CIB service for microcredit in the offing

Posted by BankInfo on Sat, Jul 19 2014 10:25 am

It will reduce transaction cost for both borrowers and lenders and bring down the demand for funds.

The microcredit regulator is set to launch a Credit Information Bureau (CIB) service for bringing more discipline in lending and borrowing process of the financial institutions.

The move comes as soon as the Micro-credit Regulatory Authority (MRA) has found recently loan overlapping by the lenders in absence of effective credit management.

“We are closely working with the central bank to set up the CIB by this year,” said an official. He said it will also help absorb shocks and prevent the dropout of borrowers.

CIB usually maintains records of an individual’s borrowing and payment records. These records are submitted to CIB of the central bank by the member banks and financial institutions, and this information is later on used to help evaluate and approve loan applications.

If CIB was established by the MRA, such records will be submitted by the MFIs including Grameen Bank and BRAC. The central bank had set up CIB on August 18, 1992 aiming to improve credit risks and reduce the extent of default loan in the country’s banking system.

The Microcredit Regulatory Authority (MRA) plans to launch a Credit Information Bureau (CIB) soon to bring more discipline in lending and borrowing process of the micro-credit financial institutions.

Earlier in February this year, Bangladesh Bank governor and also the chairman of MRA Atiur Rahman disclosed for establishing CIB for MFIs at the ‘Dhaka Microcredit Conference 2014’.

He had said, “MRA has been working for introducing CIB services for the streamlining of the micro-financers.’’

Another MRA official said the CIB will be as like as the BB. It will reduce transaction cost for both borrowers and lenders and bring down the demand for funds.

Once it is established, it would provide information on the credit flow to poor people in different areas of the country. It will help the MFs expand

operating areas and also help the government prepare its plan to reduce poverty in different zones.

Since its establishment in 2006, MRA gives licences to 732 MFIs with 1,900 branches across the country with about 20 lakh borrowers.

News:Dhaka Tribune/19-July-2014

New BRICS bank good for China, others: China's central bank

Posted by BankInfo on Sat, Jul 19 2014 10:12 am

China cannot be concerned about only itself and must join a development bank being created by emerging market nations as its economy is intertwined with that of the world, the Chinese central bank said on Thursday.
In a short defence of why China will invest $41 billion in a bank that it is unlikely to borrow from, the central bank said China stands to benefit if it helps to stabilise the economies and financial markets of other nations.
"Our economy is highly integrated with the global economy. If a sharp turmoil appears in the global financial market, it is difficult to be concerned only about ourselves," the central bank said in an online statement.
"Helping them achieve financial stability is not only in line with our own interests, it is also in line with global interests."

News:The daily Star/18-July-2014

NRB Global Bank opens ATM booth at Motijheel

Posted by BankInfo on Sat, Jul 19 2014 09:59 am

Md. Abdul Quddus, Managing Director of NRB Global Bank Limited, inaugurates an ATM booth of the bank at Motijheel Branch premises in Dhaka on Thursday.

 NRB Global Bank Limited opened an ATM Booth at Motijheel Branch premises in Dhaka on Thursday.

Md. Abdul Quddus, Managing Director of NRB Global Bank Limited formally inaugurated the ATM booth, said a press release.

SM Atiqur Rahman, Manager, Motijheel Branch, Md. Mehedi Hasan, Manager, ADC and Cards, Md. Safiqul Islam, Senior Officer of Communications and Branding Division of the bank and distinguished clients were also present. 

News:Daily Sun/19-July-2014

Central bank: BASIC clients can withdraw deposits using own judgement

Posted by BankInfo on Thu, Jul 17 2014 10:38 am

On the Bangladesh Bank advice, the BSEC in a second letter last week alleged that the central bank had avoided its responsibility in resolving the matter

Bangladesh Bank has advised the clients of scam-hit BASIC Bank to withdraw their deposits from that bank using their own judgement.

Md Syful Islam, general manager of the Financial Integrity and Customer Services Department of Bangladesh Bank, sent a letter to the finance division last week, saying BASIC Bank clients could withdraw their deposits.

In June, Chairman of the Bangladesh Steel and Engineering Corporation Md Imtiaz Hossain Chowdhury had sought advice from the finance division as well as the Bangladesh Bank on withdrawing its fixed deposit return (FDR) from the bank.

On the Bangladesh Bank advice, the BSEC in a second letter last week alleged that the central bank had avoided its responsibility in resolving the matter.

