[🇧🇩] Banking System in Bangladesh

[Saif]

Nagad Digital Bank becomes country’s first scheduled digital bank

Bangladesh Bank gave digital bank licence to Nagad today

www.thedailystar.net

Nagad Digital Bank becomes country's first scheduled digital bank
Bangladesh Bank gave digital bank licence to Nagad today

Nagad Digital Bank PLC has become the first company to receive a digital bank licence given by the Bangladesh Bank (BB).

The BB today listed Nagad Digital as a scheduled bank, according to a notice of the banking watchdog.

"We have been advocating for a digital bank to transform Bangladesh into a smart economy through cashless transactions," Tanvir A Mishuk, founder and CEO of Nagad Ltd, said after receiving the licence at a programme at the Bangladesh Bank headquarters in Dhaka.

The board of directors of the regulator gave the final approval for Nagad on May 28 after it met the criteria mentioned in the letter of intent (LoI) handed over to it in October last year.

Nagad Digital Bank has issued 12.5 crore shares among seven sponsors. Of them, three companies -- Osiris Capital Partners (USA), Blue Haven Ventures (USA) and Finclusion Ventures Pte Ltd (Singapore) -- hold more than 10 percent shares.

The remaining four shareholders are: Zen FinTech (USA), Trupay Technologies, Farhan Karim Khan and Fintechtual Holdings Ltd, the only local shareholder.

Meanwhile in another notice, the banking regulator gave go-ahead to Osiris Capital, Blue Haven and Finclusion to hold more shares than the directors' allowed limit quoted in the country's existing banking laws.

Under the present Bank Company Act, a person, organisation, company, or member of the same family cannot hold more than 10 percent share directly or indirectly in a company.

However, the permission for Nagad came after the finance ministry extended the exemption under a provision of the Bank Company Act 1991 on March 27.​

 

[Saif]

Surge in state-owned bank bad loans warrants special attention

A SURGE in non-performing loans in state-run banks, already plagued by non-performing loans of about 25 per cent of the total outstanding loans, shows the failure of the authorities to go tough on loan defaulters. This also shows the futility of concessions that the authorities have earlier...

www.newagebd.net

Surge in state-owned bank bad loans warrants special attention
07 June, 2024, 00:00

A SURGE in non-performing loans in state-run banks, already plagued by non-performing loans of about 25 per cent of the total outstanding loans, shows the failure of the authorities to go tough on loan defaulters. This also shows the futility of concessions that the authorities have earlier given to loan defaulters. Non-performing loans in the six banks soared, as Bangladesh Bank figures show, by Tk 6,805 crore in January–March. Defaulted loans in the banks surged to Tk 85,870 crore in March, up from Tk 79,065 crore in December 2023 and Tk 60,642 crore in March 2023. Defaulted loans in the banks account for almost 60 per cent of the total default loans in the banking sector. The banks are Sonali Bank, Janata Bank, Agrani Bank, Rupali Bank, Bangladesh Development Bank and BASIC Bank. The defaulted loans of Janata Bank skyrocketed to a record Tk 30,495 crore in March from Tk 25,009 crore in December 2023, accounting for 31 per cent of its total loan disbursement. Non-performing loans at Agrani Bank account for 28 per cent of its total disbursement while bad loans at Sonali and Rupali account for 14.84 per cent and 21 per cent of their respective loan disbursement. Non-performing loans at BASIC and Bangladesh Development Bank account for a staggering 63 per cent and 33.97 per cent of their total respective loan disbursement.

To read the rest of the news, please click on the link above.​

 

[Saif]

Islamic banks' deposits, investments on wane

A crisis of confidence among clients following massive lending malpractices lands Islamic banking in Bangladesh in a quandary with liquidity crunch bedeviling their operations, according to official disclosure. From deposit to investment, and even in case of wage earners' remittance, the shariah-

thefinancialexpress.com.bd

Islamic banks' deposits, investments on wane
JUBAIR HASAN
Published :
Jun 11, 2024 00:54
Updated :
Jun 11, 2024 00:54

A crisis of confidence among clients following massive lending malpractices lands Islamic banking in Bangladesh in a quandary with liquidity crunch bedeviling their operations, according to official disclosure.

From deposit to investment, and even in case of wage earners' remittance, the shariah-based banking operations keep losing their share in recent months, which becomes a matter of concern particularly to a section of unconventional bankers.

According to Islamic banking-related statistics of Bangladesh Bank, the country's central bank, Islamic banking held 23.86 per cent of the entire deposit portfolio with the country's banking system, as of December 2023.

But, on a slide, the share came down to 23.56 per cent in January 2024 and dropped further down to 23.44 per cent in March.

