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January - March 2013

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January - March 2013

Bank AuditHow much is Enough?

Editorial 2President’s Desk 3

ARTICLESGreen Banking and Sustainable Development: 5the Case of Bangladesh- Atiur Rahman Ph.D

Bank Audit – How Much should it be enough; 9in light of relevant Auditing Standards andAuditing Practice Statements- Sabbir Ahmed FCA

Audit of Local and International 15Commercial Banks:an overview of Practices and Procedures- M Jalal Hussain FCA

Profitability Trend in the Banking Sector of 22Bangladesh- a Comparative Study ofIslamic and Conventional Banks- Ishter Mahal1

- Benazir Rahman2

Laws and regulations for accounting system 36- Md Shahadat Hossain FCA

Recent Monetary Policy & Economic Trends 41- Ahmad Dawood FCA, FCMA

National Finance Performance & Stability 49- an Analysis to Reform & Retreat with Integrated Policy- Dipok Kumar Roy ACA

A Tribute to Late Mufazzal Hossain 71Chowdhury FCA- Parveen Mahmud FCA

Preparing Accountants for Future Challenges 77- ICAB President’s interview with the Daily Star

Proposals from ICAB on National Budget 792013-14

CONTENTS ISSN 1993-3649

"The opinions expressed in this publication are those of the respective authors themselves and do not necessarily reflect the views of the Editorial Board of the Institute of Chartered Accoun-tants of Bangladesh (ICAB) or the ICAB itself."

DISCLAIMER

Md. Abdus Salam FCAGopal Chandra Ghosh FCAAkhtar Sohel Kasem FCAMasih Malik Chowdhury FCANasir Uddin Ahmed FCASabbir Ahmed FCAMd. Sayeed Ahmed FCAMahmudul Hasan Khusru FCAMd. Abu Bakar FCAMd. Mahamud Hosain FCAMohammed Jashim Uddin FCASnehasish Barua FCAAjit Kumar Paul FCAMd. Abid Hossain Khan FCAMuhammmad Aminul Hoque ACAZareen Hosein ACAMd. Shahidul Islam ACADipok Kumar Roy ACAChairman DRC-ICABChairman CRC-ICAB

S M Abu Nayem Ahmed, pscSqn Ldr (Retd.)Senior Deputy Secretary-ICAB

EDITORIAL BOARD

ORIALEDIT

As the technological improvements and competitive environment changes, so is the risk of financial markets and economic fraud all around the world. As an answer to these new threats, the need to ensure transparent accounting and reporting standards cannot be overstated for the overall economic success of a country. To cope up, auditors need to adapt with the rapidly changing banking industry and the present concerns including: continuous auditing, regulatory changes, fraud, Enterprise Risk Management, social media and internet risks. Inview of this, the issue would offer an opportunity to gain insights into the current hidden and unknown facts and anomalies centering Bank that is haunting public perception with a sense of insecurity. The issues are not unknown to the world history. The best recognized bank offered best report even gave rise to corporate fraud shaking the country's financial sector. For our country, the dimension may vary compared to other modern economy. We tend to forget once it is over. The real perpetrator sometimes remains beyond touch.

On the recent financial irregularities of some

January - March 2013 The Bangladesh Accountant2

M. Farhad Hussain FCAChairman, Editorial Board

Companies; the issue has come forefront. It is surprising that how a company misappropriated more than Tk 2,500 crore from a Bank. The bank’s internal audit department could not spot any irregularity. This could have been otherwise, if the Banks would appoint the right professional in their branches. On the other hand, many thought that it is not possible to audit all the offices or branches of an office, company or bank. The audit is done randomly, on a risk-weighted basis. So, one is ikely to ponder about the process of bank audit; what and how much is feasible?

It is imperative to think about ‘Bank’s Audit in the present context as it is experiencing rising trend of financial frauds. The depositors are likely to lose their confidence in the banks as some major of irregularities in the banking sector has recently been surfaced by the newspapers’ and electronic media reports. New banks are in the line. In this context, the banks’ audit reports are considered very important to seal the possibility of recurrence of such misappropriation and to bring back people’s confidence.

As we know, in the present free trade market economy, the banking sector is the backbone of economy. Bank is the media to accelerate the trade and commerce including export and import of the country. In the global context, the role of banks is far-reaching and more penetrating in the economic

arena more than that of past. Bangladesh has a mixed banking system. Different types of audits have been carried out in the banks considering auditing rules. Every country has specific laws, rules and regulations on Banking Company. Generally, the Auditors follow the local and international standards and guide lines while conducting an audit of a bank. Recently, the Cabinet approved in principle the draft of the Bank Company (Amendment) Bill, 2013. I believe, it will strengthen the country's banking system. It is true that the Banks are facing unprecedented change in technology and regulation, Social networking, eBanking and regulatory reform are just a few of the current challenges bank auditors must tackle. Critical to the auditor’s ability to deal with these changes is probably a flexible audit plan and right input from management. Failure to deal with the malpractices can be fatal for the financial health of the country.

In fine, I would, as usual, look forward to feedbacks from our esteemed readers, the valuable suggestions and opinions would greatly help to add the quality of our journal.

Instilling more Trust

and Confidence

The Bangladesh Accountant January - March 2013 3

PRESIDENT’S DESK

As I take over the presidency, I consider it to be a sacred duty to uphold the interests of the Profession and contribute to the Accounting and private sector Auditing. We cannot stop till we get the result, we expect. To hold the continuity of our progress and advancement, I will not leave any dearth of my effort to discharge my function as the President of the Institute. I must be able to do justice to the trust and confidence bestowed upon me by the members.

In this quarter, I raised different pending issues with the Minister/Secretary/Officials of Regulatory Bodies and convey different contentious issues to them like utilization/ engagement of more Chartered Accountants in different Division/Bodies/Projects under the Ministries, allocation of land for ICAB Academic Campus, approval of the ICAB submitted Project proposal lying in the Planning Commission, engaging more Chartered Accountants in the banking sector etc. We pointed out contradiction between IFRSs & IASs and Bank Company Act, 1991 & some BRPD circulars of Bangladesh Bank which is required to be amended for the sake of exercising sound accounting practices in Bangladesh.

According to the proposal of Mr.

Wilson Vargheso, Senior Economist, Monetary and Capital Markets Development, Technical Assistance Division, International Monetary Fund (IMF), ICAB is working closely with Bangladesh Bank for the sake of strengthening the internal control of the central bank to arrange at least 6-months training for newly qualified CAs in Bangladesh Bank and other commercial banks to attract more CAs in the banking profession, encourage Bangladesh Bank to prefer accounting background professionals during their new recruitment etc. We truly believe that CA firms can play a significant role in thorough auditing the functions of the branches of the banks. It will undoubtedly, bring good result, if we could involve the adequate number of Chartered Accountants, aiming towards minimizing embezzlement/fraudulence.

As part of their expression of trust and confidence on ICAB, the NBR officials in this year also continued to take training on “Tax Audit for Tax Officials” for 5th batch and 6th batch in the month of January 2013 under the TACTS project in collaboration with DFID, a UK based development assistant partner. As we keep extending our good wishes and expertise cooperation, ICAB conducted

Training on ‘IFRS and IAS for Bangladesh Bank officials’ in the month of February and March 2013. ICAB, first time of its kind, organized this training and a total of 35 mid level Bangladesh Bank Officials Comprising Joint Directors, Deputy Directors and Assistant Directors participate in the training. Topics ranging from Financial Reporting, Financial Statements, Accounting Policy, Statement of Cash Flow and Adaptation of International Financial Reporting Standards are interacted on the 25-days training programme. ICAEW ACA Advanced Stage Classes, first time in Bangladesh held in the first quarter of 2013. We were encouraged that 32 ICAB Members registered to undergo these classes.

As we hold our ties with the ICAEW, a learning partner of ICAB, we met ICAEW high officials and sought ICAEW’s support for strengthening our ties under World Bank financed Twinning Project on a range of issues like Updating the Curriculum of ICAB and Study Materials, ICAB Case Study Exam, arrangement of Workshop, updates of ICAB-ICAEW, joint Online IFRS Training and Certificate Programme, arrangement of tuition facilities for ICAB Members registered with ICAEW, publication of ICAEW

Md Abdus Salam FCAPresident, ICAB


Advanced Stage Study Manuals etc.

It is a matter of great pride that in the prestigious recent SAFA BPA Awards, beside other prizes, IDLC Finance Ltd and Prime Bank Ltd of Bangladesh won the first and second prize respectively on 'overall categories', while, Rupali Bank Ltd and Islami Bank Bangladesh Ltd have been adjudged as the winners in the category of 'Public Sector Banking Institutions' and 'SAARC Anniversary Awards for Corporate Governance', respectively. IDLC Finance Limited and Prime Bank Limited were adjudged as an ‘Overall Winner’ along with Sri Lanka Telecom. A total of 85 awards were given out, while Bangladesh won 19 awards and the remaining awards were shared between companies from India, Pakistan, Sri Lanka and Nepal. This is a manifestation of ICAB's sincere commitment which is paying dividend for holding the Best Annual Report, which is scrutinising and thereby best of the best receiving the SAFA Awards.

To heighten the professional image, I, as President of the

Institute, took the opportunity to speak on the country perspective of the theme 'Professionalism as a Tool to Economic Growth' in the ICAI International Conference titled “Accountancy Profession: Enablers of Economic Growth' hosted by Indian Institute.

ICAB is well aware of its true responsibility; the Institute submitted its primary observation on ‘Draft Company Bill 2013’ to the Ministry of Commerce of the Govt. of Bangladesh on 25 March 2013. ICAB Experts Team reviewed new ‘Draft Company Bill 2013’ prepared in Bengali and identified some clauses which would create complexity and broaden cost of business. ICAB also was critical that this might leave negative impact on the overall economic activities of the country, if enforced. ICAB team also identified some clauses of the new Act to be in duplication/contradictory to the existing laws/laws.

ICAB holds Continuation of training of its members on the urgent issues like ‘Harmonization of Financial Reporting and Audit Practices: Bangladesh Perspective’ in

February, 2013. ICAB organized a Members’ Conference titled ‘Harnessing Technology in CA Firms’ in February . Mr. Guru Parasad, Partner, Guru and Jana, Chartered Accountants, India, in his presentation described how to use the new information technology in CA Firms and projected some common delivery models for many business applications like customer Relation Management (CRM), Management Information Systems (MIS), Enterprise Resource Planning (ERP), Invoicing, Human Resource Management (HRM), Content Management (CM) and Service Desk Management. A CPD Seminar on ‘Recent Monetary Policy & Economic Trends’ was held in March 2013 by ICAB Chittagong Regional Office.

Now, let me be frank with all to acknowledge that the unrest and political impasse is harnessing us to take our activities in full swing. However, I re-assure that the path of progress and advancement; building more trust and confidence will not stop till we achieve our purpose.In fine, I hope that this issue of the journal addressed much needed issue, though sensitive one, to the readers and anyone reading it would be tremendously benefitted, undoubtedly.

I thank everyone associated with this publication.

The development strategies of Bangladesh Government, as laid down in the Perspective Plan and the Sixth Five Year Plan, clearly spell 'out the commitment of pursuing sustainable growth. The country's vulnerability to floods, cyclones and to the threat of inundation of large coastal areas from global warming driven sea level rise makes sustainability a prime development concern.

Over the past 4 decades since liberation, national income of Bangladesh has increased more than eighteen-fold, while the population has increased a little over two-fold. Real GDP growth averaged at around 6.0 percent annually over the last 10 years. Trade openness has integrated Bangladesh with global economy with trade/GDP ratio rising from around 20.0 percent during the 1970s and 1980s to more than 60 percent in FY12. Poverty has come down to around 30 percent of the population now, from around 57.0 percent in the 1990s.

