EDITORIAL

March 2015

In a seminal study titled ‘Earnings Quality: Evidence from the Field’ conducted in 2014, Ilia D. Dichev discourages firms to publish large annual reports. Based on survey of 169 CFOs (Chief Financial Officers), Dichev concludes that financial reporting is largely viewed as a compliance activity rather than as a vehicle of innovation designed to inform stakeholders and lower the cost of capital. After the fall of Enron in the United States and recent recession in the USA and EU, there has been wider recognition of the corporate transparency and authenticity of disclosed information rather than publishing large volume of annual reports. It is heartening to see that aforementioned issue is followed very much in practice besides academic exercises. A growing practice is being observed to publish limited number of small size annual reports on recycled paper with vegetable oil based inks for saving environment. Ministry of Corporate Affairs (MCA), Govt. of India has taken a “Green Initiative in Corporate Governance” by allowing paperless compliances by the companies and has permitted to send Annual Report by e-mail to the shareholders. In line with the said circular, State Bank of India (SBI) proposes to give an option to their shareholders to receive the Bank’s Annual Report from FY 2011-12 onwards in electronic form at their e-mail addresses registered with their respective Depository Participant (DP) accounts. World Bank, International Monetary Fund and Asian Development Bank also reduce the size of annual report significantly. World Bank (WB) published its annual reports containing about 250 pages in 2004 whereas it reduced to 64 pages in 2009 and 32 pages in 2011. International Monetary Fund (IMF) brought down to 70 pages in 2011 from 250 pages in 2006 and Asian Development Bank (ADB) to 48 pages in 2012 from 280 pages in 2001. These organizations now provide only summary information in printed annual reports. Of course, multiple links are provided with a view to making it easier for readers to navigate its annual report.

This initative is yet to be getting due attention in Bangladesh. Banks in Bangladesh are keenly interested to publish a huge volume of annual reports in an articulated way with numerous information and pictorial views. It takes the form of competition among banks to publish annual reports in well looking manner with more pages. The propensity of publishing large volume of annual

reports is gradually increasing as banks are trying to get award for the best published annual accounts and reports from standard setting organizations like South Asian Federation of Accountants (SAFA), Institute of Chartered Accountants of Bangladesh (ICAB), etc. through publishing more information. The current approach of Bangladeshi banks in publishing annual report is also supported by the theories like stakeholder theory, agency theory, legitimacy theory, and political economy theory.

The approach followed now in printing annual reports is not advantageous as regards costing, accessibility and importantly environmental aspect for the banks. After incurring significant amount of costs for printing annual reports, users are not getting timely access to the annual reports because of delay in sending annual report to shareholders, missing annual reports in transit, less interest or inconvenience in sending printed annual report to shareholders living in remote areas of the country as well as to foreign shareholders and improper display of financial reports of banks in branches. Bangladesh Bank encourages banks to use lesser paper for reporting. “Save paper, save trees” is one of the common green banking slogans of BB. Therefore, this is the proper time for banks to think in other way around through reducing concentration on distribution of printed annual reports of banks. Banks may print a bulk number of annual reports in an abridged form for the mass users including shareholders of banks and a small number of annual reports in an unabridged form for regulators, internal and other VIP users. Banks may take initiative to send soft copy of the unabridged copy of annual reports to the shareholders through e-mail besides preserving it in the website of the banks. A collective initiative may also be taken to preserve annual reports of all banks on a common website created or administered by organizations like Bangladesh Bank; Bangladesh Association of Banks; Association of Bankers, Bangladesh; The Institute of Bankers, Bangladesh; Dhaka Stock Exchange, etc. To add further, annual report of banks regardless of size is required to be printed on recycled paper using environment friendly printing technology like vegetable oil-based inks. It is expected that a bank might ensure friendly accessibility of users to its annual report without spending more costs and damaging environment through undertaking above mentioned initiatives.

Accessibility and Environmental Aspect of Annual Reports of Banks

March 2015

FEATURE

The words 'Rin Khelapi' and 'Ku Rin' are quite popular in our financial system. When a borrower does not pay interest along with principal amount as per terms and conditions, then s/he is called 'Rin Khelapi' (loan defaulter) and the loan is classified as Non-Performing Loan (NPL). As per Section 5 of Bank Company Act 1991 (Amendment 2013), 'defaulting debtor' means any person or institution served with advance, loan granted in favor of him or an institution involving interest or any portion thereof, or any interest which has been overdue for six months in accordance with the definition of Bangladesh Bank (BB). Banks play an important role in allocating and distributing people’s savings from surplus economic unit to deficit economic unit and it enhances the productivity and efficiency of the economy as a whole. If banks' volume of non-performing loans continues to exceed their profits, it will lower banks' net worth and lower their risk-absorbing capacity, making it difficult to invest funds in risky projects and to realize potentially productive businesses. Additionally a higher non-performing loan reduces current revenue, resulting in high amount of provision which reduces bank profitability and increases cost of loan and advances which in turn causes low investment and less economic growth.

Present Scenario of NPLs in BangladeshNPL started at the early stage of liberation. During privatization and liberalization in 1980s and in the early 1990s, banking sector could not control NPL. The overall scenario of Gross NPL Ratios to Total

Loans during 1999-2014 has been shown in Table-1. The gross NPL ratio to total loans was 41.1% in 1999 and after many ups and downs it decreased to 10.8% in 2014. State-owned Commercial Banks (SCBs) have experienced a declining trend of Gross NPL from 1999 to 2005. From 2006 to 2014 there was a fluctuating trend of NPL in SCBs. Development Finance Institutions (DFIs) and Private Commercial Banks (PCBs) recorded a declining trend from 1999 to 2011. From 2012 to 2014 there was a fluctuating trend of NPLs. At the end June 2014, the gross NPL ratio to total loans for the SCBs, DFIs, PCBs and Foreign Commercial Banks (FCBs) were 23.2%, 33.1%, 5.7% and 6.2%, respectively. The very high NPL ratio in the earlier years of SCBs and DFIs was due, among others, to substantial loan (term lending, agricultural and micro lending) provided by them on considerations other than commercial under directed credit program of the ‘70s and ‘80s. (Choudhury et al. 2002). In addition, poor appraisal and inadequate follow-up and supervision of the loans disbursed by SCBs and DFIs were also the causes for NPL. However, the ratio of NPL of all banks had shown a declining trend from 1999 to 2011 due to some progress in recovery of outstanding loans and write-off of loans classified as ‘bad’ or ‘loss.’ But it

shot up again in 2012 due to the issuance of a circular by BB (BRPD Circular No, 14, 2012) regarding new classification and rescheduling of loans and a few scams in the banking sector. Near the end of FY12, BB significantly strengthened its policies on loan classification and loan-loss

Bangladesh Bank’s Initiatives to Reduce Ku Rin(Non-Performing Loan) in Bangladesh

Rahat Banu*

Table 1: Gross NPL Ratios to Total Loans by the Type of Banks(%)

Source: Bangladesh Bank, Annual Report 2005-06 and 2013-14

Year 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 End June 2014

State-owned Commercial Banks

45.6 38.6 37.0 33.7 29.0 25.3 21.5 22.9 29.9 25.4 21.4 15.7 11.3 23.9 19.8 23.2

Development Finance Institutions

65.0 62.6 61.8 56.1 47.4 42.9 34.9 33.7 28.6 25.5 25.9 24.2 24.6 26.8 26.8 33.1

Private Commercial Banks

27.1 22.0 17.0 16.4 12.4 8.5 5.6 5.5 5.0 4.4 3.9 3.2 2.9 4.6 4.5 5.7

Foreign Commercial Banks

3.8 3.4 3.3 2.6 2.7 1.5 1.3 0.8 1.4 1.9 2.3 3.0 3.0 3.5 5.5 6.2

Total 41.1 34.9 31.5 28.0 22.1 17.6 13.6 13.2 13.2 10.8 9.2 7.3 6.1 10.0 8.9 10.8

March 2015

provisions. BB introduced and clarified the difference between a "defaulted loan," which is a legal concept granting the bank the right to take certain actions against the borrower, and a "classified loan," which is an accounting concept that implies a certain required level of provisioning for expected losses. As a result, during FY 2013, banks tried to meet the new requirements. Political instability leading towards the national election can also be attributed to the rise in NPL ratio since 2012-2014.

The classified loans increased to Tk. 51340 crore at the end of June 2014 from Tk. 40580 crore of the December of 2013. According to Bangladesh Bank data, the total classified loan increased to Tk. 42730 crore in 2012, which was Tk. 22640 crore in 2011.

(Bangladesh Bank, Annual Report 2013-2014) Recently a series of banking scams have landed the banking system in hot soup. Embezzlement of Destiny Group, Hall-mark, Bismillah Group and BASIC Bank, etc. has become the talk of the country in recent times due to their involvement in major scams in the banking sector. This loan scrap is alarming for our banking as well as the financial sector.

Overall net NPL increased to 3.9 percent in June 2014 from 2 percent in December 2013. At the end of June 2014, ratio of Net NPLs to total loans were 7.4 percent and 26.4 percent in SCBs and DFIs respectively, whereas in December 2013, the percentages were 1.7 and 19.7, respectively.

Table-2 shows there was a tremendous increase in the provisioning maintenance ratio in the last five years (2008-2014) as compared to the year (2001-2006).

Causes behind NPLComparatively poor administration, lack of transparency, weak regulations and monitoring cell, interest rate spread and rent seeking behavior of the politicians are noticeable causes for increasing NPLs. NPL arises from two sources, one side is the lender and another side is the borrower. Lack of business experience, unwillingness to pay, non-attractive industry, strong competition, poor financial performance, poor cash flow, low market share are the causes from the borrower side while delay in assessment of loan proposal, delayed disbursement of fund, lack of proper monitoring, delay in taking proper action, unethical practices and irregularities, failure of internal control and compliance system are

the main causes of NPL from the lending side. At present, many businessmen could not pay their installments in due date as their business suffered from political deadlock. There are other economic, social and political causes of NPL like lack of investment, prolonged political instability and last but not the least is corruption.

Effects of NPLBanks play an important role in allocating and distributing people’s savings for use in most productive investment. Banks' intermediary function is essential for economic activity as it enhances the productivity and efficiency of the economy as a whole. Exporter’s bank chooses a financially sound bank for international trade payment. If financial soundness of a bank is affected by high NPL ratio, the corresponding bank is discouraged to open new LCs with that bank. The incidence of a large amount of fresh non-performing loans is continuing due to the deterioration of business confidence, in addition

Table 2: Required Provisions and Provisions Maintained -All Banks (Tk. in crore)

Source: Bangladesh Bank, Annual Report 2005-06 and 2013-14

Year 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 End June 2014

Amount of NPL of all banks 238.5 228.5 236 238.6 203.2 187.3 175.1 201.0 226.2 224.8 224.8 227.1` 226.4 427.3 405.8 503.5

Required Provisions 100.2 98.4 101.6 106.8 92.5 87.7 88.3 106.1 127.2 136.1 134.8 149.2 148.2 242.4 252.4 300.4

Provisions Maintained 51.5 58.1 61.4 59.6 37.3 35.9 42.6 52.9 97.1 126.2 137.9 142.3 152.7 189.8 249.8 260.4

Excess (+) / Shortfall (-) -48.7 -40.3 -40.2 -47.2 -55.2 -51.9 -45.7 -53.2 -30.1 -9.9 3.1 -1.7 4.6 -52.6 -2.6 40

Provision Maintenance Ratio (%)

51.4 59.1 60.5 55.8 40.3 40.9 48.2 49.9 76.3 92.7 102.3 95.4 103.0 78.3 99.0 86.7

March 2015

to the erosion of profitability and an increase in costs, putting a downward pressure on banks' net worth. There are some adverse impacts of NPL on macro-economy such as slow down of circulation of money, reduction of aggregate demand, erosion of capital and increase in loan pricing, leading to economic stagnation.