In terms of investment, such unconventional banking accounted for 24.81 per cent of the total investment made through the banking system up to last December. But their share rose to 28.92 per cent in January. Thereafter, a downturn came: the shariah-based banks saw their share drop to 24.86 per cent until March 2024.

Such massive fall of share was also observed in remittance earning, considered one of the main strengths of such banking operations. The Islamic banking bagged 47.92 per cent of the country's overall remittance earnings through the formal channel. In the following month was there a turnaround with the share having increased to 51.57 per cent.

But, since then, the share has shrunk continuously to reach 41.46 per cent and 37.95 per cent in February and March respectively, according to the central bank's data.

Seeking anonymity, a BB official said there were a number of media reports regarding massive-scale loan-related irregularities in these unconventional banks which might shatter people's confidence.

"These could be a reason behind such fall in market share," the central banker said.

Managing director of an Islamic bank, who preferred not to be quoted by name, said savers started diverting their funds into the conventional banks despite their various steps to convince them.

"As a matter of fact, the growth of deposits in such banks slowed down in recent times, which is probably reflected in the data. The contribution of the shariah-based banks in terms of receiving remittance was huge even a few months ago but it has dropped remarkably in recent times.

"And it is a matter of serious concerns for us. But we're trying our best to improve the situation," he added.

A week ago, American credit-rating agency Fitch said liquidity shortages were still affecting Bangladesh's Islamic banking sector, which is more vulnerable than the conventional banks.

It said though the Islamic-banking market share is sizable in Bangladesh, it has been stagnant over the past two years.

The agency attributed the rot partly to the flight of deposits, governance issues and comparatively lax prudential requirements for Islamic banks.

However, some Islamic banks have been perfirming well in an adverse environment.​

 

[Saif]

Bank sector needs overhaul to rescue economy

Economist Ahsan H Mansur on Wednesday said that the country’s economy would collapse if a strategy for restructuring the ailing banking sector was not taken straightaway...

www.newagebd.net

Bank sector needs overhaul to rescue economy
Staff Correspondent 12 June, 2024, 22:26

Metropolitan Chamber of Commerce and Industry, Dhaka president Kamran T Ahmed welcomes economic affairs adviser to the prime minister Mashiur Rahman at a post-budget discussion organised jointly by the MCCI and the Policy Research Institute at the MCCI auditorium in the capital Dhaka on Wednesday. Economist Ahsan H Mansur and PRI chairman Zaidi Sattar, among others, were present. | Press release

Economist Ahsan H Mansur on Wednesday said that the country's economy would collapse if a strategy for restructuring the ailing banking sector was not taken straightaway.

He made the remark at a post-budget discussion organised jointly by the Metropolitan Chamber of Commerce and Industry, Dhaka and the Policy Research Institute at the MCCI auditorium in the capital Dhaka.

In the keynote, Mansur, also the executive director of the PRI, said that the financial system in Bangladesh was shrinking and the proposed budget was silent about structural reforms that the government needed to initiate in the financial sector with particular focus on the banking sector.

He said that officially the amount of non-performing loans in the banking sector increased further to Tk 1.82 trillion, but the real figure of NPL could be as high as Tk 4 trillion or 22 per cent of the total assets of the banking system.

'Some banks have NPL as high as 60 to 70 per cent of their total assets, making those banks de facto bankrupt. This cannot continue for long,' Ahsan said, adding that merger of weaker banks with stronger ones appeared to have failed due to lack of political support and deficiencies in designing the framework for consolidation.

He urged the government not to bail out bankrupt banks.

Mentioning that the Bangladesh Bank could help reduce high inflation rates by taking a few key actions, including adopting a strong monetary policy, avoiding injecting liquidity in the form of liquidity support to commercial banks and refraining from printing extra money to cover the government›s budget deficit, he said that inflation should begin to decrease within six to nine months if these steps were strictly followed.

'Taking cue from the international experience, we can expect that the inflation rate will come down to 6-5 per cent if similar developments happen in Bangladesh,' he said.

Zaidi Sattar, chairman of the PRI, discussed the 'Made in Bangladesh' initiative in the budget.

He mentioned that if policies supporting 'Made in Bangladesh' focused on selling products globally, the country›s economic growth could increase by 7-8 per cent, potentially reaching 10 per cent.

Kamran T Ahmed, president of the MCCI, said that to implement the budget properly, reformation of tax policies, automation of the tax system, reducing system losses in the overall tax collection, capacity enhancement of tax administration and adequate services delivery to the public were necessary.

'We also believe in having an interim evaluation of the budget after every three months,' he said

Mashiur Rahman, economic affairs adviser to the prime minister, said that focus should be given on increasing productivity, as well as on diversification of products and markets.

He also said, 'The government should take steps with significant investments to create more employment in the country.'

