The Bangladesh Institute of Bank Management (BIBM) has been doing a great job since the introduction of the 'Nurul Matin Memorial Lecture (NMML)' several years back. They have so far invited many luminaries to speak on 'Ethics in Banking', the last person being Dr. A B Mirza Azizul Islam, an eminent economist and former adviser to the interim caretaker government.

Though, I have collected the copies of the speeches delivered by Professor Rehman Sobhan, M. Sayeduzzaman, this was for the first time, I physically attended the BIBM's NMML lecture session. Let the reason for attending the session remain a secret to my readers.

Mirza Aziz, who has the track record of working with our ministry of finance, Securities and Exchange Commission and state-owned Sonali Bank was meaningfully very articulate and focused. In the speech, he did focus on 'the definition of right and wrong in business', 'ethical way of running a business', 'the stakeholders' approach' and most importantly 'the possible interface between ethics and banking'.

To him, banks' principal functions are: financial intermediation or intermediation, maturity transformation in deposit and loans management, credit allocation and facilitation of payments. He felt, in running their businesses, the banks must comply with all laws and regulations; they must ensure fair and equitable treatment to all stakeholders- shareholders, clients and people; they must make adequate disclosures about their health as well as risk coverage and they must be socially responsible.

If one would ask me, I think banks' primary job is to create value out of a happy relationship between clients and their people, without losing sight of the shareholders. To ensure, continuity of the business, without any reputation loss, they must focus on regulatory compliance and give back to the community, where they make money from. To me- maintenance of the customer's confidentiality and continuous client solutions building are the most significant issues here.

My 27 years of banking career at home and abroad taught me one thing: clients want their confidentiality to be maintained, no matter how adverse situation the bank executives face. It is equally important for the bankers to be of use to the clients offering continuous product or service solutions. Here one should differentiate between selling and marketing, customer service versus customer loyalty, occupying the rack space versus occupying the mind space. The banks do survive out of long-term client loyalty, making the clients to be their ambassadors; not through a tendency to 'get rid of what they have'.

Even at the time of having many alternatives, the clients never forget the bank, which have stood by their side during tough time and kept on designing new product or solutions to get them out of the mess. To me equally, if not more, important is, how the bank behaves as a 'corporate citizen', ensures `migration of best practices' and create space for its' employees. Banks need to be always upfront with their clients, be it interest rates, exchange rates and handling fees. This means no hidden charges. At the same time, banks must attend to commitment made to all clients.

While I have observed Professor Rehman Sobhan very rightly focusing on 'financial inclusion', M. Sayeduzzaman focusing on `tolerable interest rates and better customer service' and now Mirza Aziz focusing on 'behaving responsively', if I am not mistaken there has been very little discussion on maintaining the 'fire wall' by the regulators or watchdog agency.

While in the past, number of regulated institutions were less and mostly state-owned enterprises, deposits and loans were small and banks activities were limited, regulators' jobs, more or less, remained confined to a few inspections and issuances of prudential guidelines. Now businesses have become huge and complex, foreign trade and foreign exchange transactions have increased manifold and private sector operators are commanding the market. Banks and bank executives are much more clever and organised now with owning a bank to now deemed as 'feather in the cap' for the sponsors.

Often the clients are being forced to a 'back seat' in the entire show. And they don't get a `right deal'. Here comes the role of the 'watchdog agency'. While commercial banks seniors even today are found engaged in various shady deals with the clients (at times with the defaulting ones) in exchange for personal gains; recent record and corridor rumors show various compromises by the regulatory agency too, in exchange for various favors like jobs for the relatives, low interest rate loans and so on.

Added to this is, of course, supervisory failures due to capacity constraints. Some senior citizens, having regulatory background would also tell you- compromises are being made, while the retiree regulatory agency seniors seek employment in the commercial banks after their retirement.

Take it or leave it, banking has become a 'big money game' with the passage of time, while their owners are following the same 'age old practices' of governance failures and 'cutting the corners'. Therefore, they at times seek refuge under the regulators' umbrella to maximise profit and bypass or misinterpret laws to marginalise the competitors.