As you all are aware that Bangladesh falls into the group of most climate change vulnerable countries in the world despite her insignificant share of global greenhouse gas (GHG) emission in comparison with other developing and developed countries. However,

Green Banking and Sustainable Development:the Case of Bangladesh

Atiur Rahman Ph.D

Bangladesh has made notable contribution towards establishing 'Green Climate Fund' alongside documenting the Renewable Energy Policy in 2008 & Environmental preservation Act in 1997. Accordingly, the government of Bangladesh has decided to produce 5 percent of total power generation from renewable energy sources like solar energy, air & waste by 2015 & 10 percent by 2020 with the above Policy & Act. To protect our environment from industrial pollution a guideline is formulated under this act, which requires Effluent Treatment Plant mandatory for those Industries that emit liquid effluent. Around 60 percent people in Bangladesh are outside of the electricity facility while around 90 percent are outside of the natural gas network. Renewable energy, especially solar energy and biogas can provide a sustainable and environment friendly solution to reduce the demand-supply gap of energy in the country.

BB has issued guidelines for environmental risk management and green banking in 2011 and is probably the only central bank, which has issued such an indicative guideline for green banking. The guidelines aim to ensure environment friendly business practices by banks and financial institutions, to incorporate environmental risks into Core Risk Management (CRM) and to promote


BB FORMULATED

GREEN BANKING POLICY

GUIDELINE IMPLEMENTED

IN 3 PHASES FROM 2011 TO

2013. BY FOLLOWING THESE

GUIDELINES, BANKS WILL

BENEFIT IN TERMS OF

IMPROVED CAMELS

RATING. BESIDES, BB WILL

DECLARE THE NAMES OF

THE TOP 10 BANKS

REGARDING THEIR

OVERALL PERFORMANCE IN

GREEN BANKING

ACTIVITIES AND WILL

ACTIVELY CONSIDER

GREEN BANKING

ACTIVITIES OF BANKS

WHILE ACCORDING

PERMISSION FOR OPENING

NEW BRANCH.

sustainable financial and economic growth. Bangladesh Bank has also issued a common format to all the commercial banks to report green banking activities including the extent of carbon footprint in a structured way. Banks and financial institutions enthusiastically responded to this 'Green Banking' drive. Now they regularly submit a quarterly report to Bangladesh Bank on their performance of green banking activities.

BB formulated green banking policy guideline implemented in 3 phases from 2011 to 2013. By following these guidelines, banks will benefit in terms of improved CAMELS rating. Besides, BB will declare the names of the top 10 banks regarding their overall performance in green banking activities and will actively consider green banking activities of banks while according permission for opening new branch. BB has decided to accord permission for SME branch subject to installation of solar panel in


place. Banks will also receive separate treatment in existing guidelines for Environmental Risks in computation of Adequate Capital by BB. To promote green energy, BB advised banks to facilitate clients to open L/Cs for installation of ETP in industrial units, to finance Solar Energy, Biogas and ETP projects, to comply with CSR guidelines for ingraining environmentally and socially responsible practices with the instructions stipulated in Green Banking Policy.

Besides these, BB introduced a Refinance Scheme (revolving) for Solar Energy, Biogas, and Effluent Treatment Plant (ETP) of Taka 200 Crore in August 2009. From this revolving fund, refinance facilities are allowed for banks/FIs against lending in the Solar Energy, Biogas Treatment Plant sectors on terms and conditions set forth in a BB's ACSPD Circular. By now, 27 banks & 1 Financial Institution have signed the participation agreement with BB to


avail the refinance facility for Solar Energy, Biogas & Effluent Treatment Plant. As per another ACD Circular, refinances were allowed at limited scale up to Taka 300 million from this fund to establish Hybrid Hoffman Kiln (HHK)/equivalent technology in brick manufacturing industry with a view to reduce carbon & suspended particulate matter in the atmosphere.

Notwithstanding the insignificant amount relative to the overall country's demand, the achievements of green banking in the renewable energy sector are worth mentioning.

As of December 2012:

• An amount of Tk. 103.72 million has been disbursed under the refinance program of Solar Home System (SHS) to establish 3763 units SHS. These solar home systems are situated at off-grid areas of the country benefiting at least 3763 families with the production capacity is 164100 KW/day.

• An amount of Tk. 23.9 million disbursed for 8 solar energy driven irrigation pumps. No. of

beneficiary farmers are 618 and bringing 920 bighas of land under cultivation with uninterrupted water flow enhancing the productivity and cropping intensity. Besides, an amount of Tk. 248.80 million disbursed for establishing Solar PV Module Assembly Plant. In the sub sector of Integrated Cow Rearing and Biogas Plant, an amount of Tk. 262.13 million refinanced in 820 numbers of Integrated Cow Rearing and Biogas plant.

• An amount of Tk 90.36 million disbursed for establishing 8 ETP with effluent treatment capacity of 18000 cubic meter per day contributing significantly in limiting environmental pollutions, while an amount of Tk. 124.47 million disbursed for establishing Hybrid Hoffman Kiln (HHK) technology in 3 brick manufacturing industries which reduces carbon emission in the brick manufacturing plants.

I would like to take this opportunity to share the green initiatives taken by BB. The central bank of Bangladesh is responding to climate change in a diverse of

ways. With a move towards encouraging green banking in Bangladesh, BB installed a 8-kilowatt solar power system on its rooftop in March 2010, which has been providing necessary energy supply for the executive floor along with emergency security lights in the BB premises. This is now being extended to cover more areas. A recent initiative has been taken to convert the 30-storied building of the bank into a 'Green Building' with the modern facilities of rain water harvesting, waste water recycling and motion sensor energy efficient bulbs supported by window based solar panels. Besides, BB is arranging an international conference on 'Green Banking' jointly with IFC in March 2013 in line with the outcome document of Rio+20 called 'The Future We Want," and COP meetings of the UNFCCC, especially COP 18 including the 'Kyoto Protocol' in combating various vulnerabilities due to climate change.

Bangladesh Bank has been working for last four years to establish a completely IT based banking system in the country. Various IT based initiatives of BB have been helping to move


The Author is the Governor,Bangladesh Bank

towards the paperless green banking. In view of ensuring low-carbon green development without compromising the imperative of faster economic growth and social development, IT infrastructure of the financial sector has undergone vast improvements in recent years. It has been facilitating countrywide automated online connectivity of banks with the BB for supervisory reporting, National Payments Switch and fully automated inter bank clearing and settlement platforms for paper based and electronic fund transfers, and a credit information bureau accessible online by users.

Despite all these achievements, the prospect of achieving sustainable development is not free of challenges. Future challenges include formulation of sector specific environment polices, coordination among concerned authorities to build up a green economy, speeding up proper awareness and effective capacity building, application of quantitative approach for more justified ratings of banks. We envision Bangladesh as a mature advanced economy in 2050, with levels of human development and technological advancement sufficient to place her among

leading Asian nations in terms of financial prosperity as well as social and environmental responsibility.

To conclude, I would like to thank the organizer for initiating the discussion on such an important issue like green banking. I hope you all will have very productive deliberations and find this seminar very useful.

(The Article was presented in a seminar on 02 February 2013)

Introduction

I would like to start this article with a very famous quote that came to my attention many years ago while reading an interview of a Global Bank’s CEO. The quote I am referring here is “Banking is such a unique industry where you do not want your competitor to fail”. Honestly speaking it did not make much sense at that time. However, after working as a professional accountant for many years the perspective of the comment is quite vivid. Why it is so that a Bank would not like to see his fellow competitor Bank to fail? The simplest and shortest answer is “Banking business is based on Trust” and failure of a Bank severely dents that Trust and it affects not only other Banks but the whole economic systems bears the brunt.

It is an undeniable fact that Banks play a central role in the economy. They hold the savings of the public, provide a means of payment for goods and services and finance the development of business and trade. To perform these functions securely and efficiently, individual banks must command the confidence of the public and those with whom they do business. The stability of the banking system, both nationally and internationally, has therefore come to be recognized as a matter of general public interest. This

Bank Audit – How Much should it be enough;in light of relevant Auditing Standards and

Auditing Practice StatementsSabbir Ahmed FCA

public interest is reflected in the way banks in almost all countries, unlike most other commercial enterprises, are subject to multiple prudential supervisions by central banks and/or other specific official regulators/agencies.

As part of this confidence building measure on Banks, its financial statements are subject to audit by multiple auditors including external or statutory auditors. The external auditor conduct the audit in accordance with applicable ethical and auditing standards, including those calling for independence, objectivity, professional competence and due care, and adequate planning and supervision. The auditor’s opinion lends credibility to the financial statements and promotes confidence in the banking system.

However, what is also very important to note is the fact that the quality of the external auditor’s opinion would also be influenced by multiple elements, notable amongst those are the proper observance of various roles and responsibilities of not only external auditors but the following parties as well:

- the Bank’s Board of Directors (those charged with Governance);

- the Bank’s Management; and- the supervisor (i.e. Central Bank) and

other regulators.


THEY HOLD THE

SAVINGS OF THE PUBLIC,

PROVIDE A MEANS OF

PAYMENT FOR GOODS

AND SERVICES AND

FINANCE THE

DEVELOPMENT OF

BUSINESS AND TRADE. TO

PERFORM THESE

FUNCTIONS SECURELY

AND EFFICIENTLY,

INDIVIDUAL BANKS MUST

COMMAND THE

CONFIDENCE OF THE

PUBLIC AND THOSE WITH

WHOM THEY DO

BUSINESS. THE STABILITY

OF THE BANKING SYSTEM,

BOTH NATIONALLY AND

INTERNATIONALLY, HAS

THEREFORE COME TO BE

RECOGNIZED AS A

MATTER OF GENERAL

PUBLIC INTEREST.

The roles and responsibilities of the above parties could be different in various countries based on applicable law, regulation and custom, however it is true that proper observance of these roles and responsibilities by those parties would eventually support/complement fulfilment of each other’s duties and obligations.

Various auditing standards and audit practice statements provided guidance on respective roles and responsibilities of bank’s board of directors, management, banking supervisors and external auditors to avoid misconception about such roles that could lead to inappropriate reliance being placed by one party on the work of another. Those standards and statements also sets out responsibilities of the board of directors and management, essential features of the role of banking supervisors and external auditors and what should be the relationship between the banking supervisor and the bank’s external auditors. We shall


aim to analyze those roles and responsibilities before focusing in detail on what need to be considered by an external auditor at the time of doing the audit of a bank.

The Responsibility of the Bank’s Board of Directors and the Management

The primary responsibility for the conduct of the business of a bank is vested on the board of directors and the management appointed by it. This responsibility includes, among other things, ensuring that:

• Those entrusted with banking tasks have sufficient expertise and integrity and that there are experienced staff in key positions;

• Adequate policies, practices and procedures related to the different activities of the bank are established and complied with, including the following:

- The promotion of high ethical and professional standards.

- Systems that accurately identify and measure all material risks and adequately monitor and control these risks.

- Adequate internal controls, organizational structures and accounting procedures.

- The evaluation of the quality of assets and their proper recognition and measurement.

- “Know your customer” rules that prevent the bank being used, intentionally or unintentionally, by criminal elements.

- The adoption of a suitable control environment, aimed at meeting the bank’s prescribed performance, information and compliance objectives.

- The testing of compliance and the evaluation of the effectiveness of internal controls by the internal audit function.

• Appropriate management information and information technology systems are established;

• The bank has appropriate risk management policies and procedures;

• Statutory and regulatory directives, including directives regarding solvency and liquidity, are observed; and

• The interests not only of the shareholders but also of the depositors, employees and other creditors are adequately protected.

Management is responsible for preparing financial statements in accordance with the appropriate financial reporting framework and for establishing accounting procedures that provide for the maintenance of documentation sufficient to support the financial statements. This responsibility includes ensuring that the external auditor who examines and reports on the financial statements has complete and unhindered access to, and is provided with, all necessary information that can materially affect them and, consequently, the auditor’s report on them. Management also has the

responsibility to provide all information to the supervisory agencies that such agencies are entitled by law or regulation to obtain.

Management is also responsible for the establishment and the effective operation of a permanent, continuous and adequate internal audit function that should also be independent of the organizational activities it audits or reviews and every day internal control process. Every activity and every division, subsidiary or other component of the banking organization should fall within the scope of the internal audit function’s review and the internal audit function should be adequately staffed with persons of the appropriate skills and technical competence who are free from operating responsibilities.