Habibullah N Karim, senior vice-president of the MCCI, among others, was present in the discussion.​

 

[Saif]

Six state banks struggle to recover written-off debts

Six state-owned commercial banks altogether recovered a nominal amount of their written-off loans against the government targets during the first quarter of the current calendar year, show Bangladesh Bank data, as a former central bank governor has accused bankers of not being serious enough abou

thefinancialexpress.com.bd

Six state banks struggle to recover written-off debts
REZAUL KARIM
Published :
Jun 15, 2024 00:06
Updated :
Jun 15, 2024 00:06

Six state-owned commercial banks altogether recovered a nominal amount of their written-off loans against the government targets during the first quarter of the current calendar year, show Bangladesh Bank data, as a former central bank governor has accused bankers of not being serious enough about loan recovery.

The six state-owned commercial banks -- all fully or majority-owned by the government -- are Sonali Bank, Bangladesh Development Bank Limited (BDBL), Basic Bank, Agrani Bank, Janata Bank and Rupali Bank.

Sonali Bank, BDBL, Basic Bank, Agrani Bank and Janata Bank only recovered 0.8 per cent, 0.15 per cent, 1.89 per cent, 3.50 per cent, and 4.57 per cent of their targets, respectively, in the January-March quarter. Rupali Bank, however, collected 53.86 per cent of its target during the first three months.

"Bankers at state-owned banks appear reluctant and lack seriousness in collecting written-off loans," said former Bangladesh Bank governor Salehuddin Ahmed. "They receive salaries and allowances regularly regardless of the deteriorating financial health of these banks."

Mr Ahmed added that borrowers from state-run banks are often influential and many fail to repay their loans. This leads to a hefty portion of disbursed loans becoming classified (non-performing) and eventually written off after a set period.

He suggested strengthening loan recovery efforts, including complying with central bank directives on the matter.

The total amount of written-off loans by state-owned commercial banks was Tk 181.17 billion in March 2024, down slightly from Tk 182.46 billion in March 2023.

The breakdown of written-off loans by bank in December 2023 was as follows: Sonali Bank over Tk 66.11 billion; Janata Bank Tk 32.42 billion; Agrani Bank Tk 39.41 billion; Rupali Bank Tk 5.67 billion; Bangladesh Development Bank Tk 13.27 billion; and Basic Bank Tk 24 billion.


Already burdened with heavy NPLs

The six banks are struggling under the weight of a large volume of non-performing loans (NPLs) -- an earlier stage of loan write-off.

Central bank data from March showed that the six state-owned commercial banks had Tk 858.70 billion in NPLs. These loans can eventually turn into bad debts, leading to a further rise in overall NPLs.

Sources in banking circles indicate that the NPL situation in the sector has been worsening for the past one and a half decades.

Banks are required to set aside provisions for a certain percentage of these loans on their balance sheets. The central bank scrutinises written-off loans quarterly.

If someone borrows money from a bank and can't pay it back, the bank considers the loan a bad debt because getting their money back seems unlikely. This is called a written-off loan. It is like removing the loan from the bank's "good stuff" list and marking it as a loss.

There are stages before a loan gets written-off. If the borrower misses payments for a while, the loan becomes non-performing. This is like a warning sign for the bank. They might try to work with the borrower to get them back on track, but if things do not improve, the loan could eventually get written-off.

The more non-performing loans a bank has, the more likely they are to write some of them off.

"While written-off loans can improve the short-term picture of a bank's balance sheet, they reduce capital base and profits in the long run. These loans also have a negative impact on a bank's business and investment activities," said a high-ranking official from the Bangladesh Bank.

To read the rest of the news, please click on the link above.​

 

[Saif]

Banks’ surging investments in bills, bonds shrink loanable funds

Banks in Bangladesh are increasing their investments in Treasury bills and bonds to net higher profits from the rising interest rate, a development that has squeezed the availability of loans for borrowers.

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Banks' surging investments in bills, bonds shrink loanable funds

Banks in Bangladesh are increasing their investments in Treasury bills and bonds to net higher profits from the rising interest rate, a development that has squeezed the availability of loans for borrowers.

This has forced a section of banks to continuously secure liquidity support from the Bangladesh Bank to meet their day-to-day fund requirements.

The government has used the bills and bonds to borrow Tk 78,117 crore from banks between July 1 and May 29 this fiscal year, up 337 percent from Tk 17,883 crore during the same period a year ago, central bank data BB showed.

The escalated borrowing through bills and bonds came after the central bank stopped lending to the government since such injection of funds into the economy fuels inflation, which has stayed above 9 percent for nearly two years and shows no signs of cooling.

The government plans to borrow Tk 137,500 crore from banks to finance the deficit in the proposed budget for 2024-25.