BB’s Initiatives to Lessen NPLThe central bank is committed to bring sound corporate governance even at the expense of the board and the management. A number of positive steps and control measures were undertaken by the central bank. Bangladesh Bank has created Financial Integrity and Customer Services Department which is acting as a watchdog for identifying the possibility of frauds in banks and FIs. Besides, Bangladesh Bank has established Bangladesh Financial Intelligence Unit under core risk surveillance and as per requirement of FATF/Egmont group. Combination of off-site surveillance with on-site inspection is another renovation of BB to combat NPL. As part of bank’s statutory function currently seven departments of BB namely DBI-1, DBI-2, DB1-3, DB1-4, DFEI, BFIU, ICB are working for reducing NPL. The central bank has already developed a live automated reporting system (dash board) for monitoring purposes. Bangladesh Bank mentioned that the dash board eventually will be directly connected with core banking systems which will obviously bring standardization and revolution in the monitoring and controlling of the banks. BB has introduced stress testing system to assess the risk absorption capacity of banks and NBFIs. In order to prevent moral hazard problem and financial scams all banks have been instructed to prepare “Self-Assessment of Anti-Fraud Internal Controls” report which is signed by CEO and counter signed by the chairman of the Audit committee. Integrated Supervision System Software has been introduced by BB to monitor the major functions at each bank’s head office and branches on monthly basis. A large number of local and foreign training has been organized by all the banks to enhance the skill of the inspectors of their respective field. In order to bring all the banks under intensive investigation, Bank Supervision Specialist (BSS) has been initiated in Department of Off-Site Supervision. Customers’ Interest Protection Centre (CIPC) was re-built as a department named Financial Integrity and Customer Service Department (FICSD) in 2012 which

act as a supervisory body for identifying the early warning signs of internal and external fraud at banks and NBFIs. The Anti-Terrorism Rules 2013 and Money Laundering Prevention Rules, 2013 were ratified in FY14. Cash Transaction Report (CTR) and Suspicious Transaction Report (STR) are also requirements for the optimum supervision.

The amount of classified loans in the country’s banking system recorded a sharp decline in the final quarter of the calendar year 2014 due to Bangladesh Bank’s guideline and regulation on rescheduling, write off and recovery. Individual banks need to limit their lending when NPL goes beyond a certain level. Additionally, these organizations may create rehabilitation unit (remedial management subsidiary) for marginal accounts with well-defined work-out-strategies and move from decentralization to centralization to address this problem. The bank may use asset securitization and SWAP, improve operational alertness and last but not the least use close monitoring system which is guided by Bangladesh Bank to lessen the increasing trend of NPL.

ReferencesBangladesh Bank, Annual Report 2005-06.Bangladesh Bank, Annual Report 2013-14.Bank Company Act, 1991.Choudhury, T. Ahmed and B. Kumar Adhikary (2002), “Loan Classification, Provisioning Requirement and Recovery Strategies: A Comparative Study on Bangladesh and India,” Bank Parikrama, Vol. XXVII, Nos. 2 & 3, June & September 2002, pp. 134-184.Habib, S. M. Ahsan (2014), “Reducing Non-Performing Loans of Banks,” The Financial Express, 25 December.Islam, Muinul and Mohiuddin Siddique (2010), “A Profile of Bank Loan Default in the Private Sector in Bangladesh.”Unnayan Onneshon, Bangladesh Economic Update (2014), Vol. 5, No. 07, July.

* The author is Lecturer, Bangladesh Institute of Bank Management (BIBM), Dhaka. Views expressed in this feature are the author’s own.

FEATURE

March 2015

The development of new competitive sectors in developing countries faces a number of problems that requires to be addressed. Many financing instruments have been developed such as development banking, back to back LC, pre-shipment credit, post- shipment credit and packing credit to finance competitive sectors. Export Development Fund (EDF) is a scheme developed by Bangladesh Bank to promote the nontraditional exports from Bangladesh. It provides financial support to expedite export growth. Through this fund, Bangladesh Bank supports loan refinancing schemes at nominal interest rates. EDF ensures cheap access to financing in foreign exchange for input procurements by manufacturers for producing final output for direct export, and also by producers of local deliveries of intermediate outputs to manufacturers of the final export to meet their short-term liquidity requirements.

As per request of Bangladesh Government to promote export of non-traditional manufactured items from Bangladesh, International Development Association (IDA) in 1989 arranged an Export Development Fund (EDF) primarily with US$ 31.2 million. Initially EDF fund was created with US$ 28 million and in this arrangement Govt. of Bangladesh & IDA’s contribution was US$ 3 million & US$ 25 million, respectively. Presently its size is US$ 1500.00 million. The EDF is held & managed by the Foreign Exchange Reserve & Treasury Management Department (FRTMD) of Bangladesh Bank.

The main objective of creating an Export Development Fund (EDF) at the Bangladesh Bank is to assure a continued availability of foreign currency to meet the import requirements of non-traditional manufactured items. This facility is available to the non-traditional exporters, particularly new exporters, exporters diversifying into higher value exports and exporters diversifying into new markets. Authorized Dealer (AD) banks can borrow US Dollar funds from the EDF against their foreign currency loans to manufacturer-exporters for input procurements. At

their option, the ADs can also lend to some extent from their own foreign exchange funds for input procurements [up to fifty percent of Non-Resident Foreign Currency Deposit (NFCD) balances).

Criteria for Getting Loan from EDFAn exporter is eligible to avail of EDF facilities on the conditions stated below:a) The exporter must be an exporter of

non-traditional manufacturing items.b) The value added of these products could be 20%

except in the case of garments where it has to be 30% and above.

c) The loan should be utilized in case of importing raw-materials for manufacturing the exportable products.

d) The exporter must have an Export L/C. e) The Exporter must create a Back to Back L/C for

importing raw materials.f) The exporter can borrow many times in a year on

revolving basis.g) The interest rate of EDF is LIBOR + 1.50%.h) The Exporter has to have an Export Credit

Insurance through Export Credit Guarantee Scheme (ECGS).

Areas of EDF • Manufacturer-exporters for input procurements.• Member organizations of the Bangladesh

Garments Accessories & Packaging Manufacturers & Exporters Association (BGAPMEA) making bulk import of raw materials for local deliveries of garment accessories to manufacturer-exporters against inland back to back LCs in foreign exchange.

• Member organizations of the Bangladesh Plastic Goods Manufacturers and Exporters Association (BPGMEA) making bulk import of raw materials for local deliveries of garment accessories to manufacturer-exporters against inland back to back LCs in foreign exchange.

• Member manufacturer-exporters of Leather Goods & Footwear Manufacturers & Exporters Association of Bangladesh (LFMEAB).

EDF for Promoting ExportMd. Abdul Halim*

March 2015

• Bangladesh Ceramic Wares Manufacturers’ Association (BCWMA).

• Bi-cycle sectors.• Bangladesh Dyed Yarn Exporters' Association

(BDYEA).

With only the members of these associations being allowed to draw EDF finance for input imports, EDF has strayed from its objective of making fund available to the non-traditional exporters, particularly new exporters for diversifying into higher value added products. Indeed, a number of potential non-traditional exporters are left out from this excellent financing facility offered by EDF.

Tenor of EDF Loans EDF loans from BB are repayable by the AD’s upon receipt of proceeds of the relative exports (except in case of loans for bulk import of cotton and other textile fiber by BTMA member mills against past export performance). The tenor is applicable for all cases within 180 days from dates of disbursement, extendable by BB up to 270 days upon application to BB explaining the cause of delay repatriation of export proceeds.

Table-1: Size of EDF

Source: Bangladesh Bank

The Table-1 shows that in 2005 the total size of EDF was US$100 million now it is about US$ 1500 million , within this nine years the fund size became 15 times higher than 2005. The growth rate of fund also explains the increasing demand of EDF fund. Though the growth rate was slower in 2011 and 2012, but in recent years it has increased at the rate of above 50 percent. The Compound Average Growth Rate (CAGR) of EDF is 66 % also supports the increasing demand of the funds.

EDF in Neighboring CountryIn 2000, an Export Development Fund (EDF) has been set up by Indian Govt. with the objective of using the resources for the development of exports from the North-Eastern region in Shillong in India. All activities, which have a linkage with the exports from the region and are designed to help exports, shall be eligible for assistance from the fund. Even setting up of pioneering/pilot projects aimed at exports is also eligible for EDF. It is managed by the Agricultural & Processed Food Products Export Development Authority (APEDA) under the Department of Commerce.

ConcludingIn facilitating export sector especially export of nontraditional items, EDF have brought a remarkable change. It is expected that the Govt. will expand the areas of EDF in future in the sectors like pharmaceutical sector, high-potential export-oriented sectors including shipbuilding and light engineering. In this perspective, it is notable to mention that Bangladesh Bank may think to prepare a single policy document for EDF for more effectiveness through incorporating myriad circulars in the Foreign Exchange Guideline.

ReferencesBangladesh Bank, Annual Report 2012-13.Bangladesh Bank, Master Circular on Export Development Fund (EDF).Khan, Mustaq H. (2014), “The Design of Financing for Developing New Competitive Sectors: Theory and Evidence”, Paper Presented in the Seminar Organized by Bangladesh Institute of Bank Management (BIBM), Dhaka, Bangladesh, 26 October.

The author is Lecturer, Bangladesh Institute of Bank Management (BIBM), Dhaka. Views expressed in this feature are the author’s own.

Year Amount (Million US$) Growth Rate (%) 2005 100 _ 2007 150 50 2009 300 100 2010 400 33 2011 500 25 2012 600 20 2013 1000 66 2014 1500 50

March 2015

BIBM NEWS1. Participants in Courses, Workshops and SeminarsBangladesh Institute of Bank Management (BIBM) organized a number of training courses, training workshops, research workshops, foundation & special training courses and national seminars for different bank officials as part of its academic activities during January-March, 2015. A total of 2,248 participants attended the above mentioned programs.

2. Training Courses Organized in BIBM during January – March, 2015

743

501

263

55

400

286

0

100

200

300

400

500

600

700

800

TrainingCourses

TrainingWorkshops Workshops Research

WorkshopFoundation &

Special CoursesNationalSeminars

Total Number of Participants during January-March, 2015

Sl. Title & Date Coordination Team Participants 1. Appraisal and Management of Working

Capital Financing (Jan 12-15) Md. Mahabbat Hossain Nur Al Faisal 39

2. Human Resource Management in Banks (Jan 18-22) Ashraf Al Mamun Md. Masudul Haque 28

3. International Trade Payment and Finance (Jan 18-27) Sheikh Mozaffar Hossain Tofayel Ahmed 41

4. Islamic Banking and Finance (Jan 25-29) Md. Alamgir Nur Al Faisal 26 5. IT Application for Branch Managers

(Feb 01-05) Md. Mahbubur Rahman

Alam Kaniz Rabbi

31

6. Risk Management in Banks (Feb 01-05) Md. Zakir Hossain Rahat Banu 48 7. Investment and Merchant Banking

(Feb 08-12) Md. Ruhul Amin Tahmina Rahman 21

8. Credit Appraisal and Management (Feb 08-17) D.R. Karmaker Md. Abdul Halim 63

9. SME Product Development and Marketing (Feb 15-17) Md. Shahid Ullah Rexona Yesmin 37

10. International Financial Reporting Standard (IFRS) and Financial Statements of Banks (Feb 22-24)

Md. Mahabbat Hossain Tofayel Ahmed 36

11. Prevention of Malpractices in Banks (Feb 22-25) Md. Najir Hossain Rexona Yesmin 52

12. Online Banking for Non-IT Executives (Mar 01-05)

Md. Mahbubur Rahman Alam

Md. Shihab Uddin Khan 35

13. Asset-Liability Management in Banks (Mar 08-12) Md. Ruhul Amin Nur Al Faisal 44

14. Branch Management (Mar 08-16) D.R. Karmaker Md. Najir Hossain 45 15. Agricultural and Rural Banking

(Mar 15-19) Abdul Jalil Choudhury Tahmina Rahman 29

16. Internal Control and Compliance in Banks (Mar 22-25) Atul Chandra Pandit Md. Shahid Ullah 45

17. SME Credit Risk Management (Mar 22-25) Ashraf Al Mamun Rahat Banu 40

March 2015

3. Training Workshops Organized in BIBM during January – March 2015

4. Research WorkshopBangladesh Institute of Bank Management (BIBM) organized one Research Workshop during January- March, 2015.