“We are worried about saving the corporation’s FDR fund in the wake of misappropriation of a large amount of money at BASIC Bank,” the letter reads.

The BSEC also suspects that its officials might be harassed by the Anti-Corruption Commission because of its large FDR fund at BASIC Bank when the ACC starts investigating the scam.

According to a Finance Ministry report, the deposits at BASIC Bank declined by Tk997.56 crore in six months this year as depositors gave the state-owned bank the cold shoulder after Bangladesh Bank had detected huge irregularities at the bank.

Bankers say the depositors lost confidence in the BASIC Bank after the central bank unearthed that it disbursed more than Tk4,500 crore in loans in the last few years violating rules and regulations.

The ministry report, submitted to the parliamentary standing committee on public undertakings on Thursday, shows that deposits at BASIC Bank dropped to Tk12,451.78 crore as of June 30 from Tk13,449.34 crore in December 31, 2013. 

News:Dhaka Tribune/17-July-2014

BASIC Bank: Blatantly looted

Posted by BankInfo on Thu, Jul 17 2014 10:16 am

Central bank's probe into 3 branches finds gross anomalies in loan approvals; report sent to ACC

Rejaul Karim Byron and Md Fazlur Rahman
BASIC Bank: Blatantly looted

The central bank has sent a report on the financial scam at BASIC Bank to the Anti-Corruption Commission, detailing how borrowers embezzled money from the state lender through fake companies and suspected accounts.
Bangladesh Bank sent the report to the anti-graft body on Tuesday, after concluding a special inspection into the scam in the first week of this month.
The central bank first inspected BASIC Bank's Gulshan, Shantinagar and Dilkusha branches in 2012 and found evidence of serious anomalies in approving loans.
Dilkusha branch, for example, doled out Tk 683 crore in loans to 16 borrowers, all of whom took the money through illegal means.
One borrower, Asif Iqbal, proprietor of Reliance Shipping Lines, opened a current account with the branch on December 4, 2011. Nahid Enterprise was the identifier.
But both the companies are fake, said the BB report.
The board approved another loan of Tk 16 crore in 2012. The borrower withdrew the money in the name of purchasing ships through four pay orders. The money ended up in the accounts of other banks.
Through one pay order, Gazi Auto Bricks got Tk 1.5 crore. Five individuals named Shakil, Aziz, Erfan, Opu and Bipu withdrew the amount from the account.
In another incident, Md Rashedul Hasan, managing director of Simex Ltd, opened a current account with the same branch in December 2010.

The board, then led by Abdul Hye Bacchu, approved another loan of Tk 7.9 crore three months later. The branch, however, did not find the borrower's residence, office and factory.
Against all these loans, the central bank's special inspection found no business transactions, as the money was withdrawn by individuals from the credit accounts in cash.
Sahara Import Ltd withdrew Tk 12 crore, without any business purpose, within 12 days of the sanction of the loan.    
RK Food Ltd was given a loan of Tk 69.85 crore without assessing its business transaction and capacity of the firm. It withdrew Tk 40 crore within four months from Gulshan and Shantinagar branches of the bank.  
"The then branch manager helped embezzle the money. It was clear that the money was embezzled in connivance with the client and the authorities of the bank," said the central bank report.
The 47-page report, which includes a list of borrowers, gives a detailed picture of how the loans were approved and withdrawn in clear violations of rules.
In Gulshan branch, 12 clients took out Tk 297 crore through pay orders or in cash.
One client, SFG Shipping Line, was given a loan of Tk 37.54 crore. He transferred the money to five companies, with accounts with other banks, through pay orders. All these companies are fake.    
The report also contains a list of 40 pay orders that were transferred from a number of loan accounts at Shantinagar branch to suspected accounts in the same branch in 2012. Each pay order transferred funds between Tk 50 lakh and Tk 1 crore.   
The central bank suspects a chunk of Tk 4,500 crore embezzled from BASIC Bank has gone out of the country, officials said.
The report was also sent to the anti-money laundering unit of Bangladesh Bank to see whether the money was laundered.  
The latest inspection was aimed at identifying the actual beneficiaries of the scam by digging deep into specific accounts.
The report said the BASIC Bank's board and its credit committee at the headquarters ignored the negative observation from branches on a number of loan proposals and approved them without following due diligence.
At least on one occasion, BASIC Bank flouted instructions from the central bank.
The central bank had ordered the state bank to submit a report containing details of loans beyond Tk 1 crore, but the report never reached the BB, according to the report.

News:The Daily Star/17-July-2014
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