Banks are also more interested in investing in bills and bonds than lending to the private sector because of the rising interest rate. Government instruments are also secure whereas loans can turn sour.

"Therefore, banks are keener about Treasury bills and bonds and a major portion of their surplus liquidity has been invested in the tools," a central banker said.

The interest rate of Treasury bills now ranges from 11.60 percent to 12 percent whereas it was 6.75 percent to 7.75 percent in June last year. The interest rate of bonds recently jumped to a 15-year high of 12.75 percent.

Bills have short-term maturities while bonds have long maturities.

Owing to the higher investments by banks in government securities, excess liquidity, which includes cash and cash-equivalent assets, including Treasury bills and bonds, has risen in the banking system.

Excess liquidity stood at Tk 1,76,205 crore at the end of April, up 5 percent from Tk 1,66,825 crore a month earlier, central bank data showed.

A senior banker said although bills and bonds are considered liquid assets, they can't be turned into cash instantly because the secondary market is yet to become vibrant. Thus, the volume of surplus liquidity reported by the BB is not the actual liquid asset situation.

"This is evidenced by the liquidity stress confronting several banks."

Banks have collectively obtained around Tk 20,000 crore from the central bank through repo (repurchase agreement) and assured liquidity support tools in the past six months.

Mirza Elias Uddin Ahmed, managing director of Jamuna Bank, said although the surplus liquidity has increased, many banks are still taking liquidity support from the central bank.

"There is a liquidity mismatch in the banking sector. Some Islamic banks have been experiencing a liquidity crisis for more than one year. This has impacted the overall banking sector."

Another factor that has made banks cautious when it comes to lending is unbridled bad loans: default loans hit an all-time high of Tk 182,295 crore in March.

The demand for fresh loans has also declined as there has been a slowdown in the economy for the past two years owing to the lingering impacts of the coronavirus pandemic and the Russia-Ukraine war.

Recently, borrowers have adopted a go-slow approach in expanding their footprint amid the climbing interest rate.

Customers enjoyed a maximum 9 percent lending rate between April 2020 and June last year after the central bank introduced the ceiling to keep the cost of funds lower with a view to spurring industrialisation. However, amid lingering inflation, it was forced to scrap the cap in July last year, and on May 8, it even left the interest rate in the hands of the market.

To read the rest of the news, please click on the link above.​

 

[Saif]

Push-button mobile banking outshining traditional bank operations

Push-button mobile banking is flourishing fast as 20.80 per cent of Bangladesh's people now hold such device-based bank accounts with unbanked population increasingly coming under its network, latest official findings show. As of last April, the volume of transactions through all types of MF

thefinancialexpress.com.bd

Push-button mobile banking outshining traditional bank operations
Published :
Jun 20, 2024 00:06
Updated :
Jun 20, 2024 00:06

Push-button mobile banking is flourishing fast as 20.80 per cent of Bangladesh's people now hold such device-based bank accounts with unbanked population increasingly coming under its network, latest official findings show.

As of last April, the volume of transactions through all types of MFS ballooned to Tk 1.44 trillion.

Mobile-banking transactions can be done by using the mobile phone or from agent points. This is now much popular as Tk 25,000 can be transacted a day by an accountholder or Tk 150,000 a month.

In rural areas, the rate of mobile accountholders is 21.82 per cent while 18.75 per cent in urban areas.

Such picture comes clear from a latest survey conducted by Bangladesh Bureau of Statistics or BBS under the headline 'Socioeconomic and Demographic Survey 2023'. Population aged 10 years and above in the country with account in financial services came under such headcount.

They mainly open account with leading mobile-phone financial services --- bKash, Nagad, Rocket, Upay etc --with the rate being 28.33 per cent for male and 13.43 per cent for female.

The national statistical bureau says if a person has an account in a bank or non-bank financial institution, either individually or jointly, with any institution where financial transactions occur, that person is regarded as an accountholder in that financial institution.

Some 18.09 per cent have accounts with multiple financial institutions-with 26.02 per cent and 10.33 per cent for male and female respectively.

It is stated that 47.43 per cent of people in the country have financial accounts in banks, financial institutions, MFS, insurance, microcredit institutions, post offices, capital markets (BO or beneficiary owner account) and National Savings Directorate.

However some 52.57 per cent of the population does not have any account in financial institution.

In banks, some 5.85 per cent of the population has accounts while 0.09 per cent in non-bank financial institutions. Some 2.36 per cent of people have accounts with microcredit institutions or NGOs while 0.11 per cent in insurance companies.

And 0.10 per cent of the people have accounts with cooperative societies while 0.02 per cent in post office accounts.