(i) Employee Turnover in the Banking Sector of Bangladesh: An Economic Analysis

Bangladesh Institute of Bank Management (BIBM) organized a research workshop on “Employee Turnover in the Banking Sector of Bangladesh: An Economic Analysis” at its auditorium on February 19, 2015. Dr. Shah Md. Ahsan Habib, Professor & Director (Training) of BIBM presented a keynote paper on the subject as a team leader of the research team. Other members of the research team were Ms. Fahmida Chowdhury, Associate Professor, BIBM; Mr. Md. Mohiuddin Siddique, Associate Professor & Director (DSBM), BIBM; Ms. Rexona Yesmin, Lecturer, BIBM; Mr. Md. Abdul Halim, Lecturer, BIBM; and Mr. John Sarker, ADMD & Head of HR, ONE Bank Limited. The purpose of this research workshop was to finalize the research paper by accommodating comments and suggestions of the

designated discussants and participants of the program.

Mr. Khondkar Ibrahim Khaled, Dr. Muzaffer Ahmad Chair Professor, BIBM; Mr. S. A. Chowdhury, A.K. Gangopadhaya Chair Professor, BIBM; Mr. Helal Ahmed Chowdhury, Supernumerary Professor, BIBM; and Mr. M. Ehsanul Haque, Managing Director & CEO, Mercantile Bank Limited were present in the workshop as panel discussants. Dr. Toufic Ahmad Choudhury, Director General, BIBM inaugurated the workshop and delivered concluding remarks as chairman. A good number of Senior Executives from different banks and faculty members of BIBM were present in the research workshop.

Sl. Title Coordination Team Participants 1. Prevention of Money Laundering and

Terrorist Financing (Jan 14-15) Sheikh Mozaffar Hossain Md. Alamgir 35

2. Green Banking (Jan 21-22) Md. Shahid Ullah Tahmina Rahman 31 3. Credit Risk Grading for Lending Decision

(Jan 27-29) Md. Mahabbat Hossain Md. Abdul Halim 40

4. Retail Banking (Jan 28-29) Md. Masudul Haque Rexona Yesmin 36 5. Factoring, Leasing and Venture Financing

(Feb 03-05) Abdul Jalil Choudhury Md. Ruhul Amin 28

6. Risk Based Internal Audit in Banks (Feb 11-12) Atul Chandra Pandit Rahat Banu 31

7. Information System Audit and Risk Management in E-Banking (Feb 17-19) Md. Shihab Uddin Khan Kaniz Rabbi 41

8. Corporate Social Responsibility and Governance for Sustainable Banking (Feb 18-19)

Ashraf Al Mamun Tofayel Ahmed 30

9. Debt Securities in Bangladesh (Feb 25-26) Tahmina Rahman Nur Al Faisal 26 10. Negotiation Skills in Banking (Feb 25-26) Fahmida Chowdhury Md. Masudul Haque 32 11. Prudential Regulations and Bank

Supervision (Mar 03-05) Sheikh Mozaffar Hossain Tofayel Ahmed 26

12. ICC Guidelines for Trade Facilitation (Mar 10-12)

Dr. Shah Md. Ahsan Habib Tofayel Ahmed 41

13. Time and Stress Management for Bank Executives (Mar 15-16) Fahmida Chowdhury Md. Abdul Halim 31

14. Management of Non-performing Loans: Case-based Analysis (Mar 18-19) Md. Mohiuddin Siddique Md. Shahid Ullah 42

15. Structured Finance and Credit Derivatives (Mar 24-25) Abdul Jalil Choudhury Md. Ruhul Amin 31

March 2015

5. National SeminarsBangladesh Institute of Bank Management (BIBM) organized two national seminars during January to March, 2014. Two key note papers were presented in these seminars.

i) SME Cluster Development: Implication for BanksA day-long national seminar was held at Bangladesh Institute of Bank Management (BIBM) on 14th March, 2015 in its Auditorium. A paper titled on “SME Cluster Development: Implication for Banks” was presented in the seminar by the research team comprising Dr. Shah Md. Ahsan Habib, Professor and Director (Training), BIBM; Ms. Fahmida Chowdhury, Associate Professor, BIBM; Mr. Md. Shahid Ullah, Assistant Professor, BIBM; Mr. Md. Zakir Hossain, Lecturer, BIBM; Ms. Rexona Yesmin, Lecturer, BIBM; and Mr. Md. Ashraful Alam, Deputy General Manager, SME & Special Programmes Department, Bangladesh Bank. The study shows that the SME clusters of the country are basically geographically concentrated without meeting the pre-requisites of successful clusters. Most of the SME clusters are immature. Extensive supports to these clusters can bring notable change. A separate ‘SME cluster development and financing policy and strategy’ is needed to promote SME clusters in Bangladesh. A coordination body is also needed with participation of different stakeholders for formulating support strategies.

Mr. Md. Abul Quasem, Chairman, Executive committee of BIBM and Deputy Governor, Bangladesh Bank was present in the seminar as the chief guest. He underscores the importance of the subject. Dr. Momtaz Uddin Ahmed, Professor, Department of Economics, University of Dhaka; Mr. Md. Mehmood Husain, President & Managing

Director, Bank Asia Limited and Dr. Engr. Syed Md. Ihsanul Karim, Managing Director, Small & Medium Enterprise Foundation were present in the seminar as designated Discussants. Dr. Toufic Ahmad Choudhury, Director General, BIBM Chaired the occasion

A total number of 200 participants including executives, high officials of different banks, academicians, media representatives, faculty members and students of BIBM participated in the seminar.

(ii) An Assessment of On-site Supervision of Bangladesh Bank A day-long national seminar on aforementioned subject was held at Bangladesh Institute of Bank Management (BIBM) on 29th March, 2015 in its Auditorium. Dr. Prashanta Kumar Banerjee, Professor and Director (RD&C), BIBM gave his welcome address in this seminar. The research paper was written by a team comprising Mr. Sheikh Mozaffar Hossain, Faculty Member, BIBM and General Manager, Bangladesh Bank; Mr. Md. Alamgir, Assistant Professor, BIBM; Mr. Tofayel Ahmed, Lecturer, BIBM; and Mr. Md Abdul Halim, Lecturer, BIBM. Mr. Sheikh Mozaffar Hossain presented the paper in the seminar.

In the paper, a comparative analysis of on-site supervision procedures followed by different countries was presented and international best practices were highlighted. Finally, some recommendations were made for making the on-site supervision of Bangladesh Bank more effective. The paper suggested that Bangladesh Bank should transform the present inspection procedure into a risk based one at the earliest convenience. The paper suggested that a road map may be prepared and the risk based inspection may be phased out in this regard.

Mr. Md. Abul Quasem, Chairman, Executive Committee of BIBM and Deputy Governor, Bangladesh Bank was present in the seminar as the chief guest. He underscored the importance of the

March 2015

research and thanked BIBM and team members for undertaking this work. He mentioned that the research would be very useful for on-site supervisors supervising the banks for maintaining financial stability, which would ultimately protect the depositors’ interest. He also drew the attention of the bankers to uphold ethical standards in doing banking business and suggested the bankers to maintain ‘Daily Affairs’ properly for minimizing irregularities.

Mr. Khondkar Ibrahim Khaled, Dr. Muzaffer Ahmed Chair Professor, BIBM; Mr. S. A. Chowdhury, A. K. Gangopadhaya Chair Professor, BIBM; Mr. Mohammed Nurul Amin, Managing Director & CEO, Meghna Bank Limited; and Mr. Mohammad Naushad Ali Chowdhury, Executive Director, Bangladesh Bank were also present in the seminar as designated Discussants.

Dr. Toufic Ahmad Choudhury, Director General, BIBM Chaired the seminar. In his concluding remark, Mr Choudhury mentioned that banking financial institutions should be highly regulated since banks create money. He also pointed out that regulators should deploy their efficient resources to minimize various irregularities in banks.

A good number of participants including executives, high officials of different banks and central bank, academicians, media representatives, faculty members, and students of BIBM participated in the seminar.

6. Workshop(i) Monetary Policy Statement January-June, 2015

A Workshop on "Monetary Policy Statement January-June, 2015" held at Bangladesh Institute of Bank Management (BIBM) on February 22, 2015 in its auditorium. BIBM arrange a discussion workshop following the declaration Monetary Policy Statement

by Bangladesh Bank in every six month. Dr. Biru Paksha Paul, Chief Economist, Bangladesh Bank presented and explained Monetary Policy Statement January-June, 2015 before the audience. The presenter also took part in question-answering session.

Dr. Muzaffer Ahmad Chair Professor of BIBM Mr. Khondkar Ibrahim Khaled; and A.K. Gangopadhaya Chair Professor of BIBM Mr. S. A. Chowdhury were present in the workshop as designated discussants. Dr. Toufic Ahmad Choudhury, Director General, BIBM chaired the discussion and delivered concluding remarks. Dr. Shah Md. Ahsan Habib, Director (Training), BIBM delivered welcome address. Over 200 senior bank excutives, academicians and students participated in the workshop.

(i) Enhancing Security and Staying ahead of the Fraud to Protect E-Banking Users

Bangladesh Institute of Bank Management (BIBM) organized a workshop on “Enhancing Security and Staying ahead of the Fraud to Protect E-Banking Users” at its auditorium on March 10, 2015. Mr. Dan Dica, Banking Security Industry Thought Leader & International Knowledge Expert presented a keynote paper on the aforementioned subject in the workshop.

Dr. Shah Md. Ahsan Habib, Professor & Director (Training), BIBM inaugurated the workshop and

March 2015

Dr. Toufic Ahmad Choudhury, Director General, BIBM delivered concluding remarks as its session chairman. A good number of Senior Executives from the IT departments of different banks, some media persons and all faculty members of BIBM were present in the workshop.

7. ConferenceBIBM and Knowledge Group of Companies, Malaysia jointly organized the BankTech Asia 2015 Conference in Kuala Lumpur, Malaysia.

‘Bangladesh Institute of Bank Management (BIBM)’ and ‘Knowledge Group of Companies’, Malaysia jointly organized The First Conference of the 7th Annual Series ‘BankTech Asia 2015’ at Kuala Lumpur in Malaysia during March 17-18, 2015. For the first time BIBM organized the conference as Associate Partner. The theme of the first series of the conference was ‘Technology Risk Management’. Renowned experts on the relevant field Tony Chew, Managing Director & Regional Head of Information Security, Asia Pacificand Global Head of Cyber Security Regulatory Strategy, Citibank; Costel ION, Digital Crime Officer, Cyber Innovation & Outreach, INTERPOL, Keith S. Chan ABCP, First Vice President for Information Technology Group, Philippine Business Bank delivered lectures in the

conference. Dr. Shah Md. Ahsan Habib, Professor and Director (Training) of BIBM attended the conference on behalf of BIBM.

The first series was to feature a comprehensive 2-day program to drill down on the hottest topics to help and to validate security and risk management strategy, so that we can see what needs to be improved, kept the same, or changed in your approach for a clear vision into the future. The conference also showcased the latest technologies available in the market today to create opportunities for successful collaborations between organizations with a diverse spectrum of technologies and business issues in the financial business environment. Delegates from different countries participated in the conference. Ten senior level bank executives from six BIBM Member Banks participated in the first series of the conference. The following series of the conference titled Retail Banking Technology, Payment and Transaction Management and Investment Banking Technology will be held during 26-27 May, 2015; 08-09 September, 2015; and 18-19 November, 2015. Bank Executives from Bangladesh are expected to participate in the remaining series of the conference.

8. Awards Received by the Participants in Different Programs in BIBMBIBM introduced cultural programs, sports events and best participant of the program in different training courses and workshops. The participants highly appreciated the BIBM initiatives as they believe this will make more interactions among the participants.

Name of the Course/ Workshop and Date Participants of the Program Participants of the Sports Participants of the

Cultural Night

Foundation Training Course for the Senior Officers & Officers (on Probation) of Pubali

Bank Limited (Nov 30, 2014-Jan 13, 2015)

Md. Selim Reza SO, PBL

Md. Mahamudul Haque Officer,

Pubali Bank Ltd.