Profitability remains the core issue for all commercial enterprises. Banks can't be any exception. All the institutions, especially banks, are more involved in devising new ways of making money as fast as possible. Any ethical bank is being judged by - how they perform in the midst of cut-throat competition, how respectful they are towards a robust risk management culture, how they treat their clients- be it depositors or borrowers, how they invest in their people or delivery platform and distribution network to make sure there is a winning bondage between 'client and the people'.

In order to serve the clients best and most importantly-'how they are being perceived by the commoners as a responsible corporate citizen', are increasingly becoming the indicators of being an 'ethical organisation', as such for banks. I can vouch, there will be banks coming up in the neighborhood, with the desired virtues; because they want to survive and move on. Survival of the fittest means, survival of the ones that follow right practices.

Financial Express /Bangladesh/ 23th Feb 2012

The government’s borrowing from the banking system declined significantly in the past three months when loan repayment increased remarkably, driven mainly by higher revenue earnings and fund flow from overseas. The government borrowing in the recent time reached at its peak at Tk 22,400 crore on November 21 last year, exceeding its fiscal target of Tk18,957 crore.

Bangladesh Bank (BB) data for mid-February, however, showed the government trimmed down the amount to a comfortable level by repaying Tk 6,023 crore until February 15 when the net state borrowing was Tk 15,377 crore. Of this amount, the borrowing from the central bank was Tk 6,558.25 crore and from commercial banks Tk 8,818.75 crore.

“The trend of government borrowing declined mainly on strong revenue growth coupled with the higher fund flow from overseas,” BB economic adviser Dr. Md. Akhtaruzzaman told BSS on Thursday.

The National Board of Revenue (NBR) posted over 16 per cent increase in the revenue earning in the first half of the current 2011-12 fiscal. The July-December revenue earning was recorded at Tk 39,090.82 crore, which was Tk 150.53 crore more than the target of Tk 38,940.29 crore for the period.

The revenue department is expecting 21.52 per cent growth at the end of the fiscal year to achieve the target of Tk 91,870 crore for the financial year, which will bring the government borrowing further down.

Similarly, the fund flow from overseas rose to US$ 423 million in January this year, which was only US$ 65 million in December.

Besides these positive improvements, Aktaruzzaman said, the government bonds, which matured in the recent months, helped substantiality to adjust government debt from the banking system.

The Independent/Bangladesh/ 23th Feb 2012

Participants at the investors’ awareness programme organised by MTBSL pose for photograph at a city hotel recently.

MTB Securities Limited (MTBSL), one of the leading brokerage companies of the country, organised an investors’ awareness programme at a city hotel recently.

Anis A Khan, Vice Chairman of MTBSL and Managing Director and CEO of MTB inaugurated the programme with Md. Nazrul Islam Mazumder, CEO of MTBSL in the chair, said a press release.

MTBSL is a subsidiary of Mutual Trust Bank Limited (MTB).

The Daily Sun/Bangladesh/ 23th Feb 2012

BRAC Bank arranged an exceptional program for children of its officials on the occasion of the Ekushey February and International Mother Language Day. Presence of eminent artist Mr. Mustafa Monowar delighted the kids.

Mustafa Monowar described the history of language movement and bloodshed for mother language in lucid and simple way. The children enjoyed the story telling by the renowned artist, said a press release.

The Daily Sun/Bangladesh/ 23th Feb 2012

Rajib Zaman interviews Quazi Saifur Rahman (Right)

Merchant banks should understand that they are not dealing with a single client rather thousands of clients. Investors are the heart of these firms. I think, there is no need to force an investor to sell his or her shares.

At the same time, the merchant banks have the responsibility to protect the interests of their clients. If they did not force the investors to sell off shares, the small investors should not have returned empty handed or committed suicide, Quazi Saifur Rahman, Managing Director of Banco Finance and Investment Limited said at a discussion with ETV.