Upcountry area like Rangpur division has the highest number of MFS accounts of 28.1 per cent followed by Barishal with 24.26 per cent.

Chattogram has the lowest number of MFS accounts at 18.11 per cent.

"Government payments and salary disbursement and cash-out transactions are major products," says the BBS in its survey report.

Currently, 10 banks and 3 subsidiary companies are providing MFS as an alternative payment channel in the country.​

 

[Saif]

Islami Bank dethrones Sonali Bank to become largest lender by deposits

Islami Bank Bangladesh PLC has become the largest lender in the country by total deposits for the first time, surpassing Sonali Bank PLC, despite loan scams in recent years.

www.thedailystar.net

Islami Bank dethrones Sonali Bank to become largest lender by deposits

Islami Bank Bangladesh PLC has become the largest lender in the country by total deposits for the first time, surpassing Sonali Bank PLC, despite loan scams in recent years.

The Shariah-compliant bank attracted deposits of Tk 153,456 crore in 2023, an increase of around 9 percent year-on-year.

Sonali Bank, the largest state-run lender, mobilised deposits worth Tk 150,606 crore, up 6 percent, according to the financial reports.

This makes Islami Bank the largest bank in Bangladesh in terms of deposits and loans (investments). Its lending has been much higher than the state-run lender for several years.

"Islami Bank receives higher deposits due mainly to religious factors," said Toufic Ahmad Choudhury, director-general of the Bangladesh Academy for Securities Markets.

"Apart from this, people have limited investment opportunities to keep their funds safe. People can buy land and flats, but they are also cheated. Therefore, banks have managed to retain the trust of depositors."

Established in 1983, Islami Bank was the first Shariah-based bank in Southeast Asia. It has been facing crisis since 2017 when S Alam Group took it over. Since then, its financial health has been deteriorating and many sponsors have already pulled out.

It has recently come under scrutiny due to widespread financial scams. For example, the bank allegedly disbursed Tk 7,246 crore in loans to nine companies in 2022 violating banking norms.

Choudhury, also a former director-general of the Bangladesh Institute of Bank Management, said many depositors don't bother about whether banks are safe options or not, and they have little knowledge about how financial institutions use the funds to generate incomes.

Private banks are also expanding their footprint by setting up agent banking outlets and by launching mobile financial services and internet banking. On the back of new technologies, they are growing fast while state-run banks are lagging.

In terms of network, Sonali Bank is still the largest lender in Bangladesh and much ahead of Islami Bank.

Islami Bank had 394 branches at the end of 2023 whereas it was 1,232 for Sonali Bank. State-run Agrani Bank came second with 978 branches and Janata was third-placed with 928 branches.

Choudhury said Sonali Bank has to give many government services, and it can't focus on collecting deposits like its private-sector competitors. "However, this bank's financial performance is improving."

Historically, people have had more trust in state-run banks, and they expanded their footprint across the country through branches, which netted them comparatively higher deposits.

Janata Bank collected the third-highest volume of deposits of Tk 110,341 crore last year. It was Tk 98,540 crore for Agrani Bank, Tk 66,731 crore for Rupali Bank, and Tk 60,574 crore for Pubali Bank, their financial reports showed.

Among the foreign banks, Standard Chartered Bangladesh raised the highest deposit at Tk 41,940 crore, a year-on-year increase of around 15 percent.

Pubali Bank posted a 19 percent growth to Tk 60,574 crore, becoming the top deposit collector among local conventional banks.

A top banker said depositors of Shariah-based banks usually don't keep funds with conventional banks, and the number of depositors in Islamic banks is rising steadily.

"Besides, financially strong and sound banks get more deposits."

Islami Bank lent Tk 141,035 crore in 2023. Sonali Bank came second in the category by extending loans amounting to Tk 102,399 crore.

Janata, Agrani, and Pubali Bank were among the top lenders.

Although Islami Bank topped the chart in attracting deposits and providing loans, it ranked lowly in the list of top profit-makers.

Standard Chartered Bangladesh posted the highest profit among all banks, netting a record Tk 2,335 crore in 2023 followed by HSBC's Tk 999 crore, BRAC Bank's Tk 827 crore, Dutch-Bangla Bank's Tk 801 crore, Sonali Bank's Tk 747 crore, and Pubali Bank's Tk 697 crore.

Another top banker said many people keep their funds with Shariah-based banks even if they offer a lower return or their financial strength is weak.

"They keep funds with a view to avoiding interests in conventional banks. Even, some of my close relatives don't keep funds in my banks," he said. "So, this is a pure case of belief."​

 

[Saif]

State banks nowhere near target to retrieve funds from top defaulters

Four state-run banks in Bangladesh are finding it difficult to recoup loans from their top 20 defaulters, a failure that has worsened their financial health and squeezed their capacity further to lend.

www.thedailystar.net

State banks nowhere near target to retrieve funds from top defaulters

Four state-run banks in Bangladesh are finding it difficult to recoup loans from their top 20 defaulters, a failure that has worsened their financial health and squeezed their capacity further to lend.