Md. Selim Reza SO, PBL

March 2015

Name of the Course/ Workshop and Date Participants of the Program Participants of the Sports Participants of the

Cultural Night

Foundation Training Course for the Management Trainees of Prime Bank Limited

(Dec 10, 2014 –Jan 18, 2015)

Shaikh Nur Alam Management Trainee Prime Bank Limited

Muhammad Anamul Haque Management Trainee Prime Bank Limited

Sanjib Saha Management Trainee Prime Bank Limited

Training Course on “Human Resource Management in Banks”

(Jan 18-22, 2015)

Abu Shaeid Md. Taslim EO & OM

EXIM Bank Limited

Abdullah-Al-Mamun, EO & Manager, SIBL

Zakiya Sultana SO

Pubali Bank Limited

Training Course on “Green Banking” (Jan 21-22, 2015)

Farjana Khaleque FAGM

Janata Bank Limited

- -

Training Course on “International Trade Payment and Finance”

(Jan 18-27, 2015)

Md. Aminul Islam SO, IBBL

Md. Aminul Islam SO, IBBL

Kazi Fatema Begum PO, Agrani Bank Ltd

Sanchia Binte Ali DGM

Rupali Bank Ltd

Special Training Course on ‘Investment Appraisal & Management’ for the Officers of

IBBL (Jan 18-22, 2015)

Syed Tamjid SO, IBBL

- -

Foundation Training Course for the Officers of The City Bank Limited

(Jan 12-25, 2015)

Prosenjit Gupta, SO

The City Bank Limited

Md. Ariful Islam ARM

The City Bank Limited

Manik Sanyal, Officer, The City Bank Limited

Training Course on “Islamic Banking and Finance”

(Jan 25-29, 2015)

Farjana Akhter Chowdhury

Officer Bank Alfalah Limited

Md. Hafizur Rahman Chowdhury SO, SIBL

Kazi Redwanur Rahman

SEO Janata Bank Limited

Training Workshop on “Credit Risk Grading for Lending Decision” (Jan 27-29, 2015)

Plaboni Sarker EO

Standard Bank Limited

- -

Training Workshop on “Retail Banking” (Jan 28-29, 2015)

Kafil Uddin AhmedSEO

Sonali Bank Limited

- -

Special Training Course on ‘Risk Based Internal Audit in Banks’ for the Officers of IFIC Bank

Limited (Jan 25-29, 2015)

Shahab Rashid Khan FVP

IFIC Bank Limited

- Asma Akhter AVP

IFIC Bank Limited

Training Course on “Risk Management in Banks” (Feb 01-05, 2015)

Qazi Md. Faruq Al Banna SEO

Al-Arafah Islami Bank Ltd.

Md. Fahim Uddin SO, BDBL

Abul Kalam Azad PBL

Training Course on “IT Application for Branch Managers”

(Feb 01-05, 2015)

Falak Naaz Mustafa SEO

Janata Bank Limited

Mohammad Rafi Uddin AVP & OP, SIBL

Md. Abdul Aziz SPO

Agrani Bank Limited

Training Workshop on “Factoring, Leasing and Venture Financing” (Feb 01-05, 2015)

Md. Abdullah SPO & Manager

Agrani Bank Limited

Special Training Course on ‘Investment Appraisal & Management’ for the Officers of

IBBL (Feb 08-12, 2015)

Md. Mujahidul Islam SO, IBBL

Md. Asabul Alam SO, IBBL

Md. Masihur Rahman Afrad IBBL

Training Workshop on “Risk Based Internal Audit in Banks”

(Feb 11-12, 2015)

Mohammad Saiful Alam SEO, SIBL

- -

Training Course on “Investment and Merchant Banking”

(Feb 08-12, 2015)

Mohammad Shamsuzzaman

DD, BB

Md. Rayhan PO, OBL

Anjan Chakraborty JM State Bank of India

Advanced Training Course for the Special Cadre Officers of ONE Bank Limited

(Jan 18-Feb12, 2015)

Arnab Goswami SCO, OBL

Md. Zakaria Sarker SCO, OBL

Md. Junaid SCO, OBL

Training Course on “Credit Appraisal and Management”

(Feb 08-17, 2015)

Noor-E-Alam EO, Sonali Bank Ltd.

Md. Saiful Alam PO, AB Bank Ltd.

A. J. M. Mahbubul Islam

SO, Uttara Bank Ltd. Training Course on “SME Product Development

and Marketing” (Feb 15-17, 2015)

Md. Al Amin Hossain SO, Trust Bank Ltd.

- Md. Zahidul Islam AVP, ONE Bank Ltd.

March 2015

Name of the Course/ Workshop and Date Participants of the Program Participants of the Sports Participants of the

Cultural Night

Training Workshop on “Information System Audit and Risk Management in E-Banking”

(Feb 17-19, 2015)

Quazi Shaklain FAVP

First Security Islami Bank Limited

- -

Foundation Training Course for the Newly Recruited Officers of BDBL

(Jan 25-Feb 19, 2015)

Md. Ashrafuzzaman, SO, BDBL

Gautam Barua Robin SO, BDBL

Sourav Chowdhury Officer, BDBL

Training Workshop on “Corporate Social Responsibility and Governance for Sustainable

Banking” (Feb 18-19, 2015)

Md. Yousup Majumder SEO

Commercial Bank of Ceylon PLC

- -

Training Course on “International Financial Reporting Standard (IFRS) and Financial

Statements of Banks” (Feb 22-24, 2015)

Md. Alamgir Hossain AD, BB

Md. Rezaul Islam EO, EXIM Bank Limited

-

Training Course on “Prevention of Malpractices in Banks”

(Feb 22-25, 2015)

Mohammad Absar Uddin

PO & Manager Trust Bank Limited

Md. Shah Alam Mussolly FAVP

EXIM Bank Limited

Dhali Sajjad Ahmed SO, IBBL

Training Workshop on “Debt Securities in Bangladesh”

(Feb 25-26, 2015)

Syeda Rezwana Begum DD, BB

- -

Training Workshop on “Negotiation Skills in Banking”

(Feb 25-26, 2015)

Md. Monirul Hoque Bhuyan

PO, Trust Bank Limited

- -

Foundation Training Course for the Fresh Officers of NRB Bank Limited

(Mar 01-03, 2015)

Md. Shaidul Hossain Officer

NRB Bank Ltd.

- Md. Shaidul Hossain Officer

NRB Bank Ltd.

Training Course on “Online Banking for Non-IT Executives”

(Mar 01-05, 2015)

Sanchita Sen Gupta SO

Agrani Bank Limited

Muhammad Emran Hossain, Officer, ONE

Bank Limited

Mohammad Rafiqul Islam

Senior Officer ONE Bank Limited

Training Workshop on “Prudential Regulations and Bank Supervision”

(Mar 03-05, 2015)

Md. Anwar Hossain Bhuiyan

SEO Sonali Bank Limited

- Mohammad Kamruzzaman

FAGM Janata Bank Limited

Foundation Training Course for the Probationary Officers of Modhumoti Bank Limited

(Feb 15-Mar 12, 2015)

Md. Azad Mondol Probationary Officer

Modhumoti Bank Limited

Monoranjan Das Probationary Officer

Modhumoti Bank Limited

Md. Ainul Huq Probationary Officer

Modhumoti Bank Limited

Training Workshop on “ICC Guidelines for Trade Facilitation”

(Mar 10-12, 2015)

Pradip Paul Deputy Director

Bangladesh Bank

- -

Training Course on “Asset-Liability Management in Banks”

(Mar 08-12, 2015)

Shaharin Sultana AD, Bangladesh Bank

Mehedi Hasan Bhuiyan EO

EXIM Bank Limited

Nusrat Islam PO

Islamic Finance and Investment Ltd.

Special Training Course on ‘ITPF’ for the Officers of

IFIC Bank Limited (Mar 08-12, 2015)

Md. Azad Mondol Senior Officer

IFIC Bank Limited

Monoranjan Das Senior Officer

IFIC Bank Limited

Md. Ainul Huq Senior Officer

IFIC Bank Limited

Training Course on “Branch Management” (Mar 08-16, 2015)

Krishna Chandra Shil EO

Janata Bank Limited

K. M. Abu Sayed SPO, FSIBL

Wazi Uddin Md. Saifulla

Deputy Manager BASIC Bank Limited

Training Workshop on “Time and Stress Management for Bank Executives”

(Mar 15-16, 2015)

Md. Lutfur Rahman PO

EXIM Bank Limited

Training Course on “Agricultural and Rural Banking”

(Mar 15-19, 2015)

Md. Masum Billah TAO The Farmers Bank Ltd.

Md. Masiar Rahman SO, SIBL

Hafizur Rahman SO

Southeast Bank Limited

March 2015

9. Recommendations of the Training Workshops (i) Prevention of Money Laundering and Terrorist Financing BIBM organized a workshop on “Prevention of Money Laundering and Terrorist Financing” at BIBM premises during January 14-15, 2015. A total number of 35 senior officers of different banks participated in the workshop. The suggestions given by participants in this workshop are as follows:• Arrange training & workshop on Prevention of

Money Laundering and Terrorist Financing quarterly.

• Circulate clear guidelines for dealing with Politically Exposed Persons (PEPs).

• Formulate a specific guideline regarding student account & mobile banking.

• Arrange awareness building program for mass people by different media like e-mail, internet, Face book, electronic media, etc.

(ii) Green Banking BIBM organized a workshop on “Green Banking” at BIBM premises during January 21-22, 2015. A total number of 31 senior principal officer or equivalent officer and above of different banks participated in the workshop. The suggestions given by participants in this workshop are as follows:

• Required to change the mind set of root level, mid-level and top level bank employees.

• All stakeholders like Banks, Department of Environment, Business Houses, Consumers, Researchers, NGOs, etc. should consider the green banking issues seriously and simultaneously.

• Central bank should give some specific indications regarding the cost sharing and incentives (like Tax advantage, energy star, social award, etc.) for the banks practicing green banking.

• Need to consider the size, culture and attitude of different banks in case of establishing level playing field for implementing Green Banking Policy Guideline given by Bangladesh Bank.

• Banks are required to have more expertise, knowledge sharing, awareness development and synchronization to implement the green initiatives successfully.

• Need some specific instances like penalizing, freezing of loan limit, etc. to make green banking initiative successful.

• Required to incorporate environment and climate related issues well matched with Bangladesh perspective at the very early stage of our national curriculum.

Name of the Course/ Workshop and Date Participants of the Program Participants of the Sports Participants of the

Cultural Night

Training Workshop on “Management of Non-performing Loans: Case-based Analysis”

(Mar 18-19, 2015)

Md. Hamim Ahsan Officer, DBBL

- -

Special Training Course on ‘General Banking’ for the Executives of Eastern Bank Limited

(Mar 22-24, 2015)

Md. Shafiul Islam Officer, EBL

- -

Training Course on “Internal Control and Compliance in Banks”

(Mar 22-25, 2015)

Quazi Mohd. Reza-E-Rabbi SEO

Midland Bank Limited

Mahmood Alam Feroz Officer

Bank Asia Limited

Md. Ruhul Amin SPO

EXIM Bank Limited

Training Course on “SME Credit Risk Management”

(March 22-25, 2015)

Md. Golam Mostofa SO

IBBL

Iftekhar Ahmed MTO

Habib Bank Ltd.

M. F. Shahriar Kabir PO

ONE Bank Limited

Training Workshop on “Structured Finance and Credit Derivatives”

(Mar 24-25, 2015)

Noor-E-Alam Talukder PO, TBL

- -

Foundation Training Course for the Officers of the City Bank Limited (March 15 - 30, 2015)

Khondker Ajwad Hossain Officer

The City Bank Limited

Mir Abubakar Siddik EO

The City Bank Limited

Imtiaz Hossain Chowdhury

Senior Manager The City Bank Limited

Training Course on “Legal Aspects of General Banking and Credit”

(Mar 29-Apr 02, 2015)

Qazi Mahmudur Rahman Manager

Bank Alfalah Limited

Mohammed Sohel Mahmud

EO Bank Asia Limited

Md. Kamrul Hasan Chowdhury

Officer Rupali Bank Limited

Training Course on “Marketing of Financial Services”

(Mar 30-Apr 02, 2015)

Md. Akibul Hasan SO

Uttara Bank Limited

Md. Riyad Hasan Associate Manager

BRAC Bank Limited

Nusrat Hossain SPO

ONE Bank Limited

March 2015

• Campaign through electronic and print media to develop green banking related awareness should be amplified.

