of the existing Tk 5 crore.

Under the amendment of capital issue rules, the regulator will now conduct 'special audits' into the listed companies' financial statements in a bid to ensure transparency and accountability in their financial management.

If an issuer fails to get its financial statement audited and submitted to the SEC and stock exchanges within the stipulated time, the commission may appoint a firm to audit the issuer's financial reports.

Cost of acquisitions and constructions, valuation, including revaluation and physical existence and the title of the fixed assets will be checked during the period of special audit.

In line with the guidelines, the audit firms will also re-audit the authenticity of liabilities of a company, including direct confirmation for major amounts -- which is more than 5 percent of the total liabilities.

The Independent/Bangladesh/ 29th Feb 2012