The Role of the Banking Supervisor (i.e. Central Bank)

The key objective of prudential supervision is to maintain stability and confidence in the financial system, thereby reducing the risk of loss to depositors and other creditors. In addition, supervision also is often directed toward verifying compliance with laws and regulations governing banks and their activities. Although these compliance requirements may differ from country to country but the following basic requirements are ordinarily found in most systems of supervision:

• The bank must have suitable shareholders and members of the board (this notion includes integrity and standing in the business community as well as the financial strength of all major shareholders).



by regulators in that country (i.e. the Bank Company Act 1991).

As stated earlier, the auditor’s opinion helps to establish the credibility of the financial statements. The auditor’s opinion, however, should not be interpreted as providing assurance on the future viability of the bank or an opinion as to the efficiency or effectiveness with which the management has conducted the affairs of the bank, since these are not objectives of the audit.

The auditor designs audit procedures to reduce to an acceptably low level the risk of giving an inappropriate audit opinion when the financial statements are materially misstated. The auditor assesses the inherent risk of material misstatements occurring (inherent risk) and the risk that the entity’s accounting and internal control systems will not prevent or detect and correct material misstatements on a timely basis (control risk). Based on the assessment of inherent and control risk, the auditor carries out substantive procedures to reduce the overall audit risk to an acceptably low level.

The auditor considers how the financial statements might be materially misstated and considers whether fraud risk factors are present that indicate the possibility of fraudulent financial reporting or misappropriation of assets. The auditor designs audit procedures to reduce to an acceptably low level the risk that misstatements arising from fraud and error that are material to the financial statements taken as a whole are not detected.

What are the additional audit risk factors

As all we know, Banks have the following characteristics that

• The bank’s management must be honest and trustworthy and must possess appropriate skills and experience to operate the bank in a sound and prudent manner.

• The bank’s organization and internal control must be consistent with its business plans and strategies.

• The bank should have a legal structure in line with its operational structure.

• The bank must have adequate capital to withstand the risks inherent in the nature and size of its business.

• The bank must have sufficient liquidity to meet outflows of funds.

• The bank must have a robust risk management framework to cover various banking risks, such as credit risk, market risk (including interest and foreign exchange risk), liquidity and funding risk, operational risk, legal risk and reputational risk and regularly monitor, measure and limit its risk exposures to the prescribed internal and external limits.

• The bank is applying right methods and fair judgments to calculate specific and general allowances that are adequate to absorb estimated credit losses, on a timely basis, in accordance with appropriate policies and procedures. In addition, the supervisor also seeks to ensure that credit risk is adequately diversified by means of rules to limit exposures, whether in terms of individual borrowers, industrial or commercial sectors or particular countries or economic regions. Although it

may not be the banking supervisor’s role to direct banks’ lending policies, but it is essential for the supervisor to be confident that the bank has adopted a sound system for managing credit risk.

• The development of sophisticated real-time computerized information systems has greatly improved the potential for control, but in turn has brought with it additional risks arising from the possibility of computer failure or fraud. The introduction of electronic commerce has also introduced significant new risks and requires, in turn, additional controls. From supervisory point of view these are very critical element.

• Supervisors are concerned to ensure that the quality of management is adequate for the nature and scope of the business and try to understand management’s business plans and strategies and how it expects to achieve them. Similarly, the supervisor seeks to discover whether the bank is properly equipped to carry out its functions in terms of the skills and competence of its staff and the equipment and facilities at its disposal.

The Role of the Bank’s External Auditor

The objective of an audit of a bank’s financial statements by an external auditor is to enable an independent auditor to express an opinion as to whether the bank’s financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework (i.e. Bangladesh Financial Reporting Standards) and in accordance with any relevant regulations laid down


generally distinguish them from most other commercial enterprises and hence external auditors need to consider appropriate additional audit procedures:

• They have custody of large amounts of monetary items, including cash and negotiable instruments, whose physical security has to be safeguarded during transfer and while being stored. They also have custody and control of negotiable instruments and other assets that are readily transferable in electronic form. The liquidity characteristics of these items make banks vulnerable to misappropriation and fraud. Banks therefore need to establish formal operating procedures, well-defined limits for individual discretion and rigorous systems of internal control.

• They often engage in transactions that are initiated in one jurisdiction, recorded in a different jurisdiction and managed in yet another jurisdiction.

• They operate with very high leverage (that is, the ratio of

capital to total assets is low), which increases banks’ vulnerability to adverse economic events and increases the risk of failure.

• They have assets that can rapidly change in value and whose value is often difficult to determine. Consequentially a relatively small decrease in asset values may have a significant effect on their capital and potentially on their regulatory solvency.

• They generally derive a significant amount of their funding from short term deposits (either insured or uninsured). A loss of confidence by depositors in a bank’s solvency may quickly result in a liquidity crisis.

• They have fiduciary duties in respect of the assets they hold that belong to other persons. This may give rise to liabilities for breach of trust. They therefore need to establish operating procedures and internal controls designed to ensure that they deal with such assets only in accordance with the terms on which the assets

were transferred to the bank.

• They engage in a large volume and variety of transactions whose value may be significant. This ordinarily requires complex accounting and internal control systems and widespread use of information technology (IT).

• They ordinarily operate through networks of branches and departments that are geographically dispersed. This necessarily involves a greater decentralization of authority and dispersal of accounting and control functions, with consequential difficulties in maintaining uniform operating practices and accounting systems, particularly when the branch network transcends national boundaries.

• Transactions can often be directly initiated and completed by the customer without any intervention by the bank’s employees, for example over the Internet or through automatic teller machines (ATMs).

• They often assume significant commitments without any

The Author is a Fellow CharteredAccountant and Director,Hoda Vasi Chowdhury & Co.


When I was discussing the draft of this article with a very senior chartered accountant with few decades of experience in bank audit, he jokingly told me that some people may interpret this article as my effort to defend auditors or dilute auditor’s responsibilities by highlighting roles of other stakeholders. Although his comment was a lighthearted one without much seriousness attached to it, but taking the hint, for the purpose of this article, I have extensively used relevant auditing standards and audit practice statements in its original form without much alteration. This way I have attempted to eliminate subjectivity and reflected what requires as per standards for a bank audit that can be termed as sufficient and appropriate. As this article has already highlighted, fulfilling of all requisite roles and responsibilities by only the auditor would not result in sufficient and appropriate audit if all other stakeholders are not fulfilling their mutual responsibilities.

No doubt time has come for self assessment by auditors as to whether they are performing Bank audits as required by standards or this has become just a routine matter. At the same time it also needs to be ensured that all other stakeholders are also fulfilling their respective responsibilities as without which an audit would not be adequate (i.e. sufficient and appropriate).

initial transfer of funds other than, in some cases, the payment of fees/margins. These commitments may involve only memorandum accounting entries. Consequently their existence may be difficult to detect.

• They are regulated by governmental authorities, whose regulatory requirements often influence the accounting principles that banks follow. Non-compliance with regulatory requirements, for example, capital adequacy requirements, could have implications for the bank’s financial statements or the disclosures therein.

• Customer relationships (i.e. loans, deposits) that the auditor, assistants, or the audit firm may have with the bank might affect the auditor’s independence in a way that customer relationships with other organizations would not.

• They generally have exclusive access to clearing and settlement systems for checks, fund transfers, foreign exchange transactions, etc.

• They are an integral part of, or are linked to, national and international settlement systems and consequently could pose a systemic risk to the countries in which they operate.

• They may issue and trade in complex financial instruments, some of which may need to be recorded at fair values in the financial statements. They therefore need to establish appropriate valuation and risk management procedures. The effectiveness of these procedures depends on the appropriateness of the

methodologies and mathematical models selected, access to reliable current and historical market information, and the maintenance of data integrity.

In view of the above, it is agreeable that in addition to the usual competency of auditing and accounting standards, statutory or external audit of a Bank also require additional knowledge and understanding on areas like banking products/services, various macro and micro economic indicators, applicable regulations etc.

Also equally important to note that an auditor can only effectively discharge their responsibilities when other functionaries like board, management and regulator/supervisors are also properly and diligently following their own roles and responsibilities. If any one party is falling behind in following its roles and responsibilities the work of other would suffer.

Conclusion

The key theme of this issue of the Bangladesh Accountant is very topical, as hardly any single day has been passed during the last few months where not only business and finance section, but even headlines of local dailies were not free from news about banking sector in Bangladesh. Many of those articles also touched upon the performance of external auditors in their audit of banks. Therefore, an attempt has been made through this article to reflect respective roles and responsibilities of auditors as well as other stakeholders like board, management and supervisors for the conduct of a successful audit as all are quite interrelated.

Introduction

Commercial Bank (Bank), either local or international, is required to be incorporated under the laws of the land where they are incorporated as “Banking Companies”. Every country has its specific laws, rules and regulations on how to incorporate Banking Company, how it will be run, what are the requirements for audit, who will conduct the audit, what guidelines are to be followed and so on. Generally the Auditors follow the local and international standards and guide lines while conducting an audit of a commercial bank. There are different types of audit of banks: internal, external, statutory, special and compliance audit. External audit may be from the Central Bank, from the government auditors, from the management on specific purposes, from the parliamentary audit committee. Bank audit is completely different and unique in itself because banking businesses are different from other ordinary businesses. The importance of banks’ audit has been increased tremendously after the Global Financial and Economic Crisis started from the giant economy of the United States since 2007. In Bangladesh, special audit consideration has been provided by various authorities including the stakeholders, the central bank and the government, after the

Audit of Local and InternationalCommercial Banks:

an overview of Practices and ProceduresM Jalal Hussain FCA

exposure of Sonali Bank’s (a local state owned commercial bank) loan scandal with Hall Mark Group of Industries and Destiny Group of industries.

Why Bank audit is different from other business entities?

Commercial banks have the following distinctiveness which generally distinguishes them from most other commercial enterprises:

• Commercial banks of any country need special license from the Central Bank to run the operations of the bank and strictly follow the rules, regulations and guidelines of the Central bank.

• They are the custodian of large volumes of monetary items, including cash and negotiable instruments, whose physical security has to be assured. This applies both to the storage and the transfer of monetary items and makes banks vulnerable to misappropriation and fraud. Banks therefore need to establish and upgrade formal operating procedures, well defined limits for individual discretion and effective systems of internal control.


IN MANY CASES OF AUDIT: INTERNAL, EXTERNAL, STATUTORY AND OTHER TYPES, FAIL TO DETECT AND CONTROL FRAUD, ERRORS, NEGLIGENCE, MISAPPROPRIATION OF FUND, LOAN SCAMS, ETC. IN LARGE BANKS. IN BANGLADESH, AUDIT JOBS ARE CONDUCTED BY VARIOUS AUDITORS AND THERE ARE INTERNAL CONTROL SYSTEMS IN EXISTENCE BUT THE LOAN SCAMS OF HALL MARK AND DESTINY GROUPS PROVE THAT BOTH INTERNAL CONTROL AND VARIOUS AUDITS FAIL TO CONTROL AND PREVENT THE EMBEZZLEMENT OF HUGE FUND. FROM THE VARIOUS ANALYSIS AND INVESTIGATION IT IS EVIDENCED THAT THERE ARE MANY LAPSES AND WEAKNESSES IN THE INTERNAL CONTROL SYSTEMS OF BANKS WHICH ARE NOT DETECTED WHILE CONDUCTING AUDITS BY THE AUDITORS.

• Banks engage in a large volume and variety of transactions both in terms of quantity and value. This necessarily requires strong internal control and in particular, the Bank’s management information system and related business processes relevant to financial reporting and widespread use of electronic data processing.

• Banks normally operate through a wide network of branches and departments which are geographically located in different parts of the country. This necessarily involves a greater decentralization of authority and dispersal of financial reporting and internal control functions, with consequent difficulties in maintaining uniform operating practices and information systems, particularly when the branch network covers national and international boundaries.

• Banks often times assume significant commitments without any transfer of funds. These items, normally called “off-balance-sheet” items, may not involve accounting entries and consequently the failure to record such items may be difficult to detect.

• They are regulated by governmental authorities and the resultant regulatory requirements often influence generally accepted accounting principles and auditing practices within the Banking sector.