• Green banking should cover its investment more in rural areas as well as engaging more participation of rural women.

• Incentives are needed at primary level to come forward the stakeholders to work in green banking.

(iii) Credit Risk Grading for Lending Decision BIBM organized a Training workshop on ‘Credit Risk Grading for Lending Decision” at BIBM premises during January 27-29, 2015. A total number of 40 officers of different banks participated in the workshop. The suggestions given by participants in this workshop are as follows:• Quick ratio may also be considered. • Net profit ratio may be considered under financial

risk.• Technological risk may be addressed. • In case of superior grading, local bank guarantee

may also be considered. • Weightage under financial risk may be reduced.• Environmental risk may be considered for

adjusted GRG. • CRG Score sheet should be sector/industry

specific. • More parameters may be used under financial

risk, security risk and management risk.• Size of business may not be measured only by

sales.• Guarantor’s CIB status may be considered under

security risk.• Separate CRG Score sheet for new business.• More weightages may be allocated for coverage

ratio.• Coverage ratio for continuous and term loan

should be different.• The valuation of security and control over security

should be considered for each parameter under security risk.

• Accounting system/quality of data may be included as one of the parameters.

• Minimum required score for each principal risk component should be fixed.

(iv) Retail BankingBIBM organized a Training workshop on “Retail Banking” at BIBM premises during January 28-29, 2015. A total number of 36 senior bank officials from different banks participated in the workshop. The suggestions found in the workshop were as follows:• A strong policy or guidelines for operating Retail

activities of banks should be in place. There is also a lack of universal database in our banking industry. Moreover, CIB is not that much strong. If it is possible to develop the database, it can help to take right decision at right time. Central bank may take initiative in this respect.

• The Retail market that is served by financial institutions is already saturated. There is an ample opportunity to capture the other portion of the urban market (mass people) and the rural people.

• In case of borrower selection in Retail operation, banks hardly go for segmentation. Effective segmentation and proper target market selection can give huge potentiality of the sector by developing tailor made products for them.

• To select the right borrowers banks should go for Contact Point Verification (CPV), check credit worthiness and repayment capacity of the borrowers, take proper documentation and other formalities as there is a scope of application and documentation fraud, fund diversion, etc.

• Default tendency is high in Retail banking. So, to mitigate the risks banks can strengthen their supervision and monitoring cell.

• There is lack of professional skilled manpower in banks. Banks can take initiatives to appoint skilled manpower and retain them by proper training and development.

• For reducing the fraud and forgery in operation and give customers IT knowledge, banks can take initiative to create awareness among customers through proper marketing activities.

• There is a tendency of business heads to set short term targets by aggressive activities. Also, there is a lack of ethical standards of both the banks and borrowers but it should not be.

• In Retail, customers bear a high rate of interest and other hidden costs. So, there is a scope to change the circumstance.

March 2015

(v) Factoring, Leasing and Venture Financing BIBM organized a workshop on “Factoring, Leasing and Venture Financing” during February 3-5, 2015. A total number of 28 officers of different banks and fincncial institutions participated in the workshop. The summary of recommendations of the workshop is as follows:• Awareness building initiatives as well as capacity

building program should be undertaken for suppliers, buyers and banks in order to boost up factoring services in the country.

• Banks should launch separate window for offering factoring services as special skills are required for such customized product.

• Banks may start domestic factoring now and gradually extend to international factoring.

• Government may support the growth of lease financing by allowing tax advantage.

• Detailed database regarding technical and economic value of equipment, estimated life of technology, etc. are required for providing the leasing services.

• Operating lease can be popularized to increase the business portfolio of financial institutions.

• Banks may create a venture capital financing fund from each year profit for 5-10 years.

• Bangladesh Bank should take initiatives to provide guideline for venture capital investment.

• Non-resident Bangladeshi investors need to be encouraged to invest in venture firms.

• Extensive pilot survey is required to find out the potential sectors under venture financing in Bangladesh and accordingly, suitable project appraisal techniques, monitoring guideline, market linkage support, etc. may be devised.

• Transparent and smooth exit route through capital market is needed for the venture capitalists.

• For specialized financial products like Factoring, Leasing and Venture Financing, capacity building initiatives for employees is necessary to be undertaken.

• Government and Bangladesh Bank may take necessary actions separately and jointly to familiar these special financial products in Bangladesh through introducing product specific guidelines, refinancing schemes, etc.

(vi) Risk Based Internal Audit in BankBIBM organized a Training workshop on “Risk Based Internal Audit in Bank” at BIBM premises during February 11-12, 2015. A total number of 31 officers of different banks participated in the workshop. The suggestions given by participants in this workshop are as follows:• Detailed guidelines on Risk Based Internal Audit

(RBIA) should be made available for the banking sector of Bangladesh.

• Initiatives should be undertaken at the bank level to enhance capacity of the bank officials engaged in the process of conducing RBIA.

• Uniform set of parameters may be developed for assessing branch risks of the commercial banks of Bangladesh. However, risk assessment parameters may be customized at the bank level considering the nature and complexity of operation particularly for the specialized banks.

• Software may be developed at the bank level for conducting pre-audit risk assessment of bank branches which will facilitate the preparation of Risk Based Audit Plan.

• Uniform Risk Based Internal Audit report format may be introduced for the banks.

(vii) Information System Audit and Risk Management in E-BankingBIBM organized a workshop on “Information System Audit and Risk Management in E-Banking” at BIBM premises during February 17-19, 2015. A total number of 41 senior executives of different banks participated in the workshop. The suggestions given by participants in this workshop are as follows:• BIBM should organize more workshops with

more practical case studies so that bankers can conduct IS audit accurately.

• ICC guideline of Bangladesh Bank is not updated after 2005. Also, IT audit is not included in ICC guideline.

• IT expert person should be included in audit team.• If necessary, manual control measures should be

adopted.• Core principles of C-I-A (Confidentiality,

Integrity, and Availability) should be maintained and implemented properly.

• Adopt good governance in every area of banking.• There should be an individual compliance unit

which has expertise in risk management.

March 2015

• Budget allocation on IT risk/ IS audit should be increased.

• Bank management should look after to minimize high turnover of IT professionals.

• There should be a predefined set of policies from the competent authority (i.e Bangladesh Bank, Government, BTRC) for selecting right vendor for a service.

(viii) Corporate Social Responsibility and Governance for Sustainable BankingBIBM organized a workshop on “Corporate Social Responsibility and Governance for Sustainable Banking” at BIBM premises during February 18-19, 2015. A total number of 30 officials from different banks and financial institute participated in the workshop. The following recommendations are drawn from the participants of the Workshop:• Financial institutions must expand their missions

that prioritize profit maximization to a vision of social and environmental sustainability.

• A commitment to sustainability would require financial institutions to fully integrate the consideration of ecological limits, social equity and economic justice into corporate strategies and core business areas.

• Based upon an assessment of its past experience, its present capabilities and its future ambitions, bank needs to select the social and environmental issues it wants to assign top priority to. Based upon these strategic decisions, the bank should select the types of clients it wants to focus on and the sectors and the regions and countries it wants to be active in. These strategic choices have of course to be adopted by the board of your bank.

• In putting the ambitions formulated in specific policies into practice, the bank needs to devote considerable attention and resources to capacity building, training, motivating and rewarding its employees.

• Financial institutions should commit to do no harm by preventing and minimizing the environmentally and/or socially detrimental impacts of their portfolios and their operations.

• Financial institutions should bear full responsibility for the environmental and social impacts of their transactions. Financial institutions must also pay their full and fair share of the risks they accept and create. This includes financial

risks, as well as social and environmental costs that are borne by communities.

• Financial institutions must be accountable to their stakeholders, particularly those that are affected by the companies and activities they finance.

• Financial institutions must be transparent to stakeholders, not only through robust, regular and standardized disclosure, but also by being responsive to stakeholder needs for specialized information on financial institutions’ policies, procedures and transactions. Commercial confidentiality should not be used as an excuse to deny stakeholders information.

• Financial institutions should ensure that markets are more capable of fostering sustainability by actively supporting public policy, regulatory and/or market mechanisms which facilitate sustainability and that foster the full cost accounting of social and environmental externalities.

(ix) Debt Securities in Bangladesh A training workshop on “Debt Securities in Bangladesh” was held at BIBM from February 25-26, 2015. A total number of 26 officials of different banks participated in the workshop. The suggestions given by participants in this workshop are as follows:• Comfortable platform for trading bond should be

introduced.• Yield curve should be developed which will assist

investor to understand market condition easily.• Circuit breaker is required for both the lower and

upper level yield change.• Revaluation should be stopped until the secondary

market is developed.• Local bodies like municipalities should come

forward for issuance of debt securities.• Derivatives can be introduced for ensuring market

diversification. For example, Floating Rate Notes, TIPS, etc.

• Awareness among general investors regarding investment in different bond should be developed to increase the depth of this market.

(x) Negotiation Skills in BankingBIBM organized a training workshop on “Negotiation Skills in Banking” during February 25-26, 2015. A total number of 32 senior bank

March 2015

officials from different banks participated in the workshop. The suggestions found in the workshop were placed below.• For banking negotiation there may be a group of

bankers in the business department having knowledge in human psychology.

• In case of business and dispute negotiation in banking, knowledge plays a significant role to reach an amicable solution. That’s why bankers should have sound knowledge about the banking industry, national and international economy, politics and other issues.

• Money Loan Court Act assists bankers to settle their financial disputes though it is time consuming and difficult to some extent. In this regard outside the court settlement can play a very significant role. That’s why, efficient negotiation skills is vital for the bankers.

• Bankers should be well aware about the rules and regulations of their respective banks. Moreover they should also be aware about the central bank’s policy, guide lines, circulars and other issues.

• Negotiators should set their goals and need to do the ground work before sitting for negotiation. They have to collect sufficient information about their opponents for better bargaining at the time of negotiation. Identifying the opponent’s weak point is very important in this regard.

• In some cases bank can take help from third party/ outsourced agency for negotiation.

• Giving waiver to more profitable customers is very vital in case of banking negotiation. Previous profit volume shown by the customer’s needs to be considered in case of banking negotiation.

(xi) Prudential Regulations and Bank SupervisionBIBM organized a workshop on “Prudential Regulations and Bank Supervision” at BIBM premises during March 03-05, 2015. A total number of 26 officials from different banks and financial institutes participated in the workshop. The following recommendations are drawn from the participants of the Workshop:• Checklist for Department of Banking Inspection

team should be updated in line with regulations of other departments of BB.

• Bankers recommend providing clear and precise instruction at the time of issuing any guidelines or circulars.

• BB should conduct adequate training, both on the job and off the job, for supervisors.

• On-site supervision should be increased as major irregularities are disclosed through this type of supervision.

• Format of Integrated Supervision System should be familiarized to the concerned persons providing data to supervisors.

• Increased supervision can be on courier service to combat anti money laundering.

• BB should update BRPD Circular No. 14 in accordance with International Accounting Standard and Bangladesh Accounting Standard.

(xii) ICC Guidelines for Trade FacilitationBIBM organized a workshop on “ICC Guidelines for Trade Facilitation” at BIBM premises during March 10-12, 2015. A total number of 41 officials from different banks and financial institute participated in the workshop. The following recommendations are drawn from the participants of the Workshop:• Amendment of L/C should be accepted or rejected

by beneficiary with notice before presentation of documents along with modification of UCP article 38(k).

• Greater co-ordination between domestic guidelines and international guidelines can be created to some extent.

• More simplification can be of incoterms.• ICC publications should be available in website at

reasonable cost.• Provision of L/C amendment may be accepted

partially.

(xiii) Time and Stress Management for ExecutivesBIBM organized a workshop on “Time and Stress Management for Executives” during March 15-16, 2015. A total number of 31 officials from different banks and financial institute participated in the workshop. The following recommendations are drawn from the participants of the Workshop:• Realistic and achievable branch target could

manage bankers’ excessive stress.• Proper manpower allocation in the branches may

help proper allocation of duties and responsibilities. This ultimately contributes to proper time management.