Following is the details of the discussion.

* At first, I want to know the overall condition of the share market.

# If I review the market situation for last one month, then I see it is favourable for investment. The share prices are very lucrative at present. Everyone must remember that no tax is charged for income from investment in stocks. Many companies maintain a price ratio under Taka 10. According to present ratio, one will get Taka 1 if he or she invests Taka 10. This is the net income. One has the scope to earn more profit as investment in shares is lucrative and one can avail the opportunity of earning more profit by investing for long term.

* Many people term share market as a loan market. What is your conception on this?

# I don’t agree with this. Because, the main task of merchant banks and brokerage houses is to sanction loans. They also give loans to other financial institutions and banks. Naturally, both the institutions are lenders. But, the policy of sanctioning loans of a merchant bank is different. The question for recovering loan can arise if I compare the loan given by merchant banks and other banks.

* Many people say that the market has come to a stagnant condition as margin loans were sanctioned indiscriminately. If the loans were given through proper scrutiny then the situation would not have been so. What is your opinion?

# Since 2010, the SEC interfered in sanctioning margin loans. It used to change its decision very frequently. Now, they have come to realise the adverse impacts. So, they are not interfering much on margin loans.

* Experts suggest investors to examine the fundamentals of any company before investing in shares of that company, but the market continues to fall. What is the benefit?

# We always think of day-to-day transactions. One may think why the price of the share that increased yesterday hasn’t increased today? So, they sell shares and buy new ones. This creates a panic. They should invest step by step. They should open a discretionary account to deal with merchant banks. They can lower their losses by buying shares at lowest rates.

* The number of individual investors in other countries is not so high, where there are investors-advisory services. Since there is no such service here, the loss amount is higher. What do you think?

# We are not utilising any new tools. When we get stuck somewhere, we start thinking from there – we should get away from this perennial attitude. In a meeting with the SEC, we recommended for introducing this service in an expanded way. We are not well-informed what services the merchant banks will be able to give under investors’ advisory services. The SEC should give more attention in this regard. This service can be for servicemen or for a businessman starting a new line of business. The serviceman may have a surplus income which he may spend, keep in fixed deposit or purchase land.

The investors, who are engaged in fixed investment, do not have any creativity. More discipline can be established in the capital market to attract them in share business. There are potentials of more investment through initiating investment advisory services. Not only government personnel, there are also private job holders who invest in FDRs. We can encourage them to make investments in stocks through offering secured accounts. We hope, the SEC will implement this system as quickly as possible.

Many directors of National Bank are yet to purchase the government earmarked shares. They are not giving declaration on purchase of shares. The record date has already expired.

* Question through telephone: Many advise us to purchase shares now. But we do not have that much capital. The banks are also not sanctioning loans. What can we do in this situation?

# I think, everyone should invest using ones’ own funds, not depending on loans. Generally we take loans from friends, relatives or bank loans against properties. Even, we take loan from stock market and invest. My advice is, one should invest in stocks from one’s disposable income, not taking loans. You do not need to panic and sell when the market falls.

* How do you evaluate the investment plan when one invests whole amount?

# One should always keep some funds in hands to support investment during any crisis moment. Everyone wants to secure the investment through insuring. As a result, the insurance companies take risks, but the profit is shared with the companies. I hope the concerned quarters will think about this.

* We know, finance minister ordered concerned not to press investors for forced sales when market becomes volatile. But it is followed. What is your comment?

# Firms often press investors sell off shares without considering market price. They don’t consider either an investor survives or dies. The lending firms just want to recover their loans. Everyone should understand what the capital market is? This is a long term investment market. Merchant banks should understand that they are not dealing with a client rather thousands of clients. Investors are the heart of these firms. I think, there is no need to force an investor to sell his or her shares. At the same time, the merchant banks have the responsibility to protect the interests of the clients. If they did not force the investors to sell off shares, the small investors should not have returned empty handed or suicide.

The Daily Sun/Bangladesh/ 23th Feb 2012