Why special audit considerations arise in the audits of banks?

As mentioned earlier, Banks do business transactions which are different from other commercial


enterprises; special considerations are required for the following reasons:

• Since Banks operate the businesses where risks are involved in many ways, special concentration of auditors have become material;

• the particular nature of the business risks associated with the transactions undertaken by banks;

• the scale of banking operations and the resultant significant exposures which can arise within short periods of time;

• the extensive dependence on computerized systems to process transactions;

• the outcome of the regulations in the various jurisdictions in which they operate; and

• the ongoing development of new products and banking practices which may not be matched by the concomitant development of accounting principles and auditing practices.

International and Local Standards for conducting audit of Banks:

The International Auditing Practices Committee (IAPC) of the International Federation of Accountants (IFAC) issues standards (ISAs) on generally accepted auditing practices and on related services and on the form and content of the auditor’s reports. These standards are intended to improve the degree of uniformity of auditing practices and related services throughout the world. In addition to the international standards, there are various standards framed by the local authorities, need to be followed by the auditors. In addition, Banks are required to follow the local standards,


procedures and programs as embodied by the local authorities and the central banks.

Why reliance on the Internal Control System of banks is so important?

Effective internal control system in banking sector is a must. A system of effective control is a choleric and diagnostic component of bank management and a foundation for the safe and sound operation of banking organizations. A system of strong internal controls can help ensure that the goals and objectives of a banking organization will be met, that the bank will achieve long-term profitability targets, and maintain reliable financial and managerial reporting. Such a system can also help ensure that the bank will comply with laws and regulations

as well as policies, plans, internal rules and procedures, and decrease the risk of unexpected losses or damage to the bank’s reputation due to corruption, baloney and malpractices by the employees of the bank.

Establishing degree of Reliance on Internal control:

Management’s responsibilities include the maintenance of adequate internal control, the selection and application of accounting policies, and the safeguarding of the assets of the entity.

The auditor is required to obtain a sufficient understanding of the internal control to plan the audit and develop an effective audit approach. After obtaining the understanding, the auditor should

consider the assessment of control risk to determine the appropriate detection risk to accept for the financial statement assertions and to determine the nature, timing and extent of substantive procedures for such assertions. Where the auditor assesses control risk at a lower level, substantive procedures would normally be less extensive than would otherwise be required and may also differ as to their nature and timing. Identifying, documenting and testing the operating effectiveness of control procedures

Who is responsible to introduce effective and strong internal control system in banking industries? The answer is simply the Board of Directors of the bank. The Board of Directors of a bank provides governance, guidance and oversight to senior management. Board members


should be professional, objective, capable, and inquisitive, with a knowledge or expertise of the activities of and risks run by the bank. The Board should consist of some members who are independent from the daily management of the bank. A strong, active board, particularly when coupled with effective upward communication channels and capable financial, legal, and internal audit functions, provides an important mechanism to ensure the correction of problems that may diminish the effectiveness of the internal control system. The Board of Director should realize the importance of effective internal control system as banks handle billions of Taka of money that belongs to individual depositors, businesses and other entities. Internal bank controls ensure that account holders can safely deposit money into banks without having to contend with the risk that a bank employee might misuse the money or put it in jeopardy by recklessly

investing it. Additionally, bank internal controls are necessary to ensure that the bank employees comply with the laws of the land and the rules, regulations issued by banks and the central bank.

In assessing the appropriateness of the individual internal controls used to ensure that all transactions are properly recorded, the auditor will need to take into account a number of factors which are especially important in a banking environment. These are as follows:

• Banks deal in large volumes of transactions, which can individually and cumulatively involve large amounts of money. Accordingly, the bank will need to have balancing and reconciliation procedures which are operated within a time-frame that provides the ability to detect errors and discrepancies so that they can be investigated and corrected with a minimal risk of loss to

the bank. Such procedures may be operated hourly, daily, weekly, or monthly, depending on the volume, nature of the transaction, level of risk, and transaction settlement time-frame.

• Many of the transactions entered into by banks are subject to particular accounting rules. It will therefore be necessary to have control procedures in place to ensure those rules are applied in a manner and in a time-frame which results in the generation of accounting entries that may be required for the preparation of appropriate financial information for management and external reporting. Examples of such control procedures are those which result in the market revaluation of foreign exchange and security purchase and sale commitments so as to ensure that all unrealized profits and losses are recorded.

• Many transactions entered into by banks are not disclosed in the balance sheet or even in the notes to the financial statements. Accordingly, control procedures must be in place to ensure that such transactions are recorded and monitored in a manner which provides management with the required degree of control over them and which allows for the prompt determination of any change in their status which needs to result in the recording of a profit or loss.

• New financial products and services are constantly being developed by banks. The auditor needs to obtain


reasonable assurance that necessary revisions are made in accounting procedures and related internal controls.

• End of day balances may not be indicative of the volume of transactions processed through the systems or of the maximum exposure to loss during the course of a business day. This is particularly relevant in executing and controls in these areas must take into account the ability to maintain control during the period of maximum volumes or maximum financial exposure.

• The majority of banking

transactions must be recorded in a manner which is capable of being verified both internally and by the bank’s customers and counterparties. The level of detail to be recorded and maintained on individual transactions must allow for bank management, transaction. Counter parties, and the bank’s customers to verify the accuracy of the amounts. An example of such a control is the continuous verification of foreign exchange trade tickets by having an independent employee match them to incoming confirmations from counterparties.

Why audit is not enough to detect and control fraud in banks?

Although the audit of banks are conducted by the professionals, experts with due consideration to internal control systems in banking businesses, there are lots of frauds, misappropriation and misuse of fund, loans scam and on and on remain unearthed and uncovered around the modern world. In many cases of audit: internal, external, statutory and other types, fail to detect and control fraud, errors, negligence, misappropriation of fund, loan scams, etc. in large banks. In Bangladesh, audit jobs are conducted by various auditors and there are internal control


systems in existence but the loan scams of Hall Mark and Destiny Groups prove that both internal control and various audits fail to control and prevent the embezzlement of huge fund. From the various analysis and investigation it is evidenced that there are many lapses and weaknesses in the internal control systems of banks which are not detected while conducting audits by the auditors. Loopholes in the existing legal system help the loan defaulters and the criminals to escape punishment. Banks, in most of the cases, fail to realize loan from the defaulting borrowers as the borrowers come out by using the legal network without paying back the loan amount. As a result the amount of classified loans increases every year.

In USA the SEC has recently charged three former executives of a bank, Tier OneBank, responsible for a fraudulent scheme.

New charges were also brought against its auditors. The SEC’s

investigation found that the auditors failed to appropriately scrutinize management’s estimates of TierOne’s allowance for loan and lease losses (known as ALLL). Due to the financial crisis and problems in the real estate market, this was one of the highest risk areas of the audit, yet the auditors failed to obtain sufficient evidence supporting management’s estimates of fair value of the collateral underlying the bank’s troubled loans. Instead, they relied on stale information and management’s representations, and they failed to heed numerous red flags when issuing unqualified opinions on TierOne’s 2008 financial statements and the bank’s internal controls over its financial reporting.

According to the SEC’s order, the internal controls identified and tested by the auditing engagement team did not effectively test management’s use of stale and inadequate appraisals to value the collateral underlying the bank’s troubled loan portfolio. For

example, the auditors identified TierOne’s Asset Classification Committee as a key ALLL control. But there was no reference in the audit work papers to whether or how the committee assessed the value of the collateral underlying individual loans evaluated for impairment, and the committee did not generate or review written documentation to support management’s assumptions. Given the complete lack of documentation, the auditors had insufficient evidence from which to conclude that the bank’s internal controls for valuation of collateral were effective. The SEC’s order alleges that the auditors engaged in improper professional conduct as defined in the securities laws. A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the order are true and what, if any, remedial sanctions are appropriate. The judge is expected to issue an initial decision within 300 days from the date of service of the order (Topbeancounter | January 10, 2013).

Conclusion:

It has become conspicuously evident that the banks are in no way obviated of corrupt and fraudulent practices after all. Abundant facts in the recent studies attest to this claim. The banking sector in particular has become a terrain for various appalling corrupt and fraudulent practices. In addition, the recent studies noted that the internal mechanisms in the banks are not sufficient to guarantee transparent and accountable service in the conduct of official business in the sector. Mere conventional audit is not enough to protect the banking industries from entwine of corruption and fraud. The audit procedures, plans and programs of

The Author is the Group FinancialController of a private Group ofIndustries and Fellow CharteredAccountant of ICAB


the auditors need to be reorganized to cope with modern complicated and electronic banking system. Auditors should give more emphasis on the internal control system and evaluate the effectiveness of the system. The stakeholders and the management of the bank must establish and upgrade the transparency and accountability in the banking operation and management system. Accountability and transparency are celestially

considered to be the most important contraptions for protecting banks from irregularities, frauds and mismanagement. It is copacetic from the present world economic scenarios that the more economically developed countries have track record of strong and effectual transparency and accountability in banking sector economy. The legal systems of the developing economies like Bangladesh need to be amended to

enable the banks to realize the default loans and the defaulters get punishment and cannot escape punishment by using the laws of the land.

Abstract

Profitability is the ultimate test of managements’ operating effectiveness and success of a financial institution. However, profit is one of the quantitative elements which reflect the bank performance story. Baking industry of Bangladesh has developed tremendously. Among contributory financial organizations both conventional and Islamic banks of Bangladesh are making significant contribution in economic development of Bangladesh. But both types of bank need to ensure sustainability along with the profitability by maintaining adequate liquidity. In the recent years banks are developing at a high growth rate. Both of these banks are concentrated in their profitability trend for better sustainability. Profitability depends on the overall performance efficiency of the bank. The study shows a comparative study between conventional and Islamic banking system of Bangladesh and reveals the competitive scenario for both sectors.

Introduction

Banking is the backbone of national economy. All sorts of economic and financial activities revolve round the axis of banks. In the global context, the role of banks is far-reaching and more penetrating

Profitability Trend in the Banking Sector ofBangladesh- a Comparative Study of

Islamic and Conventional Banks1Ishter Mahal | 2Benazir Rahman

in the economic and fiscal discipline, trade, commerce, industry, export and import. Banks are the only media through which both national and international trade and commerce emanated. Bangladesh has a mixed banking system comprising nationalized, private and foreign commercial banks. Bangladesh Bank is the central bank of the country and is in charge of monetary policies of the Government and all commercial banks.

Now-a-days Commercial banks play a key role in the economic development of a nation through mobilization of savings and allocation of credit to productive sectors. Nevertheless, directed and inefficient credit allocation by the commercial banks of Bangladesh in various economic sectors without adequate credit appraisal and monitoring, ultimately led to the widespread loan delinquency, and deteriorating health of the entire financial system. The commercial banking system dominates Bangladesh's financial sector. There are 54 banks performing their functions in Bangladesh excluding Bangladesh Bank. Out of these, 4 are nationalized commercial banks, 29 are private commercial banks (conventional), 7 Islamic banks, 9 are foreign commercial banks and 5 are specialized development banks. These banks are offering a variety


AFTER ANALYZING THE AVERAGE PROFITABILITY RATIOS IT IS FOUND THAT BOTH THE SECTORS ARE DOING WELL BUT THEIR CLASSIFIED LOANS/INVESTMENTS AMOUNT SHOULD BE MAINTAINED AT A TOLERABLE LEVEL. AFTER THE COMPARATIVE STUDY IT IS FOUND THAT PROFITABILITY TREND OF SELECTED ISLAMIC BANKS ARE HIGHER BUT AVERAGE PROFITABILITY RATIOS OF CONVENTIONAL BANKS SHOWS BETTER POSITION. THOUGH ISLAMIC BANKS’GROWTH RATE IS BETTER BUT CONVENTIONAL BANKS’ RATIOS ARE IN BETTER POSITION. IT MAY BECAUSE OF THESE BANKS HAVE BETTER RISK MANAGEMENT TECHNIQUES AND ALSO DIVERSIFIED RANGE OF INVESTMENTS. IN SHORT, IT CAN BE SAID THAT BOTH SYSTEMS HAVE DIFFERENT COMPETITIVE ADVANTAGES IN THEIR FIELD WHICH INFLUENCE THEIR PROFITABILITY.

of products to their clients. In doing their business most crucial part is to manage their credit efficiently as their profit mostly depends on the proper management of credit. The next session will focus on literature review, third session focuses on company analysis, fourth session will include the analysis part and fifth session will focus on conclusion.