• Job rotation is necessary for reducing employee

March 2015

stress and learning time management.• Senior management should be more attention to

solve grievances.• Automation of service in every department is

necessary for time management in banks.• Training should be arranged for every level of

employee for reducing stress.• Mandatory leave should be implemented.• Proper motivation and reward system need to be

administered to reduce stress.• Bank can take initiatives to develop health and

recreational club for their employees.

(xiv) Management of Non-performing Loans: Case-based AnalysisBIBM organized a training workshop on “Management of Non-performing Loans: Case-based Analysis” at BIBM premises during March 18-19, 2015. A total number of 42 officers of different banks and financial institutions participated in the workshop. The issues recommended by the participants are summarized as follows:• Banks should institute more innovative approach

other than legal measures to settle non-performing loan.

• Recovery department of the bank will have to be more alert and effective to expedite the recovery of bad debt.

• Borrower selection process should be made more rigorous to reduce the instances of willful default.

• Opportunities to get loan by the same borrower from different banks in excess of repayment capacity should be eliminated.

• Internal Control and Compliance department should be given appropriate standing within the organizational structure with regard to credit risk management culture.

(xv) Structured Finance and Credit DerivativesBIBM organized a training workshop on “Structured Finance and Credit Derivatives” at BIBM premises during March 24-25, 2015. A total number of 31 officers from different banks and financial institution participated in the workshop. The issues recommended by the participants are summarized as follows:• In initiating innovative products, proper legal and

regulatory framework should be created first for minimizing risks.

• In order to introduce credit derivatives, floating rate lending and borrowing along with reference rate (e.g., LIBOR) should be introduced. Interest rate swap will also be introduced.

• Securitization can be applied for financing infrastructure projects under PPP. In private sector, securitization in small scale such as in the form of commercial paper or zero coupon bonds can be introduced.

• Developing a strong capital market is also required for trading of these securities.

• A good number of competent Special Purpose Vehicles (SPV) are needed to ensure extensive soundness of derivative trading. In this regard, the current licensing procedure should be standardized.

• Credit insurance and other security measures can be introduced through developing a sound regulatory framework.

• More skilled and sound human resources need to be developed to lead this sector through arranging recurrent training programs at both national and international end.

• For syndicated loan the down payment, in case of rescheduling, may be increased to 5% and above depending on the circumstances.

10. BIBM Faculties in International Programs/ Visit during January to March 2015• Dr. Shah Md. Ahsan Habib, Professor and

Director (Training) participated in Membership Meeting of EBTN from January 08-09, 2015, held in Frankfurt, Germany.

• Mr. Md. Alamgir, Assistant Professor and Mr. Tofayel Ahmed, Lecturer participated in Training Workshop on “ICC International Trade Finance: Rules and Tools Operations, Legal Cases and Proven Trade Finance Strategies” from February 13-15, 2015, held in Colombo, Sri Lanka.

• Ms. Rahat Banu, Lecturer and Mr. Md. Abdul Halim, Lecturer participated in “Training for the Trainers” from February 23-28, 2015, held in Indian Institute of Banking & Finance, Mumbai, India.

• Dr. Prashanta Kumar Banerjee, Professor and Director (RD&C) participated in Southwestern Society of Economists Meeting from March 11-14, 2015 held in Houston, Texas, USA.

March 2015

• Dr. Shah Md. Ahsan Habib, Professor and Director (Training) participated in BankTech Asia Conference 2015 (First part of Series Conference) from March 17-18, 2015 Organized by Knowledge Group of Companies, Malaysia and BIBM, held in Malaysia.

• Mr. Md. Nehal Ahmed, Associate Professor and Mr. Atul Chandra Pandit, Assistant Professor is participating in E-learning course on Certified Expert in Risk Management from March 2, 2015 to August 31, 2015 organized by the Frankfurt School of Finance and Management, Frankfurt, Germany.

11. BIBM Faculties in Local Programs during January to March 2015• Mr. Md. Abdul Halim, Lecturer, BIBM

participated in a round table discussion “Operationalization of WTO LDCs Service Waiver Bali decision and Its Implementation” on January 25, 2015 held in Bangladesh Foreign Trade Institute, Dhaka.

• Mr. Md. Mohiuddin Siddique, Associate Professor and Director (DSBM) participated in a daylong program “Utilization of Workers’ Remittances in Bangladesh” on February 23, 2015 organized by the Research Division, Bangladesh Bank, Dhaka.

12. BIBM Officers in Local Programs during January to March 2015• Mr. Sujan Kumar Ghosh, Training Officer of

BIBM participated in a training program “Training and Facilitation Skill Development” from January 10-13, 2015 held in Continuing Education Centre, Dhaka.

• Mr. Md. Nuruzzaman, Senior Accounts Officer and Ms. Sharmina Nargish, Senior Administrative Officer participated in a training program “Procurement Management” from February 15, 2015 to March 05, 2015 organized by Bangladesh Planning and Development Academy, Dhaka.

March 2015

BANKING AND FINANCIAL NEWS

Domestic NewsBB Rolls Out Rewards for Good BorrowersBangladesh Bank unveiled a new policy to provide good borrowers with incentives, including a 10 percent rebate on interests, in an effort to eliminate willful loan default culture. The central bank also came up with the definition of good borrowers. Good borrowers must not have any classified loans in the last three years. In case of current loans, if borrowers make regular repayment for three consecutive years, banks will have to provide a 10 percent rebate on interests at the end of third year. Against demand loans, banks will have to provide the same rebate on the interests to be accrued from the credit on the third year. In case of term loans, banks will have to provide a 10 percent rebate on the interests to be realized on the third year. The central bank has made it mandatory for banks to provide the incentives to all its clients, a move which was well received by bankers.Source:The Daily Star, March 20, 2015

BB's New Effort to Help Women Entrepreneurs Bangladesh Bank (BB) has announced a new initiative to facilitate women entrepreneurship in the country. As per the new scheme, each branch of commercial banks and non-bank financial institutions will have to lend a minimum of Tk. 50,000 to at least one-woman entrepreneur every year. If the initiative continues, around 10,000 new women entrepreneurs will be created in the country every year. The Bangladesh Bank had previously asked banks and NBFIs to create separate units managed by women officials for women entrepreneurship development, which made access to finance much easier for thousands of women entrepreneurs.Source: The Daily Star, March 29, 2015

BB to Create $500m Green Fund for Textile The central bank is going to undertake an initiative to set aside $500 million of low-cost funds for textile factories to help them adopt eco-friendly

technologies and practices. The money will come in addition to the existing Export Development Fund (EDF) of $1.5 billion and will be named as Green EDF. At present, Bangladesh Bank is offering the EDF to exporters at a rate of LIBOR (London Interbank Offered Rate) plus 2.5 percent for six months. An exporter can borrow a maximum of $15 million in foreign currency.Source: The Daily Star, February 15, 2015

Banks Asked to Withdraw Cases against Default FarmersBangladesh Bank instructed state-run commercial and specialized banks to take steps to withdraw or settle cases filed against farmers for defaulted agriculture loans. Agricultural Credit and Financial Inclusion Department of the central bank also advised the banks to report the progress on the settlement of the certificate cases on a monthly basis. It suggested banks to organize meetings at field level to raise awareness among farmers about the importance of using and paying back farm loans and the consequence of certificate cases. According to Bangladesh Bank data, certificate cases were filed against more than two lakh farmers by six state banks1. Of them, arrest warrants were issued approximately against 10,000 farmers. The current initiative is expected to release the farmers from certificate cases.Source: The Daily Star, March 13, 2015

Loan Rescheduling Rules Relaxed for Unrest-hit FarmersThe central bank has relaxed the agriculture loan rescheduling policy as farmers are failing to repay loans because of the falling prices of their production caused by the ongoing blockade and strikes. As per the new circular, the conditions for down payment for rescheduling short-term farm loans can be relaxed based on banker-borrower relationship. Even, loans can be rescheduled without any down payments. The BB also directed the banks to disburse fresh loans to farmers after rescheduling their existing loans. Source: The Daily Star, February 25, 2015

1 Sonali, Janata, Agrani, Rupali, Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank

March 2015

Non-Banks Asked to Depend Less on Call Money The central bank has asked non-bank financial institutions to reduce their dependence on call money -- a short-term bank loan repayable on demand. The directive has forced many non-banks to adjust their additional exposure, causing a fall in interest rate and a rise in transactions. A non-bank had a transaction ceiling of Tk. 154 crore in the call money market, which came down to Tk. 100 crore in February and went down further to Tk. 50 crore in March. So, the financial institutions with higher exposure were forced to make the adjustments. The weighted average call money rate declined to 7.63 percent on March 12, down from 8.25 percent a month ago, according to Bangladesh Bank data.Source: The Daily Star, March 18, 2015

Cotton Hedging is Need of the Time Cotton price volatility is a major source of risk that eats up the profits of the textile producers. As such, it is always a source of concern for the textile sector of the country. Hedging is a strategy designed to reduce the risks of adverse price movements in an asset. According to the industry insiders, Bangladesh should practice hedging for cotton imports, as the consumption of the fibre is on the rise. Hedging is expected to ensure guaranteed supply of cotton at a reasonable price even in times of crisis as the purchase agreements are signed way before the shipments. In case of hedging, importers need to pay a certain amount of money in advance to the exporters, which is not permitted under existing foreign exchange rules. The cotton hedging is the demand of the time since Bangladesh is not a cotton producing country but a regular user. This is more important for the country as it is needed for the best interests of the garment sector.Source: The Daily Star, March 30, 2015

L/C Confirmation Charges Higher in Bangladesh An importer in Bangladesh has to pay up to 4 percent of the import value as confirmation fees on letters of credit a year, which is far higher than in other South Asian countries. The L/C confirmation charge previously was 2-2.5 percent, but it shot up to 3-4 percent during political unrest in 2012 and 2013. Moreover, loan scams also contributed to the rise in

L/C confirmation charges in 2012. Businesses fear that the new spat of political instability that began on January 5 may further increase the fees and put extra pressures on them. Source: The Daily Star, March 25, 2015

Non-banks' CEOs cannot be Fired without Central Bank's PermissionAs per the new directives, chief executives of non-bank financial institutions cannot be removed or suspended without approval from Bangladesh Bank. This initiative is expected to provide more job security of the chief executives of the institutions and will act as a tool to prevent from carrying out any unlawful instructions from the board to retain employment. At the same time, it will make the CEOs more accountable, as, in case of any fraud or irregularity, they will not be able to justify their actions by simply saying that they had to perform the wrong doings under pressure from the board. Source: The Daily Star, March 26, 2015

BB Drafts Law for Payment Systems The central bank has prepared a draft National Payment Systems Act to govern the operations of all kinds of payments in the country. Once implemented, the Payment Systems Act 2015 will enhance efficiency in controlling the payments. The objectives of the national payment system include minimizing payment, clearing and settlement risks as well as achieving reliable, secure, convenient, cost effective, universal and integrated systems to meet the needs of the growing economy. The proposed law comes right when the electronic fund transfer and mobile banking are growing tremendously.Source: The Daily Star, March 30, 2015

BSEC Allows Share Netting Facility for Same SecurityThe securities regulator took decision on the share netting facility for same security and extension of deadline for provisioning of un-realized loss of merchant banks and stock brokers at the office of the Bangladesh Securities and Exchange Commission (BSEC) on December 31, 2014. Presently, investors are only allowed to purchase the shares of a company by selling out the shares of another company on the

March 2015

same trading day. As per the BSEC's recent decision, investors from now on will get financial adjustment facility, which is called share netting facility, for same security of A, B, G and N category on the same trading day. The regulator allowed the share netting facility for same security following the proposal made by both the bourses. Source: The Financial Express, January 01, 2015

IPO through Merchant Banks and BrokersThe securities regulator has made the submission of application for IPO (Initial Public Offering) shares through merchant banks and brokerage firms mandatory from April 1, 2015 instead of applying through banks. Bangladesh Securities and Exchange Commission (BSEC) took the decision while approving the revised IPO application process. Dhaka Stock Exchange (DSE) started to receive IPO applications through merchant banks and merchant banks on the basis of pilot project from July 15, 2011.Source: The Financial Express, January 28, 2015