Sonali, Janata, Agrani and Rupali repeatedly hit the loan recovery target set by the central bank as per its memorandum of understanding (MoU) with the four largest banks of the country by branches.

It came although the government is under pressure to reduce the bad loans of state-run banks to 10 percent by 2026 as per prescriptions of the International Monetary Fund as part of its $4.7 billion loan programme.

Bad loans held by the six state-owned banks, which also include Bangladesh Development Bank Ltd and BASIC Bank, totalled Tk 65,781 crore in December, making up 20.99 percent of their outstanding credits.

Last year, Sonali Bank was asked to recoup Tk 300 crore from the top defaulters, data from the Bangladesh Bank showed. The lender managed to recover only 12 percent of the amount fixed. It was, however, an improvement from the 4 percent posted in 2022.

The bank's bad loans amounted to Tk 13,340 crore in December. Of the sum, more than Tk 4,000 crore was held by the top 20 defaulters.

T & Brothers, Hallmark Group, Modern Steel Mills, Fairtrade International, Ratanpur Steel Re-Rolling Mills, and Sonali Jute Mills are the largest delinquent borrowers.

Among them, Hallmark's loan hit hard the largest lender of Bangladesh by branches.

The bank's Ruposhi Bangla Hotel branch lent Hallmark Group and five other companies Tk 3,547 crore between 2010 and 2012 on forged documents. The businesses embezzled the entire amount in collusion with some bank officials.

Officials said that despite repeated attempts, the bank has not been able to make significant gains in reclaiming funds from the major defaulters.

Speaking to The Daily Star, Md Afzal Karim, managing director of Sonali Bank, said legal proceedings are underway to recover funds from Hallmark.

"We have come a long way under the process," he said, adding that several properties of Hallmark Group will come under the bank's control this year.

Janata Bank was given a target to raise Tk 870 crore from the top defaulters last year. It was able to recover only 5 percent of the target, down from 11 percent in 2022.

In December, AnonTex Group, S Alam Group, Crescent Group, Ranka Group, Ratanpur Group, Rimex Footwear, Chowdhury Group, Thermax Group, and Sikder Group were on the list of top 20 defaulters of Janata Bank.

However, Thermax and Sikder Group's bad loans were shown as unclassified in the classified loan statement since a writ has been filed with the High Court.

AnonTex has the highest amount of bad loans at Tk 7,708 crore with Janata Bank. The garment manufacturer is largely responsible for the ailing situation of the lender.

In 2022, Janata Bank decided to waive an interest of Tk 3,359 crore of AnonTex on the condition of a one-off loan repayment. The waiver was cancelled later.

Officials of Janata Bank said AnonTex is going to get an opportunity to repay the loans by selling collateralised properties.

At Tk 25,009 crore, Janata Bank had the highest volume of default loans among lenders in Bangladesh in December. It rose to Tk 30,495 crore in March this year, central bank data showed.

This forced the bank to stop giving out large loans and focus on getting back the unpaid loans from the top borrowers.

Recently, Janata's Managing Director Md Abdul Jabbar told The Daily Star that he was worried that the bank's bad loans would surge.

Agrani Bank got back only 3 percent of the Tk 685 crore recovery target set for 2023. Owing to the lacklustre collection from the defaulters, the bank's bad loans increased to Tk 21,476 crore from Tk 15,400 crore in 2022.

Zakia Group, JoJ Bhuiya Group, Tanaka Group, and Dhaka Hide & Skin Ltd are the top defaulters of the bank.

A senior official of the bank said Agrani is going to form a separate team to recover the bad loans from the top defaulters.

Of the four state-run banks, Rupali's performance was comparatively better than the other in terms of loan recovery.

The BB gave a goal of retrieving Tk 350 crore from the big defaulters last year. The lender attained 20 percent of the target.

As of June last year, Nurjahan Group, Benetex Industries, A Net Spin Ltd, Virgo Media (Channel 9), HR Spinning Mills, Ibrahim Consortium, SA Group and M Rahman Steel were among its top defaulters.

The bank's bad loans were at Tk 10,043 crore in 2023, up from Tk 9,225 crore a year ago, BB data showed.

Yesterday, Rupali Bank Managing Director Mohammad Jahangir said the bank has maintained regular contact with the top defaulters and taken steps to fast-track the legal procedures against the defaulters.