Objective

Broad Objective

The main objective is to focus on the profitability trend of both Conventional and Islamic banking system in Bangladesh taking 5 banks from each category and comparing them by applying appropriate tools.

Specific Objectives

The specific objectives of this paper are the following:

To study the Overall profitability trend of both Islamic banks and Conventional banks in Bangladesh based on their 5 years‘ performance of selected banks.

To find out the impact of profitability of these banks to the overall banking sector in last 5 years.

To show the impact of deposits and Loans/investments on profitability of banks selected from two sectors through regression analysis for 5 banks from each sector.

To show a comparative analysis of two sectors of banking in the light of selected 10 banks.

To point out the lacking that reflects in different banks’ performance.

To focus on factors influencing the growth as well as profitability of these two sectors of banking.

Limitation of the study

Privacy of Information: All the 10 banks selected as a sample are prominent banks of Bangladesh. For maintaining privacy, only limited information was available to use in the project. Another limitation of this study is bank’s policy of not disclosing some data and information for obvious reason, which could be very much useful.

Time Limitation: Such short time period of 3-months is not enough to learn everything about banking sector. Time limitation will also hinder the study.

Data Collection: collecting data through all the filtering and getting approval to use these data was difficult. The main constraint of the study is limited access to information, which has hampered the scope of analysis required for the study.

Sampling Problem: We have just worked with 10 banks amongst all the commercial banks which is so small as a sample.

Literature Review

Bader et al (2008) measured and compared the cost, revenue and profit efficiency of 43 Islamic and 37 conventional banks over the period 1990-2005 in 21 countries using Data Envelopment Analysis. They assessed the average and overtime efficiency of those banks based on their size, age, and region using static and dynamic panels and suggested that there are no significant differences between the overall efficiency results of conventional versus Islamic banks. Abdul & Azmi (2011) found in their



any differences of profit rate on investments of Islamic Bank against fixed lending rate of local conventional banks, foreign conventional banks and state owned commercial banks in Bangladesh. Analysis revealed that the foreign commercial banks charged the highest rate on the borrowers during the selected periods. It has also been found that there is a significant difference in mean return among Islamic banks, local conventional banks, foreign conventional banks and state owned commercial banks.

Selection of Banks / Samples

In this study the focal point is to make a comparative analysis between conventional and Islamic banking sector. For the study purpose we have selected 10 banks of Bangladesh as our sample; 5 banks from each sector. This study will focus on the profitability trend of these two sectors in the light of recent (2006-2011) 5 year’s performance of selected 10 banks. For the research selected banks are as follows-

study that while there are no significant difference in profitability during these two periods, Bank Islam Malaysia Berhad (BIMB) is relatively more liquid and less risky as compared to conventional banks. On top of that, basic modes of Islamic banking, i.e. mudharabah and musyarakah, are not of significant financing portfolio for Bank Islam Malaysia Berhad (BIMB). Usman & Khan (2012) have done a research on Financial Performance of Islamic and Conventional Banks of Pakistan and concluded that Islamic banks have high growth rate and profitability over the conventional banks. Moreover the Islamic banks have high liquidity power over conventional banks. Alani, Yaacob & Hamdan (2013) mentioned in their research perhaps the most important of the current analysis used in traditional banks are irrelevant in assessing the efficiency of the financial performance of Islamic banks because of their privacy. They urged researchers to focus on formulation of new analysis tools with focusing on Islamic banks.

Hanif (2011) depicted based on his research Islamic banking is very much practiced like modern conventional banking with certain restrictions imposed by Sharia and

addresses the large number of business requirements successfully hence perceiving Islamic banking as totally foreign to business world is not correct. Islamic banking is not a mere copy of conventional practices rather major differences exist in the operations of Islamic Financial Institutions (IFIs) in comparison with conventional banking. IFIs have succeeded in creating trust in the eyes of depositors and receive deposits on profit and loss sharing basis however investment and financing options available to Islamic banks are limited in comparison of conventional banks.

Shamsher, Taufiq & Khaled measured and compared the cost and profit efficiency of 80 banks in 21 of Organization of Islamic Conference (OIC) countries: comprising of 37 conventional banks and 43 Islamic banks, using the Stochastic Frontier Approach (SFA). The findings suggest that there are no significant differences between the overall efficiency results of conventional versus Islamic banks. However, there is substantial room for improvement in cost minimization and profit maximization in both banking systems. Kabir, Hafiz and Musa (2012) did a study which was an attempt to find whether there are

Conventional Banks

Islamic Banks


Comparison between Conventional & Islamic Banking in Bangladesh

After ananlyzing the recent 5 year’s senario of selected 10 banks we have got following result;

General Distinctions

Conventional Banks Islamic BanksDistinction of Product /Service :Principles of business

Deals with man-made principles or principles provided by BB .

Deals with Shariah based principles o n the basis of Islamic Shariah under the supervision of BB.

Variation in goals

Conventional goals are almost similar as Islamic ones in case of profitability & improving shareholder’s earnings. But now these banks are also concentrated in CSR such as environment consciousness and developing advanced technology as well.

Islamic banks mainly providing concentration on improving profit margin as well as increasing shareholder’s equity. But now these banks also improving their technology and concentrated in CSR activities but these are left behind than conventional ones.

Variation in Deposit

Conventional banks maintains following schemes generally but used different names for the schemes to distinguish from each other’s products Fixed Deposit (FDR) Savings or Short notice Deposit(SND) Current Deposit(CD)

Islamic banks receive deposits under two principles: Al-Wadeeah principle Mudaraba prin ciple

Other Facilities

Conventional banks believe in Letter of Credit ( L/C) most .

Islamic banks issues letter of guarantee most.

Business Efficiency:Profitability Profitability of conventional banks depends

on Loans and investments both.Profitability of Islamic banks depends on only investments sectors.

Liquidity & Solvency

These banks have to maintain more SLR that is 19% now.

These banks have to maintain SLR 10.5% which is lower than conventional ones.

Sources of Funds

Conventional banks use deposits as a core source of banks in exchange of fixed deposit interest.

Islamic banks also collect funds through deposits on the basis of profit & loss Sharing (PLS).

Uses of Funds These banks mainly invest in loans & advances as a core function of the banks & also invest in many sectors on term basis.

These banks mainly invest as per Islamic Shariah.

Business development

The growth profile of selected conventional banks indiates better positon.

Growth rate of selected Islamic banks are higher than the conventional ones.

Efficiency &Productivity

The selected conventional banks shows efficiency and productivity in the recent years.

The selected Islamic banks also shows better efficiency & productivity in the recent years. But the growth of these banks are higher than conventional ones.

Commitment to Economy &Community

These banks are in better situation as they have handsome amount that is invested in long-term investments.

Islamic banks are not an exeption.

Comparative Financial Analysis(Statistical Calculation & its Interpretation)

Multiple Regression-1 (For Conventional banks): For the regression analysis we have selected following variables;

Net Profit After Tax- Dependent Variable (Y)Deposits- Independent variable (X1)Loans & Advances- Independent variable (X2)


Descriptive Statistics

Mean Std. Deviation

N

PROFIT 1174.9340 882.2125 5DEPOSIT 48719.0000 16612.7650 5

LOANS 41720.5640 15484.9360 5

Variables Entered/RemovedModel Variables

EnteredVariables Removed

Method

1 LOANS, DEPOSIT

. Enter

a. All requested variables entered.b. Dependent Variable: PROFIT

Model SummaryR R2 Adjusted R2 Std. Error of

the EstimateChange Statistics

Model R2Change F Change df1 df2 Sig. F Change1 .964

a .929 .859 331.6207 .929 13.154 2 2 .071

a. Predictors: (Constant), LOANS, DEPOSIT

CorrelationsPROFIT DEPOSIT LOANS

Pearson Correlation

PROFIT 1.000 .928 .951

DEPOSIT .928 1.000 .994LOANS .951 .994 1.000

Sig. (1-tailed) PROFIT . .012 .007DEPOSIT .012 . .000LOANS .007 .000 .

N PROFIT 5 5 5DEPOSIT 5 5 5LOANS 5 5 5

Coefficient of correlation (R):

It measures the degree of relationship between the dependent and independent variables. Here, R = 0.964 indicates that there is a positive correlation between the variables.If the independent variable increases then this will result the dependent variable increase accordingly.

Coefficient of Determination(R2):

R2 shows the proportion of the variability in the dependent variable that can be explained by the estimated multiple regression equation.Here R2 is equal to 0.929 (92.9% expressed in percentage) indicates 92.9% of the variability in Profit after tax is explained by the input variables.

Adjusted R2:

Here Adj. R2= 0.859. R square shows the proportion of variability in the dependent variable that can be explained by multiple regressions. Adjusted R Square is the actual variability which is adjusted for both the independent variables. It is actual R2 needed when we add the second independent variable. It is found

after the analysis that the proportion is 0.859 or 85.90%.

Standard Error of Estimate:

Standard error of estimate denotes the error of overall estimation of the multiple correlations. Here the error is 331.6207 which indicate the variability between the expected and actual value.

ANOVAModel Sum of Squares df Mean Square F Sig.

1 Regression 2893250.743 2 1446625.372 13.154 .071Residual 219944.545 2 109972.273

Total 3113195.288 4a. Predictors: (Constant), LOANS, DEPOSITb. Dependent Variable: PROFIT

t-Test:

t- Test is used to determine whether each of the independent variable is significant. We refer to each of the separate T Test for each of the independent variable as a test for individual significance.

All the t values of our variables are (-1.239), (-0.850) and 1.396 and using α =.50, t0.25 = 0.816

Since 1.239>0.816 we reject H0: ß1=0

Since 0.850>0.816 we reject H0: ß2=0

Similarly 1.396>0.816 we reject H0: ß3=0

Hence there is a significant relationship between PAT and deposits & Loans at significance level of 0.50.

Regression Analysis:

Here,

Dependable Variable-Profit after Tax (PAT)

Independent Variables-Deposits (X2)

Loans & Advances (X3)

Findings:From the output above we can bring out an equation that is like:

Y= a+β2X2+β3X3

PAT =-755.208-7.799 Deposits +0.137Loans & Advances

Here (-7.799) represent an estimate of the changes corresponding to single quantity changes in deposit volume which is in inverse relation that for 1 increasing or decreasing arrangement with deposit volume results 7.799 decrease or increase the PAT.Similarly 1 increasing or decreasing arrangement with loans

Here

Sum of squares due to regression, (SSR) = 2893250.743Sum of square due to error, (SSE) = 219944.545Total sum of square (SST) = 3113195.288

F-Test:

The F Test is used to determine whether a significant relationship prevails between the dependent variable and independent variables. It is considered as the test for overall significance. Here the hypothesis for the F test is deemed as there is no significant relationship between dependent and independent variables. The alternative hypothesis is vice versa.

Therefore the null hypothesis is:

Ho: ß1 = ß2 = 0

Ha: one of the parameters is not equal to zero

If null hypothesis is rejected we can conclude that the overall relationship between Y(PAT) and independent variables X1(Deposits) & X2 (Loans) is significant.

Test Statistic, F= MSR/MSE 13.154And the given table value is 9.00 with the level of significance,

α= 0.10As 13.154 is higher than table value so we certainly derive that the null hypothesis is rejected. So, the overall relationship is significant.


Calculation of Coefficient –Annexure I

Coefficient CorrelationsModel LOANS DEPOSIT

1 Correlations LOANS 1.000 -.994DEPOSIT -.994 1.000

Co variances LOANS 9.679E-03 -8.968E-03DEPOSIT -8.968E-03 8.409E-03

a. Dependent Variable: PROFIT

Collinearity Diagnostics


Eigen value Condition Index

Variance Proportion

sModel Dimensio

n(Constant) DEPOSIT LOANS

1 1 2.937 1.000 .01 .00 .002 6.280E-02 6.838 .63 .00 .003 5.426E-04 73.565 .36 1.00 1.00

& advances results 0.137 likelihood to increase or decrease the PAT which is in positive relationship. (-0.755.208) represent the value of β1 which is constant coefficient that shows the reduction of PAT when two independent variables are zero (0).