DSE to Launch Two Separate Subsidiary Companies to Facilitate IT Services and Share TradingThe country's premier bourse has planned to launch two separate subsidiary companies to provide IT related services and facilitate share trading of de-listed companies. The initiative has been taken as part of the move of Dhaka Stock Exchange (DSE) to enhance the revenue of the exchange. Of the two subsidiaries, one will be 'Alternative Market for Trading' to facilitate the trading of companies which remain unlisted and had been de-listed earlier from the main bourse. The proposed ‘Alternative Market’ for trading will be the revised form of the existing OTC (Over-the-counter) market. The unlisted companies having minimum paid-up capital worth Tk. 50 million may be allowed for trading at that market. The other subsidiary company will provide IT related services to the TREC (Trading Right Entitlement Certificate) holders. Source: The Financial Express, March 03, 2015

New Platform for Boosting Capital Market Six associations related to the equity and money markets form a new platform, Bangladesh Financial

Market Forum, for the development of the economy. The forum will primarily work for the stabilization, expansion and vibrancy of the ailing capital market. Along with Bangladesh Insurance Association (BIA), five other members of the forum are the Association of Bankers, Bangladesh; Brokers Association of Bangladesh; Bangladesh Merchant Bankers Association; Bangladesh Leasing and Finance Companies Association; and Association of Asset Management Companies. The forum will work for creating a mutual understanding between the money market and equity market.Source: The Daily Star, April 02, 2015

Recently Issued IPOsTosrifa Industries Limited under textile sector went for IPO of Tk. 245,662,000 with offer price per share of Tk. 26.00. The subscription opened on March 24, 2015 and closed on March 31, 2015. Under engineering sector, Bangladesh Steel Re-Rolling Mills Limited went for IPO of Tk. 612,500,000. Opening date for this subscription was February 01, 2015 and closing was February 01, 2015. On the other hand, United Power Generation & Distribution Company Limited under fuel and power sector went for IPO to raise Tk. 237,60,00,000. Its IPO subscription started from January 18, 2015 and closed on January 22, 2015. Lastly, Asian Tiger Sandhani Life Growth Fund under mutual fund sector went for IPO of Tk. 60,00,00,000 and it’s subscription started on January 11, 2015 and closed on January 15, 2015. Source: www.sec.gov.bd

International NewsFed Debate on Rate Increases Heats upFederal Reserve officials held detailed discussions on the timing and pace of interest-rate increases. As part of these discussions, Fed staffers gave a presentation that laid out the pros and cons of delay versus moving quickly. Delay could lead to a buildup of inflation or financial-stability risks, while moving quickly could obstruct off the recovery. Fed officials also discussed with some concern how to remove from their policy statement an assurance that they would be patient before moving rate higher. Source: The Wall Street Journal, February 19, 2015

March 2015

HSBC Unit SearchedThe Geneva public prosecutor’s office has begun a search of the offices of U.K. banking giant HSBC Holdings PLC’s Swiss unit as part of probe into alleged money-laundering activities. Geneva Attorney General Olivier Jornot and the prosecutor Yves Bertossa are conducting the search of HSBC Private Bank (Suisse) SA Geneva, which is part of an investigation into aggravated money laundering. The U.K. bank’s Swiss unit has been under the spotlight for years, following the theft of data by a former employee and the opening of a criminal investigation by U.S. authorities into its alleged aiding of tax evasion. Source: The Wall Street Journal, February 19, 2015

Chinese Rate Cut Signals ConcernsA surprise rate cut by China’s central bank underscores the increasingly aggressive measures the leadership is relying on to rev up activity in the world’s second largest economy. The rate cut shaves a quarter of a percentage point off benchmark lending and deposit rates, and came less than four months after the last reduction- sooner than many economists and analysts expected. China now joins countries in the Eurozone and Japan in easing monetary policies due to deflationary pressure, while the U.S Federal Reserve is moving toward raising interest rates as America’s economy recovers. Source: The Wall Street Journal, March 2, 2015

Risk for European BanksEurope’s banks are in danger of falling into a Japanese-style trap that will hurt their profits and limit their ability to stimulate to recognize bad loans. The European Central Bank’s bond-buying program may not help. In short term, the ECB may find it

difficult to get banks to sell their government bonds, particularly those in southern Europe. Then, even as yields stay low longer term, banks may mimic Japanese peers and still buy more government bonds. The new single European bank regulator last year began the process of forcing banks to own up to bad debts- years after the crisis struck. It should now campaign for a quick change to capital charges on government debt.Source: The Wall Street Journal, February 26, 2015

European Banks Set to Flunk Fed’s TestTwo large European banks, Deutsche Bank AG and Banco Santer SA, are expected to fail the Federal Reserve’s stress test because of shortcomings in how they measure and predict potential losses and risks. Both the banks passed European Central Bank stress tests in October, 2014. Those tests focused on whether the banks had enough capital to withstand a two year recession but didn’t assess such things as governance, risk management and other more subjective factors.Source: The Wall Street Journal, February 23, 2015

U.K to Investigate Bank CompetitionThe U.K’s financial conduct regulator said that it would investigate competitions in the investment and corporate banking sector following a series of complaints about a lack of transparency in the market. The Financial Conduct Authority said that it had received feedback from industry participants concerned about conflicts of interest and that bundling services together stifles competition. The regulator is talking to trade bodies and clients and will publish the terms of reference for the review in the coming months.Source: The Wall Street Journal, February 20-22, 2015

March 2015

Source: www.bb.org.bd

Source: www.bb.org.bd

Source: www.bb.org.bd

Source: www.bb.org.bd

Source: Bangladesh Foreign Exchange Dealers’ Association (BAFEDA)

PICTORIAL VIEW OF BANKING AND FINANCIAL INFORMATION

-0.8-0.6-0.4-0.2

00.20.40.60.8

11.21.41.61.8

22.22.42.6

Aug 14 Sep 14 Oct 14 Nov 14 Dec 14 Jan 15

Growth of Credit and Deposit : August 2014-January 2015

Credit Growth (%) Deposit Growth (%)

6

7

8

9

10

11

12

13

14

Aug 14 Sep 14 Oct 14 Nov 14 Dec 14 Jan 15

Weighted Average Interest Rate on Credit andDeposit : August 2014-January 2015-

Deposit Interest Credit Interest

7.25

7.45

7.65

7.85

8.05

8.25

Oct 14 Nov 14 Dec 14 Jan 15 Feb 15 Mar 15

T-Bill Rates : October 2014-March 2015

91 Days 182 Days 364 Days

55.255.5

5.756

6.256.5

6.757

7.257.5

Oct 14 Nov 14 Dec 14 Jan 15 Feb 15 Mar 15

Repo Rate and Reverse Repo Rate : October 2014-March 2015

Repo Rate Reverse Repo Rate

6.5000

7.0000

7.5000

8.0000

8.5000

9.0000

9.5000

10.0000

Jan 6 Jan 13 Jan 20 Jan 27 Feb 3 Feb 10 Feb 17 Feb 24 Mar 3 Mar 10 Mar 18 Mar 24 Mar 31

Dhaka Inter Bank Offered Rate (DIBOR) : January-March 2015

Over Night 1 Week 1 Month 3 Month

March 2015

Source: www.bb.org.bd Source: www.bb.org.bd

Source: www.bb.org.bd Source: www.bb.org.bd

Source: www.bb.org.bd Source: www.bb.org.bd

PICTORIAL VIEW OF BANKING AND FINANCIAL INFORMATION

8.41

7.77 7.94

8.57 8.21

7.68 7.5

8.0

8.5

9.0

Oct 14 Nov 14 Dec 14 Jan 15 Feb 15 Mar 15

Call Money Rate : October 2014-March 2015

0100020003000400050006000700080009000

100001100012000

Sep'14 Oct'14 Nov'14 Dec'14 Jan'15 Feb'15

Wage Earners' Remi ance : September 2014-February 2015

Total

Middle East

Malaysia

Others (USA, UK, Australia, Hongkong,Italy, Germany, Japan, South Korea andOthers)

102030405060708090

100110120130140150

Sep 14 Oct 14 Nov 14 Dec 14 Jan 15 Feb 15

BDT

Exchange Rates of USD, EUR GBP and KSA_R in Terms of BDT : September 2014-February 2015

USD EUR GBP KSA_R

21837

22312

21590

22310

22042

21000

21500

22000

22500

23000

Sep 14 Oct 14 Nov 14 Dec 14 Jan 15 Feb 15

Foreign Exchange Reserve :September 2014-February 2015

66.16.26.36.46.56.66.76.86.9

77.17.27.3

Sep 14 Oct 14 Nov 14 Dec 14 Jan 15 Feb 15

Infla on Rate : September 2014-February 2015

Point to Point Monthly Average (Twelve Month)

0

100000

200000

300000

400000

500000

600000

700000

800000

Aug 14 Sep 14 Oct 14 Nov 14 Dec 15 Jan 15

Money Supply : August 2014-January 2015

Money Supply (M1) Money Supply (M2)

March 2015

Source: www.the financialexpress.com

Source: www.the financialexpress.com

Source: The Wall Street Journal

PICTORIAL VIEW OF BANKING AND FINANCIAL INFORMATION

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

Jan 02 Jan 07 Jan 15 Jan 22 Jan 29 Feb 03 Feb 10 Feb 18 Feb 26 Mar 04 Mar 12

Dow Jones Industrial Average (DJIA) andStandard and Poor's (S&P) 500 Index

DJIA S&P

3000400050006000700080009000

1000011000120001300014000150001600017000

Indices: DSEX and CSCX

DSEX CSCX

0100020003000400050006000700080009000

10000110001200013000

Indices: DS30 and CSE-30

DS30 CSE-30

March 2015

CIRCULARS AND CIRCULAR LETTERS OF BANGLADESH BANK: JANUARY-MARCH, 2015

Circulars of Agricultural Credit and Financial Inclusion Department ACFID Circular No. Subject and Title Date

ACFID Circular No. 01 Regarding Certificate Case 23/02/15 ACFID Circular Letter No. 01 Determination of Target for Disbursement of Agricultural &

Rural Credit and Its Implementation 05/01/15

Circulars of Bangladesh Financial Intelligence Unit (BFIU) BFIU Circular No. Subject and Title Date

BFIU Circular Letter No. 2 Introduction of Uniform Account Opening Form & KYC Form for Financial Institutions

15/03/15

BFIU Circular Letter No. 01 Money Laundering and Terrorist Financing Risk Assessment Guidelines for Banking Sector

08/01/15

Circulars of Banking Regulation and Policy Department BRPD Circular No. Subject and Title Date

BRPD Circular No. 06 Incentive to Good Borrowers 19/03/15 BRPD Circular Letter No. 05 Rehabilitation Package for Cold Storages Established in Favor

of Farmers 08/03/15

BRPD Circular Letter No. 04 Appointment of Chief Executive Officer of Foreign Banks Working in Bangladesh

25/02/15

BRPD Circular No. 5 Loan Rescheduling Policy 23/02/15

BRPD Circular No. 03 Rehabilitation Package for Cold Storages Established in Favor of Farmers of North-Bengal

29/01/15

BRPD Circular No. 04 Large Loan Restructuring 29/01/15

BRPD Circular Letter No. 03 Taking Action about the New Techniques of Propaganda Adopted by the Black Listed Organization "Hizbut Towhid"

22/01/15

BRPD Circular No. 02 Guidelines on Outsourcing Arrangements 19/01/15 BRPD Circular Letter No. 02 Policy Regarding Establishments of Business Center by Banks 13/01/15 BRPD Circular Letter No. 01 Directives on Agent Banking Operation 06/01/15 BRPD Circular No. 01 Prudential Regulations for Consumer Financing 01/01/15 Credit Information Bureau

CIB Circular No. Subject and Title Date

CIB Circular No. 01 Regarding Update of CIB Database in Case of Renewal/Regularization/Rescheduling/Adjustment of a Loan in the Interim Period of Monthly Batch Contributions

25/02/15

Circulars of Debt Management Department DMD Circular No. Subject and Title Date

DMD Circular No. 01 Closing of All Activities Regarding Tk. 10/- & Tk. 50/- Bangladesh Prize Bond

01/02/15

Circulars of Department of Currency Management DCM Circular No. Subject and Title Date

DCM Circular No. 01 Compulsory Compliance to be Maintained by Cash Department

08/01/15

Circulars of Department of Financial Institutions and Markets DFIM Circular No. Subject and Title Date

DFIM Circular No. 01 Contractual Appointment of Advisor and Consultant for Financial Institution

25/03/15

DFIM Circular No. 02 Appointment of Chief Executive of Financial Institution 25/03/15 Circulars of Department of Off-Site Supervision

DOS Circular No. Subject and Title Date DOS Circular Letter No. 03 Provision against Investment in Mutual Fund Units 12/03/15 DOS Circular Letter No. 02 Reporting of Capital to Risk Weighted Asset Ratio &

Leverage Ratio for Implementation of Basel-III in Bangladesh 04/03/15

DOS Circular No. 01 Implementation of Basel-III Liquidity Ratios 01/01/15

March 2015

Circulars of Foreign Exchange Investment Department FEID Circular No. Subject and Title Date

FEID Circular Letter No. 01

Regarding Attachment of Necessary Information/Documents while Submitting Application for New Permission/Renewal/Inclusion under Section 18a and 18b of Foreign ExchangeRegulation Act, 1947.