"We got good results last year thanks to our efforts. We will keep up the momentum."​

 

[Saif]

Two banks, one NBFI top sustainable lenders' list for fourth straight year

The latest rating showed that BRAC Bank and City Bank have been part of the list since the BB launched the rating in 2020.

www.thedailystar.net

Two banks, one NBFI top sustainable lenders' list for fourth straight year

File photo

Two banks and one non-bank financial institution (NBFI) have featured as the top lenders in sustainable financing for four years in a row, according to the Sustainability Rating 2023 report published by the Bangladesh Bank today.

The latest rating showed that BRAC Bank and City Bank have been part of the list since the BB launched the rating in 2020. Among NBFIs, IDLC Finance kept its place as one of the top sustainable financial companies.

The number of banks and financial institutions in the list increased to 13 in 2023 from 11 the previous year, as per the BB report.

The central bank introduced the rating four years ago to encourage lending to green, environment-friendly initiatives and sustainable agriculture.

The rating also listed Eastern Bank, Exim Bank, Jamuna Bank, Mutual Trust Bank, Trust Bank and Uttara Bank as the top sustainable banks, with IPDC Finance and United Finance featuring under the finance companies category.

The central bank considers financing green projects, sustainable agriculture, and cottage, micro, small, and medium enterprise finance as sustainable financing.

It also considers the performance of the lenders in giving access to sustainable finance for women, in-house green banking and environment and social risk management compliance.

Moreover, the BB evaluates the sustainability criteria of the banks by analysing factors like intervention by the directors of the financial institutions, capacity-building initiatives, and sustainable finance disclosures among others.​

 

[Saif]

New rules in the making to give more autonomy to Bangladesh Bank

The government is going to amend the Bangladesh Bank Order, 1972 to align it with global best practices and give the central bank more autonomy so that it can initiate steps to help the economy deal with pressure.

www.thedailystar.net

New rules in the making to give more autonomy to Bangladesh Bank

The government is going to amend the Bangladesh Bank Order, 1972 to align it with global best practices and give the central bank more autonomy so that it can initiate steps to help the economy deal with pressure.

The central bank authorities have prepared the primary draft to modify the order and sent it to the government for approval.

It comes as the BB faces criticism for its failure to restore macroeconomic stability, bring down inflation, and bring back good governance in the ailing financial sector.

The International Monetary Fund (IMF) also raised questions about the current level of the autonomy enjoyed by the BB and recommended changes to the order.

"The order needs to be substantially amended so that price stability is the overriding objective of the new monetary policy regime, and governance arrangements are aligned accordingly," said the IMF in its technical assistance report regarding the central bank's activities.

There is no doubt that the central bank should enjoy full autonomy. At present, there is autonomy when it comes to rules and regulations. However, it is being impacted by the political economy
— Atiur Rahman Former governor of BB

Due to a lack of autonomy, the IMF said that the central bank is not able to take steps necessary for the economy, which has been witnessing one of its worst crises in recent times.

It said the Bangladesh Bank Order (BBO) saw improvements following changes in 2003. However, no changes have occurred to the BB's governance arrangements regarding its autonomy, transparency and accountability since an assessment undertaken in 2018.

"BB's de jure autonomy …. could constrain BB actions in times of pressure."

"The amendment is needed so that it can enhance the de jure autonomy of the BB, enhance its accountability arrangements, and limit its direct lending to priority sectors."

The BB governor's post can be a constitutional one or the tenure of the post can be six years. If the post of the PSC chairman and ACC chairman can be constitutional, why not the governor's post?

— Mohammed Farashuddin Former governor of BB
The IMF said amendments should be considered as soon as possible, taking advantage of the momentum provided by the BB's announcement of the transition to an interest rate-targeting monetary regime.

The government told the Washington-based lender during the second review of the $4.7 billion loan programme in April that it would seek IMF's assistance while reviewing the draft amendments to the BBO to ensure that the order is consistent with international best practices by December.

It intends to submit the amendments for the cabinet's approval within the programme period. The 42-month programme was approved in January last year.

According to the draft amendments, notwithstanding anything contained in any other law in force, the BB will have the sole authority to issue any directive, directly or indirectly, to any bank or financial institution.

Mohammed Farashuddin, a former central bank governor, said if the central bank has strong power, it is good for the country. On the other hand, if it lacks power, its activities are still not disrupted.

Atiur Rahman, also a former governor, said there is no doubt that the central bank should enjoy full autonomy.

"At present, there is autonomy when it comes to rules and regulations. However, it is being impacted by the political economy."

According to Rahman, if the central bank enjoys autonomy, it would be helpful to keep the economy stable. When the government realises the autonomy's importance, it will be in favour of independence.

Both Rahman and Farashuddin emphasised making the post of the governor constitutional.