If we calculate regression from different samples we can get the following standard errors of Y intercept β1, β2 and β3for deposits & loans are 609.691, 0.092 & 0.098.


Multiple Regression-2 (For Islamic banks) :For the regression analysis we have selected following variables;

Net Profit After Tax- Dependent Variable (Y)

Deposits- Independent variable (X1)

Investments- Independent variable (X2)

Descriptive Statistics

Mean Std. Deviation

N

PROFIT 1253.6780 769.4472 5DEPOSIT 74078.9240 27057.356

35

LOANS 68401.7600 28159.0132

5

Variables Entered/RemovedModel Variables

EnteredVariables Removed

Method

1 LOANS, DEPOSIT

. Enter

a. All requested variables entered.b. Dependent Variable: PROFIT

Model SummaryR R2 Adjusted R2 Std. Error of

the EstimateChange Statistics

Model R2Change F Change df1 df2 Sig. F Change1 .98

2.963 .927 207.9287 .963 26.388 2 2 .037

a. Predictors: (Constant), LOANS, DEPOSIT

CorrelationsPROFIT DEPOSIT LOANS

Pearson Correlation

PROFIT 1.000 .978 .981

DEPOSIT .978 1.000 .998LOANS .981 .998 1.000

Sig. (1-tailed)

PROFIT . .002 .002

DEPOSIT .002 . .000LOANS .002 .000 .

N PROFIT 5 5 5DEPOSIT 5 5 5LOANS 5 5 5


Coefficient of correlation (R):

It measures the degree of relationship between the dependent and independent variables. Here R= 0.982 indicates that there is a positive correlation between the variables. If the independent variable increases then this will result the dependent variable increase accordingly.

Coefficient of Determination (R2):

Here R2 is equal to0.963 (96.30% expressed in percentage) indicates 96.30% of the variability in Profit after tax is explained by the input variables.

Adjusted R2:

Here Adj. R Square= 0.927It is found after the analysis that the proportion is 0.927or 92.70%.

Standard Error of Estimate:

Standard error of estimate denotes the error of overall estimation of the multiple correlations. Here the error is 207.9287 indicates the variability between the expected and actual value.

Here,

Sum of squares due to regression, (SSR) = 2281727.338Sum of square due to error, (SSE) =86468.688

Total sum of square (SST) = 2368196.025

F-Test:

The F Test is used to determine whether a significant relationship prevails between the dependent variable and independent variables. It is considered as the test for overall significance. Here the hypothesis for the F test shows significant relationship between dependent and independent variables. The alternative hypothesis is vice versa.


Ho: ß2 = ß3 = 0


If null hypothesis is rejected we can conclude that the overall relationship between Y (PAT) and independent variables X1 (Deposits) & X2 (Investments) is significant.

Test Statistic, F= MSR/MSE = 26.388

And the given table value is 9.00 with the level of significance,

α= 0.10

As 26.388 is higher than table value so we certainly derive that the null hypothesis is rejected. So, the overall relationship is significant.

ANOVAModel Sum of Squares df Mean Square F Sig.

1 Regression 2281727.338 2 1140863.669 26.388 .037 Residual 86468.688 2 43234.344

Total 2368196.025 4

a. Predictors: (Constant), LOANS, DEPOSITb. Dependent Variable: PROFIT


t-Test:

t- Test is used to determine whether each of the independent variable is significant. We refer to each of the separate T Test for each of the independent variable as a test for individual significance.

Allthe t values of our variables are (-0.857), (-0.168) & 0.632 and using

α =.50, t0.25 = 0.816

Since 0.857>0.816 we reject H0: ß1 = 0

Since 0.968<0.816 we reject H0: ß2 = 0

Similarly 1.632<0.816 we reject H0: ß3 = 0

Hence there is significant relationship between PAT and deposits & Investments.

Regression analysis:

Here,

Dependable Variable - Profit after Tax (PAT)

Independent Variable- Deposits (X2)

Investments(X3)

Finding:

From the output above we can bring out an equation that is like:

Y= a+β2X2+β3X3

PAT = -494.547-1.012 Deposits +3.652 Investments

Here (-1.012) represent an estimate of the changes corresponding to single quantity changes in deposit volume which is in inverse relation that for 1 increasing or decreasing arrangement with deposit volume results 7.799 decrease or increase the PAT.Similarly 1 increasing or decreasing arrangement with loans & advances results 3.652 likelihood to increase or decrease

Here

Sum of squares due to regression, (SSR) = 2893250.743Sum of square due to error, (SSE) = 219944.545Total sum of square (SST) = 3113195.288

F-Test:

The F Test is used to determine whether a significant relationship prevails between the dependent variable and independent variables. It is considered as the test for overall significance. Here the hypothesis for the F test is deemed as there is no significant relationship between dependent and independent variables. The alternative hypothesis is vice versa.


Ho: ß1 = ß2 = 0


If null hypothesis is rejected we can conclude that the overall relationship between Y(PAT) and independent variables X1 (Deposits) & X2 (Loans) is significant.

Test Statistic, F= MSR/MSE 13.154And the given table value is 9.00 with the level of significance,

α= 0.10As 13.154 is higher than table value so we certainly derive that the null hypothesis is rejected. So, the overall relationship is significant.

Calculation of Coefficient – Annexure II

Coefficient CorrelationsModel LOANS DEPOSIT

1 Correlations LOANS 1.000 -.998DEPOSIT -.998 1.000

Covariances LOANS 3.340E-03 -3.469E-03DEPOSIT -3.469E-03 3.618E-03


Collinearity DiagnosticsEigenvalue Condition

IndexVariance

ProportionsModel Dimension (Constant) DEPOSIT LOANS

1 1 2.926 1.000 .00 .00 .002 7.417E-02 6.281 .23 .00 .003 2.165E-04 116.234 .76 1.00 1.00


the PAT which is in positive relationship. (-494.547) represent the value of β1 which is constant coefficient that shows the reduction of PAT when two independent variables are zero (0).

If we calculate regression from different samples we can get the following standard errors of Y intercept β1, β2 and β3 for deposits & loans are 577.084, 0.060 & 0.058.

Comparative position of both regression analysis

Both the systems are in almost similar situation as per the analysis. Wehave used only the average of selected banks &found that profit of both banking systems are influenced by deposits and Loans/Investments.

SWOT Analysis


For Conventional Banks

Strengths Huge product line Fixed rate of return Have various management skills to be utilized

Weaknesses Strict regulations provided by BB than Islamic

ones Greater rate of loan default

Opportunities Diversed loan facilities or options can be created Easy access in money market/ interbank borrowing Strong customer background Can invest in those sectors which are prohibited by

Islamic Shariah

Threats Huge credit risk Demand of clients change frequently May more restrictions imposed by BB

For Islamic Banks

Strength Strong Shariah based product lines Less credit risk than conventional ones Flexible rules & regulations provided by BB

Weakness Lack of Shariah manual or guidelines Lack of linkages with training institutes and

Shariah supervisory bodies Lack of management’s commitment in strictly

following the Shariah guidelines

Opportunities Huge investment opportunities Strong religious influence

Threats Insufficient legal protection Market demand may change Lack of unified Shariah rulings Shortage of supportive and link institutions; and Shortage of skilled and trained manpower in

Islamic Shariah banking. Lack of linkages with other Islamic banks and

Islamic NGOs for extending micro credit.


Concluding Remarks

Statutory Liquidity Reserve(SLR) is the reserve that every scheduled bank in Bangladesh must maintain with Bangladesh Bank (BB). Conventional banks have to maintain more reserve than Islamic ones. So they face more difficuty to balance between liquidity & profitability.

For Conventional Banks SLR-19.0% For Islamic Banks SLR-10%(Banglapedia: Bangladesh Bank, accessed 2011)

Islamic banks have flexible regulations than conventional ones in case of SLR. So these banks can invest more funds in market. Islamic banks have to follow Shariah principles according to Islamic Shariah. So these banks need to improve their efficiency by maintaining such laws. As Bangladesh is a Muslim country, so many people like to get Islamic

PEST Analysis This analysis mainly deals with macro environment that affect banks.

Factors Conventional Banks Islamic banksPolitical As our economy greatly influenced by political

instability, our commercial banks are also affected by this issue.

Islamic banks are not exceptions.

Economic Commercial banks are highly affected by monetary and fiscal policies. Tax rate for banks are 42.50%. Any change in these policies will affect banks significantly.

Same goes for Islamic banks.

Socio-cultural Many people avoid commercial banking products due to presence of interest. But conventional banks have strong reputation in corporate world than Islamic banks as most of them are old and experienced players.

Islamic banks have strong cultural & religious background in Muslim country like Bangladesh as many people avoid interest due to religious issue. So Bangladesh are getting Islamic banking facilities. But except IBBL most of them are new players in the market.

Technological Conventional banks are now providing e-services frequently to capture the market especially the corporate clients and the youth. Now-a-days these banks also providing debit card facilities which facilitate instant cash needs such as in time of shopping.

Islamic banks are also trying to cope with the change by providing e-services to their clientele.

banking facilities due to religious influence. Many of us don’t appreciate interest as Islam prohibits interest.

For concluding the study some recommendations have been listed as follows;

For Conventional Banks

Conventional banks have lucrative ratio. They must try to maintain this in future.

These banks have huge credit risks as Loans are their main product. So they need to maintain risk management process so that they could avoid high risky situations.

They have vast invetment opportunity so they should try to utilize such opportunity.

Must concentrate in risk management system more efficiently.

Need to take necessary steps to balance between Liquidity & solvency and profitability.

Must prepare for sudden shocks so that no crisis arises in time of uncertain situations like seasonal demand.

Must ensure easy access in money market & ability to meet up problems by avoiding short-term inter-bank borrowing arrangement when money rate is too high.

Should try to make their schemes’ terms & conditions flexible.

Should concentarte on CSR activities to create public awareness.

For Islamic Banks

Islamic banks have good potential in Bangladesh as it is a Muslim Country. They must


try to improve more and more their services to retain the market as well as create new demand.

As Islamic banks need to invest according to Islamic Shariah. They need to concentrate more on those sectors where they have huge opportunity.

These must concentrate to enrich their product line.

Must improve their risk management process as per BB guidelines.

Must concentrate on promotional activities to attract new customers.

As these need to maintain lower reserve than conventional ones, they must invest the excess amount efficiently to increase profitability.

Need to improve customer care services to enhance more and more customer confidence.

Should try to improve business efficiency as well for the future betterment.

Should concentarte on CSR activities to create public awareness.

As these face difficulty to access short-term borrowing sources these need to prepare for such uncertain situations.

Among all the contributory organizations in financial system commercial banks both conventional & Islamic banks are making significant contribution in the economic development of Bangladesh. Profitability of banking industry has significant contribution in our Country’s Gross Domestic Product (GDP). Banks are developing rapidly now-a-days. Both the banking systems are improving in their own field. Our traditional/cultural as well as religious values allow us to accept & depend on Islamic banking gradually as our religion Islam prohibits “Riba” or interest. On the other hand, corporate world generally maintain relationship with conventional banks & also people trust these

banks due to their glorious history of business since liberation. Throughout the study it is found that both the sectors are developing & profitability trends are in increasing mode. As in this study we have worked on only 10 banks, 5 banks from each sector. The performance study concludes that Islamic banks are superior to conventional banks. But it is not likely that solely Islamic banks are better performing organizations rather conventional banks have also noteworthy performance and significant contribution in different economic segments. After analyzing the average profitability ratios it is found that both the sectors are doing well but their classified loans/investments amount should be maintained at a tolerable level. After the comparative study it is found that profitability trend of selected Islamic banks are higher but average profitability ratios of conventional banks show better position. Though Islamic banks’ growth rate is better, conventional banks’ ratios are in better position. It may be because these banks have better risk management techniques and also diversified range of investments. In short, it can be said that both systems have different competitive advantages in their field which influence their profitability.