11/03/15

Circulars of Foreign Exchange Operation Department FEOD Circular No. Subject and Title Date

FEOD Circular Letter No. 05 Waiver of Overdue Bill of Entry 31/03/15

FEOD Circular Letter No. 04 Payment Brokerage Charge by Shipping Company/Agent to Shippers Council of Bangladesh

09/03/15

FEOD Circular Letter No. 03 Waiver of Overdue Bill of Entry 02/03/15

FEOD Circular Letter No. 02 Payment Brokerage Charge by Shipping Company/Agent to Shippers Council of Bangladesh

10/02/15

FEOD Circular Letter No. 01 Payment Brokerage Charge by Shipping Company/Agent to Shippers Council of Bangladesh

26/01/15

Circulars of Foreign Exchange Policy Department FEPD Circular No. Subject and Title Date

FEPD Circular Letter No. 04 Foreign Currency Accounts for Shipping Lines/Airlines/Freight Forwarders Handling FOB Export and Import Cargo

29/03/15

FEPD Circular No. 02 Release of Foreign Exchange in Form of US Dollar Note 11/02/15

FEPD Circular No. 01 Reporting Procedures against Payment in Foreign Currency by EPZ Enterprises

05/02/15

FEPD Circular Letter No. 03 Foreign Currency Accounts for Shipping Lines/Airlines/ Freight Forwarders Handling FOB Export and Import Cargo

19/01/15

Circulars of Green Banking and CSR Department GBCSRD Circular No. Subject and Title Date

GBSRD Circular Letter No. 03 Amendment of Policy Regarding 10 Taka Account Holders Small/ Marginal/ Landless/ Natural Disaster Affected Farmers and Small or Micro Traders under Financial Inclusion Program

31/03/15

GBCRD Circular No. 02 Regarding Profit/Interest Rate of Tk. 10 (Ten), 50 (Fifty) and 100 (Hundred) Accounts

03/03/15

GBCRD Circular Letter No. 02 Regarding Banking Service for Street Urchin and Working Children

12/02/15

GBCRD Circular No. 01 Ensuring Banking Services for Physically Challenged Persons 21/01/15 GBCSRD Circular Letter No. 01 Bangladesh Bank's Refinance Scheme for Green Finance 18/01/15 Integrated Supervision Management Cell

ISMC Circular Letter No Subject and Title Date

ISMC Circular Letter No. 01 'Submission of Information and Communication' Related to Integrated Supervision System (ISS).

25/02/15

Circulars of Payment Systems Department PSD Circular No. Subject and Title Date

PSD Circular No. 01 Regarding Displaying Inter Banks ATM Transaction Charges on Visible Places in ATM Booths

16/02/15

PSD Circular Letter No. 01 Regarding Service Charge of Interbank ATM Transactions Made through National Payment Switch Bangladesh (NPSB)

20/01/15

Circulars of SME & Special Programmes Department SMESPD Circular No. Subject and Title Date

SMESPD Circular No. 01 Formation of Women Entrepreneur Development Unit in Banks and Financial Institutions to Strengthen Monitoring Activities for the Development of Women Entrepreneurs

08/02/15

CIRCULARS AND CIRCULAR LETTERS OF BANGLADESH BANK: JANUARY-MARCH, 2015

Academic Programs of BIBM: April-June, 2015

Program Duration Target Group A. Training Courses 1. Bank Management for Senior Executives May 17-28 Assistant General Manager or Equivalent

Executive of Commercial Banks and Financial Institutions and Joint Director of Bangladesh Bank

2. Capital Adequacy Assessment in Banks May 12-14 Senior Officer or Equivalent Officer and above 3. Computer Network Administration and

Security Management Using Windows OS

Apr 05-13 Senior Officer or Equivalent officer and above having Working Experience in Computer Application Packages and Computer Hardware Maintenance

4. Entrepreneurship Development for SME Financing May 04-07 Senior Officer or Equivalent Officer and above

5. Financial Analysis for Bankers Apr 19-28 Senior Officer or Equivalent Officer and above having Basic Knowledge of Accounting

6. Green Banking May 31- Jun 04 Senior Officer or Equivalent Officer and above 7. International Trade Payment and Finance Jun 07-16 Senior Officer or Equivalent Officer and above

Working / Likely to Work in International Division of Head Office and AD Branches

8. IT Security and Fraud Prevention in Banks

May 10-14

Senior Officer or Equivalent Officer and above Working in IT Security/IT Audit/ IT Division

9. Leadership, Team Building and Negotiation Skills for Branch Managers

Apr 26-30 Head/In-Charge of Branch/Operation Manager/Prospective Managers

10. SME Delinquency Management May 31-Jun 02 Senior Officer or Equivalent Officer and above

B. Outreach Training Courses 1. a. Credit Appraisal and Management

b. Half Day Workshop on Recent Policy Issues (Participated by Regional Heads of Banks)

Sylhet Apr26-30

Senior Officer or equivalent officer and above working/likely to work in the Credit Department

D. Training Workshops 1. Agricultural Financing and Commodity Market May 27-28 Senior Principal Officer or Equivalent Officer

and above 2. Bank Guarantees May 20-21 Senior Principal Officer or Equivalent Officer

and above 3. Basel-III: Regulatory Framework for Resilient

Banking Systems Apr 12-13 Jun 17-18

Senior Principal Officer or Equivalent Officer and above

4. Credit Rating and Its Risk Implication for Banks

Apr 15 Senior Principal Officer or Equivalent Officer and above

5. Customer Relationship Management in Banks May 06-07 Senior Principal Officer or Equivalent Officer and above

6. E-Commerce and E-Banking Apr 22-23 Senior Principal Officer or Equivalent Officer and above

7. Infrastructure Financing and Public Private Partnership (PPP)

Apr 07-09 Principal Officer or Equivalent Officer and above

8. Legal Aspects of Security and Documentation May 13-14 Senior Principal Officer or Equivalent Officer and above

9. Prevention of Money Laundering and Terrorist Financing

Jun 10-11 Senior Principal Officer or Equivalent Officer and above

Academic Programs of BIBM: April-June, 2015

March 2015

D. Training Workshops 10. Security Market Analysis and Portfolio

Management Jun 01-02 Senior Principal Officer or Equivalent Officer

and above 11. Team Building for Work Excellence in Banks Jun 10-11 Senior Principal Officer or Equivalent Officer

and above 12. Term Lending: Case-based Analysis Apr 01-02 Senior Principal Officer or Equivalent Officer

and above Working in Credit Department 13. Working Capital Financing : Case-based

Analysis Jun 17-18 Senior Principal Officer or Equivalent Officer

and above Working in Credit Department

E. Review Workshops 1. Credit Operations of Banks Jun 07 Head of Credit Operations 2. Human Resource Management and Training

Activities of Banks Jun 22 Head of Human Resource Management

3. Internal Control and Compliance of Banks May 07 Head of Internal Control and Compliance 4. 5. 6.

G. National Seminars 1. Costing, Accessibility and Environmental

Aspects of Annual Report of Banks in Bangladesh

Apr 30 Assistant General Manager or Equivalent Executives or above

2.

3.

Issues and Challenges for Islamic Financeand Banking in Bangladesh in the Perspectiveof Global Development

May 31 Assistant General Manager or Equivalent Executives or above

Financing Public-Private Partnership (PPP) Projects in Bangladesh: An Assessment for Future Strategy

Jun 11 Assistant General Manager or Equivalent Executives or above

IT Operations of Banks Jun 14 Head of IT OperationsTrade Services Operations of Banks Apr 16 Head of Trade ServicesTreasury Operations of Banks Jun 16 Head of Treasury Operations

March 2015

Publications of BIBM

Communication should be addressed to:Publications-Cum-Public Relations Officer (PPRO), Bangaladesh Institute of Bank Management (BIBM), Mirpur, Dhaka-1216. Tel: 9004981, 9003031-5 (Ext. 120), Fax: 880-2-9006756, E-mail: office@bibm.org.bd

# Type of Publication Name of the Publication Year of

Publication Price

1. Journal 1. Bank Parikrama – A Quarterly Journal of Banking & Finance

2. Bank Parikrama - Special Issue (For the Celebration of 40 Years Independence of Bangladesh)

Regular

2013

Tk. 200 US$ 10 Tk. 250 US$ 12

2. Bulletin BIBM Bulletin – A Quarterly-Periodical of BIBM Regular Tk. 50 3. Independent

Review 1. Bank Review 2010, 2012 & 2013 2. Review of Non-Bank Financial Sector 2010, 2012 &

2013

2012-14 2012-14

Tk. 300 Tk. 300

4. Banking Research Series

Compilation of Research Workshops of BIBM held in 2010, 2011, 2012 & 2013

2011-14 Tk. 400

5. Banking Review Series

Compilation of Review Workshops of BIBM held in 2012, 2013 & 2014

2013-14 Tk. 400

6. Conference Proceeding

Compilation of Annual Banking Conference held in 2012 & 2013

2013-14 Tk. 500

7. Nurul Matin Memorial Lecture

1. Ethics in Banking - Compilation of Ten Years Memorial Lectures

2. Ethics in Banking – 11th, 12th, 13th & 14th Lecture

2011

2011-14

Tk. 300 US$ 25 Tk. 50

8. Book 1. Inclusive Finance and Sustainable Development 2. A Review of the Supervisory Initiatives by

Bangladesh Bank 3. Trade Services of Banks in Bangladesh 4. Green Banking in Bangladesh

2013 2014

2014 2014

Tk. 1000 Tk. 150

Tk. 500 Tk. 400

9. Research Monograph

1. Implication of the Use of Information and Communication Technology in Channeling Workers’ Remittances to Bangladesh

2. Deposit Behavior in Banks of Bangladesh 3. SME Financing: Demand Side Problems and Supply

Side Responses 4. SME Credit Risk Model 5. Innovations in Rural Banking: Farmers Accounts and

Sharecropper Financing 6. Inclusive Banking and Inclusive Growth: Bangladesh

Perspective 7. Information System Security in Banks: Bangladesh

Perspective 8. Millennium Development Goal and Financial Sector

Development 9. A Critical Analysis of Monetary Policy in Bangladesh, 10. Bank, Stock Market and Economic Growth:

Bangladesh Perspective 11. Data Center and Disaster Recovery Management in

Banks: Current Status, Problems and Prospects 12. International Financial Regulations: Necessity and

Implications for Banks in Bangladesh 13. Non-legal Measures for Loan Recovery

in the Banking Sector of Bangladesh

2011

2011 2013

2013 2013

2013

2014

2014

2014 2014

2014

2015

2015

Tk. 75

Tk. 75 Tk. 75

Tk. 75

Tk. 150

Tk. 150

Tk. 150

Tk. 150

Tk. 150 Tk. 150

Tk. 150

Tk. 150

Tk. 150