The tenure of the governor can be six years, said Farashuddin, who held the post from November 1998 to November 2001.

"However, when I say this, I get the response that the governor enjoyed limited power when you were the governor, but you were not blocked by anyone."

He said a governor has power legally. "The power is a symbolic issue. It depends on who uses the power."

The ninth governor of the BB said he did not allow the government to take any loans from the central bank.

Farashuddin said he depreciated the currency several times before informing the then finance minister though the power was vested with the finance ministry.

The seventh governor of the BB said there were strict policies about the number of people who could sit on a board of banks and their tenure.

However, in recent years, the rules have been relaxed. For example, the forbearance for loan repayments and the relaxed loan rescheduling policy had been offered by the central bank. Still, it has failed to rein in the upward trend of non-performing loans (NPLs).

Another mistake on the part of the BB was to introduce a 9 percent lending rate ceiling in April 2020, which made loans cheaper. The interest rate was made market-based only on May 8 this year following advice from the IMF.

"Loan rescheduling is being allowed nine or ten times too. Interest waiver was given but it has to be stopped," Farashuddin added.

The IMF said some provisions of the order have given the government power that could constrain the BB's ability to "do whatever it takes" to achieve its objectives of price stability.

"The BBO section 82 also places the BB under the de facto control of the government of Bangladesh," it said.

A provision of the order called for establishing a council comprising the finance and commerce ministers, the governor, the secretary of the finance division, the secretary of the Internal Resources Division, and a member of the Planning Commission, for the co-ordination of fiscal, monetary and exchange rate policies.

The BB will ensure that the macro-economic framework as coordinated by the council is reflected in the policies of the BB, according to the provision.

"Therefore, the autonomy of the BB is not guaranteed," the IMF said.

The establishment of a dedicated body chaired by the ministry of finance to perform such coordination could also constrain BB actions in times of pressures, it added.​

 

[Bilal9]

During the watch of this Shameless ghatiya BB Governor, we had mal actors attempt to hack almost a Billion dollars from BB. Only by the grace of almighty Allah, the NYC MFR Hanover Bank noticed the hacks and shut down most of the illegal money transfer worth hundreds of millions of dollars. We still lost almost 60 Million hacked funds to Philippine banks, which they are yet to return.

This guy eluded complicity (and due criminal prosecution) by conveniently resigning from his post and go into retirement, as a reward for his complicity with illegal loans-without-collateral acts perpetrated by govt. functionaries. The FBI and NSA from US who investigated this incident, says that there was internal complicity from within BB, some from Indian IT contractors hired by the bank.

Just look at his shameless smile (and comb-over) - may Allah's lakh lana'at befall this incompetent individual appointed by even more incompetent fools under Hasina. He helped make the hapless poor people of Bangladesh even poorer. Wonder how he sleeps at night.

 

[Saif]

View attachment 6872

During the watch of this Shameless ghatiya BB Governor, we had mal actors attempt to hack almost a Billion dollars from BB. Only by the grace of almighty Allah, the NYC MFR Hanover Bank noticed the hacks and shut down most of the illegal money transfer worth hundreds of millions of dollars. We still lost almost 60 Million hacked funds to Philippine banks, which they are yet to return.

This guy eluded complicity (and due criminal prosecution) by conveniently resigning from his post and go into retirement, as a reward for his complicity with illegal loans-without-collateral acts perpetrated by govt. functionaries. The FBI and NSA from US who investigated this incident, says that there was internal complicity from within BB, some from Indian IT contractors hired by the bank.

Just look at his shameless smile (and comb-over) - may Allah's lakh lana'at befall this incompetent individual appointed by even more incompetent fools under Hasina. He helped made the hapless poor people of Bangladesh even poorer. Wonder how he sleeps at night.

He is an opportunity seeker. Most of the people who support Awami League fall in this category. It was on the media that Sheikh Hasina's son Joy was also involved in the Bangladesh Bank's financial scam.

 

[Bilal9]

He is an opportunity seeker. Most of the people who support Awami League fall in this category. It was on the media that Sheikh Hasina's son Joy was also involved in the Bangladesh Bank's financial scam.

Not unlikely. Stealing million of dollars from banks in various ways by powerful folks in Bangladesh has become too easy nowadays. Just think about how people close to the govt. can illegally transfer thousands of crores to Dubai or Singapore banks and get away with it.

 

[Saif]

Not unlikely. Stealing million of dollars from banks in various ways by powerful folks in Bangladesh has become too easy nowadays. Just think about how people close to the govt. can illegally transfer thousands of crores to Dubai or Singapore banks and get away with it.

শেখ মুজিব যথার্থই বলেছিলেন যে, 'সবাই পায় তেলের খনি আর আমি পাই চোরের খনি'।