Bibliography

DAMODAR N. GUJARATI(2006) Essentials of Econometrics, 3rd ed., USA: Mc Graw-Hill Irwin.

JAMES C. VAN HORNE, JOHN M. WACHOWICZ, JR. (2006-07) Fundamentals of Financial Management, 12th ed.,England: Financial Times Prentice Hall.


Mohammed Khaled i. Bader, Shamsher Mohamad, Mohamed Ariff & Hassan Taufiq, Cost, Revenue, and Profit Efficiency of Islamic Versus Conventional Banks: International Evidence Using Data Envelopment Analysis, Islamic Economic Studies, Vol. 15, No. 2, January 2008.

Muhammad Hanif, Differences and Similarities in Islamic and Conventional Banking, International Journal of Business and Social Science, Vol. 2 No. 2; February 2011, http://www.ijbssnet.com/journals/Vol._2_No._2;_February_2011/20.pdf

Usman Abid & Khan Muhammad Kashif, Evaluating the Financial Performance of Islamic and Conventional Banks of Pakistan: A Comparative Analysis, International Journal of Business and Social Science Vol. 3 No. 7; April 2012. http://www.ijbssnet.com/journals/Vol 3 No 7 April_2012/27.pdf

Farooq Alani, Hisham Yaacob & Mahani Hamdan, The Comparison of Financial Analysis Tools in Conventional and Islamic Banking: Evidence from Kuwait, International Journal of Business and Management;

Vol. 8, No. 4; 2013, ISSN 1833-3850 E-ISSN 1833-8119, Published by Canadian Center of Science and Education, http://journal.ccsenet.org/index.php/ijbm/article/viewFile/21848/15420

Shamsher Mohamad, Taufiq Hassan & Mohamed Khaled I. Bader, Efficiency of Conventional versus Islamic Banks: International Evidence using the Stochastic Frontier Approach (SFA), Journal of Islamic Economics, Banking and Finance, http://ibtra.com/pdf/journal/v4_n2_article5.pdf

Kabir Mohammad Rokibul , Ullah Md. Hafiz and Khan Md. Musa, Comparative Analysis of Profit Rate of Islamic Banks on Investment (ROI) and Fixed Rate of Interest on Loan of Conventional Banks in Bangladesh, World Journal of Social Sciences, Vol.2. No. 6, September 2012 Issue. Pp. 39 – 48. http://wbiaus.org/4.%20Rokibul.pdf.

Hamid Mohamad Abdul, Azmi Shaza Marina, The Performance of Banking during 2000-2009: Bank Islam Malaysia Berhad and Conventional Banking in Malaysia, International Journal of Economics and Management Sciences , Vol. 1, No. 1, 2011, pp. 09-19, ISSN: 2162-6359.

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According to the law, each and every company is to prepare its financial statements at the end of a particular period. The objective to prepare such financial statements is to provide financial information about the company that is useful to existing and potential investors, lenders and other creditors in making decisions about providing resources to the company. These decisions involve buying, selling or holding equity and debt instruments, and providing or settling loans and other forms of credit.

The financial statements are prepared following some norms, rules and regulations such as Companies Act, Banking Companies Act, other different Acts, accounting principles and standards etc. Preparation of financial statements also depends on some basis, assumptions and estimates. Since there is a scope of applying assumptions and estimate for preparing financial statements, the preparer as well as the auditor of financial statements will have to apply utmost skill, competence, professionalism and integrity to save the users of these financial statements from any loss or damage.

But there is no scope to deny that due to not performing the professional duties, in some cases, with sufficient skill, competence and integrity the users of

Laws and Regulations forAccounting System

Md Shahadat Hossain FCA

financial statements suffer for loss. Now a day, in the name of protection of the investors and other users of financial statements, regulators are establishing barrier in the way of accounting theory and standards. Some examples are presented below; Firstly, in the draft companies act net worth has been defined as the aggregate value of the paid-up share capital and all reserves created out of the profits and securities premium account, after deducting the aggregate value of the accumulated losses, deferred expenditure and miscellaneous expenditure are not written off, as per the audited balance sheet, but do not include reserves created out of revaluation of assets, write-back of depreciation and amalgamation.Net worth is an important determinant of the value of a company and it is used to determine creditworthiness because it gives snapshot of the companies investment history.

Considering the use and importance of term net worth, it should be defined in such a manner so that no confusion or ambiguity may arise. But in the draft companies act the definition of net worth which has been proposed is not in line with the definition of accounting standards because one of the important elements i.e surplus on assets revaluation has been excluded. Basically, as per accounting standard, net worth means total assets minus total liabilities. Along with this it


THE FINANCIAL

STATEMENTS OF PUBLIC

BUT NOT LISTED AND

PRIVATE LIMITED

COMPANIES ARE

PREPARED ON THE BASIS

OF THE GUIDELINE GIVEN

IN THE COMPANIES ACT.

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GUIDELINE IS NOT IN

LINE WITH THE

BANGLADESH FINANCIAL

REPORTING STANDARDS;

ON THE OTHER HAND,

THIS GUIDELINE IS NOT

COMPLETE AND

COMPREHENSIVE. DUE

TO HAVING NO

COMPLETE AND

COMPREHENSIVE

GUIDELINE, THE

FINANCIAL STATEMENTS

OF THOSE NON LISTED

AND PRIVATE LIMITED

COMPANIES ARE NOT

BEING PREPARED IN

UNIFORM AND

SYSTEMATIC

MANNER.

may be mentioned that according to International Financial Reporting Standards (IFRS), an entity shall choose either the cost model or the revaluation model as its accounting policy and shall apply that policy to an entire class of property, plant and equipment.

After recognition as an asset, an item of property, plant and equipment whose fair value can be measured reliably, shall be carried at a revalued amount, being its fair value at the date of the revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. As caution in IFRS it has also been mentioned that revaluations shall be made with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the end of the reporting period. If an asset's carrying amount is increased as a result of a revaluation, the increase shall be recognized in other comprehensive income and accumulated in equity under the heading of revaluation surplus. So, from the contents of IFRS it is clear that revaluation reserve is undoubtedly a part of net worth.

Legal base of revaluation surplus raised due to revaluation of fixed assets from one of the important case reference named Ammonia Soda Co Ltd vs Arthur Chamberlain and Others (1918) may be observed.In this case reference, the profit and loss account of the defendant company showed a debit balance of £ 19,028. Upon a boring made by the company to reach water a layer of rock salt was discovered.

The directors of the company, Mr Chamberlain and Mr Cocking, consequently appreciated the value of the land held by the company as, in their opinion, it was a reasonable ground to write up the value of the land, In the Balance Sheet for 31st


July 1911, £ 20,542 was added to the value of the land and this sum was credited to a reserve account. The appreciation in the value of land was then used to cancel the debit balance of profit and loss account to the tune of £16,451, thereby leaving a balance of £ 4,091 to the credit of reserve account.

In a subsequent year, a dividend was paid in respect of preference shares out of the current profits, yielded by the company. The plaintiffs alleged that the dividends was improperly paid and made them (the directors) liable for paying dividends out of capital. They argued that the amount £2,577 standing to the debit of profit and loss should have been wiped out before dividends were paid. The court rejected the plea holding that revaluation of the property was genuine and the directors had concealed no material fact. Judgment held that a company may write up its assets as the result of a bonafide revaluation and may divide current profits without first writing off prior losses. It is pertinent to mention that from revaluation surplus declaring cash dividend may not be logical but dividend in the form of bonus share will not be harmful. For example, suppose, five years back company P was formed with paid up capital Tk 100,000 (1000 ordinary share of Tk 100 each) and land was purchased by Tk 100,000 for the company. After five years same industry company Q was established by purchasing a land of Tk 500,000 which was funded by issuing capital of 5000 ordinary share of Tk 100 each. In this situation, if previous company i.e company P revalues its land and issues bonus shares from revaluation surplus that will be logical. From the content of above case reference and example it is clear that revaluation surplus is one of the elements of net worth.

Secondly, one of the important issues of accounting is deferred tax. As per International Accounting Standards


one of the elements of deferred tax is deferred tax assets which are the amounts of income taxes recoverable in future periods in respect of deductable temporary differences, the carry forward of unused tax losses and the carry forward of unused tax credits.

This deferred tax asset is accounted for through crediting income, in the financial statements. Since deferred tax asset is recognized through crediting income therefore, sufficient amount of conditions have been given in International Accounting Standards before recognizing and measuring the deferred tax asset. Such as, the carrying amount of a deferred tax asset shall be reviewed at the end of each reporting period and the company shall reduce the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilized. Despite having sufficient amount of conditions central bank of our country has issued restrictions for

all the banks and financial institutions on recognizing, measuring and utilizing the corresponding credit of deferred tax assets. In the circular it has been mentioned that if deferred tax is calculated and recognized based on the provisions against classified loan, advances the amount of the net income after tax increased due to recognition of deferred tax assets on such provisions will not be distributed as dividend and the amount of deferred tax assets recognized on such provisions should be deducted while calculating the regulatory eligible capital of the statement of capital adequacy requirement of annual financial report and statement submitted to Bangladesh Bank. If we analyze the contents of this circular it can be observed that it will be all the same to account for or not account for the deferred tax asset as per International Accounting Standards by the banks and financial institutions.

Thirdly, according to subsection (4) of section 82 (C) of income tax ordinance income for tax purpose

of the company which is engaged in some selected activities shall be determined on the basis of the tax deducted or collected at source from revenue and the rate or rates of tax applicable for the assessment year. In a nut shell, this provision of tax law indicates that tax is not determined on the basis of profit of the company; rather profit is determined on the basis of tax. The tax which is being collected in the name of direct tax is also contributing a negative impact in the society as an indirect tax only because of its collection procedure. We know that the main characteristic of direct tax is, it is progressive and cannot be shifted on others. But in many cases the present collection procedures of direct tax are facilitating to shift tax payers’ tax liability to others. An example may be presented to make it clear. According to the fundamental principles of tax law, tax payable amount of a company will be determined based on its net profit as presented in its annual audited financial statements. If the company earns a net profit, it will


have to pay tax at a determined rate. On the contrary, if the company incurs a loss for a particular period of time, it will not have to pay any tax. Suppose a company X earned Tk.200 net profit in the year 2012. In that case it will not be able to distribute full amount of Tk.200 as dividend among its shareholders. It will have to pay Tk.75 as tax (assuming tax rate is 37.5%) to the government and the balance Tk.125 may be distributed among its shareholders as dividend. So, according to principle of direct tax the excess purchasing power will be taken away by the amount of Tk.75 from the shareholders of the company. There is no scope to shift this tax liability on others by the shareholders of the company X. But by dint of tax law as mentioned above tax of the company X is not collected based on net profit, it is collected on turnover/revenue of the company. Suppose the company X is selling its goods to the company Y (customer). Under the tax law, the company Y is given the

responsibility to deduct tax from the sales price of the company X which is considered as the final tax irrespective of year-end profit or loss. Under this system if the company X sells goods of Tk.100 to the company Y, tax of Tk.4 (assuming rate of tax deduction at source is 4%) will be deducted by the company Y and Tk.96 will be paid to the company X. The company X knows that Tk.4 which has been deducted by the customer will not be refunded despite incurring the loss at the end of the year. Therefore, it will be considered as cost not as tax payment in advance. Since this tax will be considered as cost, subsequently the company X will increase the sale price of the product to Tk.104 as against Tk.100 so that after deducting tax it can get Tk.100 as before. By this manner the company X gets opportunity to shift its tax liability to its customers and according to principle of indirect tax it is contributing to increase the rate of inflation as well as inequality in the society.

It is relevant to raise a question why the regulators and others are introducing laws which create barriers on accounting system. As answer of this question it may be mentioned that in first and second cases the lack of reliability of measuring revaluation surplus and deferred tax asset.There is no scope to deny that in the past in many cases share price had been affected due to measuring revalued amount of fixed assets at much higher than actual. In third case the financial statements, specially financial statements of private limited companies do not seem to be reliable. It will not be baseless if it is assumed that in some cases financial statements of private limited companies are prepared showing weaker result than its actual operational result. Due to following this practice it is mentionable that in our country there is a common voice about non- preparation of financial statements correctly. One of the reasons behind such incorrect financial statements is lack of proper sufficient legal guidance. The financial statements of public but not listed and private limited companies are prepared on the basis of the guideline given in the companies act. In one hand, this guideline is not in line with the Bangladesh Financial Reporting Standards; on the other hand, this guideline is not complete and comprehensive. Due to having no complete and comprehensive guideline, the financial statements of those non listed and private limited companies are not being prepared in uniform and systematic manner. Some instances are given below: Firstly, revenue is one of the most important elements for the financial statements. Overall financial performance of a company for a particular period substantially depends on correct recognition, measurement, presentation and disclosure of


The Author is Council Member andex Vice-President, The Instituteof Chartered Accountantsof Bangladesh

revenue. As regards to presentation and disclosure of necessary information of revenue, necessary guidelines have been mentioned in the companies act but nothing has been mentioned about recognition and measurement of revenue. For example goods are shipped subject to installation and the installation is a significant part of the contract which has not yet been completed by the company. In this case, this shipment of goods will not be recognized as revenue as per Bangladesh Accounting Standards because the company retains significant risks of ownership but no guideline in the companies act has been given in this regards. Secondly, recognition of revenue

of the company which is engaged in construction business is complicated and technical. Revenue for the construction business shall be recognized by the reference to the stage of completion of the contract activity at the end of the reporting period which has been mentioned in the Bangladesh Accounting Standards, but in the companies act no such guideline has been given. Thirdly, now a days lots of companies obtain machinery and other fixed assets items on lease from the leasing company. As security of the financing all assets are registered in the name of lease providing company i.e lessor. Due to not having registration in the name of

the company, those assets despite having ownership are not considered their assets by the lessee and due to transferring, substantially all the risks and rewards are incidental to ownership to the lessee but the assets are not also shown in the books of the lessor company. As a result, there remains a chance of assets procured under the lease finance out of books of accounts. In this circumstance for ensuring financial discipline in the private sector of the country and for the betterment of the national economy, all barriers from the way of accounting need to be removed. Again, to remove all those barriers, in one hand during preparation and audit of the financial statements by the accountant and auditor respectively should perform their duties with utmost integrity, on the other hand regulatory authority should also be more active instead of imposing barrier to make their regulatory activity easy. Mandatory compliance of Bangladesh Financial Reporting Standards for all types of companies is also essential and can be ensured only by incorporating the necessary provisions in the companies act.

Monetary Policy in international landscape

Globally monetary policy is adopted to control money supply in the economy. Depending on the control exercised over money supply, two types of monetary policy are found. One is Expansionary Monetary Policy & the other is Contractionary Monetary Policy.

An Expansionary Monetary Policy increases the size of money supply more rapidly than usual, or decreases the interest rate. It is used to combat unemployment by lowering interest rates in the hope that easy credit will entice the business into expanding.

In contrast, a Contractionary Monetary Policy reduces the size of money supply or increases it slowly or rises the interest rate. It is intended to slow inflation to avoid resulting distortions & deterioration of asset values. It is sometimes referred to as Tight Monetary Policy.

Apart from these two, monetary policies are often termed in different names because of their varying character. For example, in Accommodative Monetary Policy, interest rate set by central monetary authority is intended to create

Recent Monetary Policy& Economic Trends

Ahmad Dawood FCA, FCMA

economic growth. A Neutral Monetary Policy is intended neither to create growth nor combat inflation.

In the recent years, Inflation Targeting Monetary Policy has been adopted in various countries including Bangladesh, Australia, Brazil, Canada, Chile, Czech Republic, Colombia, New Zealand, Norway, South Africa, Switzerland & Turkey. On the other hand, Singapore & Hong Kong adopted Currency Targeting Monetary Policy. China’s Monetary Policy is termed as Monetary & Currency Targeting. Sri Lanka adopts Monetary Targeting Policy while India uses Multiple Indicator Approach. USA adopts Mixed Policy dedicated to maximum employment & stable prices.

European Central Bank adopts monetary policy for European nations under common currency Euro with the main objective of maintaining price stability and lower inflation rate, close to 2%.

The BB mandate

The Bangladesh Bank is legally mandated to formulate & implement monetary policy. It is also mandated to advise the Government on interaction of monetary policy with fiscal & exchange rate policy, impact of the policy measures on


THE COUNTRY'S

INFLATION, AS MEASURED

BY CONSUMERS' PRICE

INDEX (CPI), MOVED

SLIGHTLY IN DECEMBER

2012 ON POINT-TO-POINT

BASIS. THIS IS MAINLY

BECAUSE OF INCREASE IN

PRICES OF FOOD ITEMS.

THE INFLATION RATE

MOVED UP TO 7.69 PER

CENT IN DECEMBER LAST

FROM 7.41 PER CENT OF

THE PREVIOUS MONTH ON

THE POINT-TO-POINT

BASIS, ACCORDING TO

THE BANGLADESH

BUREAU OF STATISTICS

(BBS). ON THE OTHER

HAND, THE INFLATION

RATE CAME DOWN TO 8.74

PER CENT ON ANNUAL

AVERAGE BASIS IN

DECEMBER FROM 8.98 PER

CENT IN NOVEMBER 2012.

BASED ON CURRENT

TRENDS, THE AVERAGE

INFLATION TARGET OF 7.5

PER CENT ANNOUNCED IN

THE FY13 BUDGET

APPEARS ACHIEVABLE,

THOUGH RISKS REMAIN.

economy & propose legislative measures to attain its objectives or perform its functions.

The core policies formulated by BB include Monetary Policy, Reserve Management Strategy, Interest Rate Policy, Capital Adequacy for Banks & FIs, Deposit Insurance etc.

Main focus of MPS

Generally main focus of our monetary policy is on price stability, sustainable growth & development, high employment, economic & efficient use of resources & Stability of financial & payment system.

Tools & instruments in the hands of regulator for implementing monetary policy

There are few tools & instruments in the hand of central bank to implement the monetary policy it adopts. These include Bank Rate, Open Market Operations (OMO), Repo & Reverse Repo, Statutory reserve (SLR & CRR). OMO allows central bank to manage quality of money in circulation through buying & selling of various financial instruments, e.g. treasury bills, corporate bonds & foreign currencies. Repo is the rate at which central bank lends the commercial bank while Reverse Repo is the rate at which commercial banks park their short-term excess liquidity to central bank.

Backdrop of Monetary Policy in Bangladesh

The declaration of monetary policy by the BB started in January, 2006. They declare the monetary policy twice a year, in January & July. This is the 15th Monetary Policy of Bangladesh.


About the 15th MPS of BB

This time, the monetary policy statement (MPS) aimed at attaining maximum economic growth.

It also sought to ensure sufficient credit flow for productive sectors and bring down inflation to 7.5 per cent by the on-going fiscal year. The Bangladesh Bank (BB) Governor Atiur Rahman while declaring the MPS termed it as a balanced monetary policy to minimize excessive volatility of the exchange rate. These objectives involve trade-offs and the balance between BB's instruments.

This monetary programme takes into account various global and domestic risks for H2 of FY13 and has built-in degree of flexibility to take into account changed circumstances. The main challenge of the central bank in future would be how to control inflation and, at the same time, ensure higher economic growth. The key areas of the MPS have been discussed below:

Growth Strategy

The MPS is designed to ensure that the credit flow is sufficient for productive investment. It will support attainment of the government's FY13 real gross domestic product (GDP) growth target (which is 7.2%).

The BB has also revised its monetary programme with increased private sector credit growth target. The target has been set at 18.50 per cent for the second half (H2) of this fiscal year from 18.0 per cent of the original programme. On the other hand, broad money growth target has been increased. It will rise to 17.7 per cent during the period under review from 16.5 per cent of the original target.

BB vies to alleviate poverty by achieving maximum economic growth. The Central Bank has taken


into consideration the private sector credit from overseas sources while formulating the Monetary Policy Statement for the ongoing half year.

Control over Inflation

The BB remains committed to bring inflation down further, and also to avoid asset price bubbles. As such, the Bank continues to encourage banks to use the space for private sector growth for productive, and not speculative, purposes. The BB will continue to focus on ensuring that credit is used for productive purposes consistent with financial inclusion goals. The BB plans to review the monetary policy each month considering both the global and national perspectives.

The country's inflation, as measured by consumers' price index (CPI), moved slightly in December 2012 on point-to-point basis. This is mainly because of increase in prices of food items. The inflation rate moved up to 7.69 per cent in December last from 7.41 per cent of the previous month on the point-to-point basis, according to the Bangladesh Bureau of Statistics (BBS). On the other hand, the inflation rate came down to 8.74 per cent on annual average basis in December from 8.98 per cent in November 2012. Based on current trends, the average inflation target of 7.5 per cent announced in the FY13 budget appears achievable, though risks remain. These risks stem from volatile global commodity prices and particularly, the food prices. Any further administered price increases in the energy sector, as well as sharp rise in remittance inflows will put upward pressure on asset prices and non-food inflation, it pointed out.

The average inflation has been

declining steadily over the past nine months. The fall was from a peak of 10.96 per cent in February to 8.74 per cent in December and within reach of the FY13 CPI inflation target of 7.5 per cent. This decline has been due both to lower food and non-food price inflation. The point-to-point non-food inflation declined from a peak of 13.96 per cent in March to 8.43 percent in December 2012.

Interest Rate

The interest rate spread has marked a declining trend in recent months. The BB predicts that it would continue in the near future through their monitoring and supervision.

Private Sector Credit Flow

The expanded monetary base is largely due to the higher-than-expected remittance growth this year. The BB has created some additional rooms for this liquidity to be used for private sector credit. This should benefit growth without unduly disrupting the downward inflation trend.

Reducing REPO

Falling inflation has created the space for the repo rate reduction. It should have an impact on lending rates. It will also stimulate more growth-enhancing investments. At the same time, the BB is mindful of inflation risks. This is why it has calibrated the rate cut accordingly.Balance of Payment

The BB projected that the country's overall balance of payments (BoP) would be in surplus to the tune of $2.226 billion by the end of this fiscal from $494 million in FY'12. The current account balance is likely to rise to $1.075 billion in FY'13 from $151 million in FY'12.

The country's trade balance may come down to the negative level of $8.637 billion by the end of FY13 from $9.317 billion (in the negative) in the previous fiscal.

Comments/ recommendations on few specific points

(i) Last two MPS

The monetary growth targets set in January 2012 were met by the end of FY12 and key outcomes – falling inflation and easing of external sector pressures – were achieved.

The July 2012 MPS had as its core objectives (i) limiting domestic credit growth to levels consistent with the FY13 single digit CPI inflation target (ii) ensuring that productive growth-conducive activities are not hampered by access to credit and (iii) preserving external sector stability including building reserves to more comfortable levels. Average inflation has been declining steadily over the past nine months, from a peak of 10.96% in February to 8.74%in December and within reach of the FY13 CPI inflation target of 7.5%.

The above achievements are appreciable. However, statistics of import of capital machinery and industrial raw material indicate negative trend which will lead to lower production and hamper employment generation.

(ii) Growth

In 2013, global growth is expected to be 3.6% with the average for developing countries projected at 5.6% and high income countries at 1.5%.

The targeted GDP growth of 7.2% in FY13 is unlikely to be achieved.


However, BB projects the real GDP growth this year to be the average of last 10 years which is around 5%.

(iii) Foreign reserve & value of Taka

Gross foreign reserves were US$ 12.8 billion in end December 2012 and equivalent to about 4 months of import cover.

The Taka: USD exchange rate has remained largely stable with the Taka appreciating by 2.6% between July 1st - December 31st.

Foreign currency reserve of the country has recently crossed $ 14 billion-mark. Continuity of remittance flow will be necessary to maintain it.

(iv) Key developments related to monetary policy in H1FY13 & future outlook

There were three key

developments related to monetary policy in H1FY13. First the sharp increase in foreign remittances (22% in H1FY2013) and lower imports contributed to a sharp increase in Net Foreign Assets. The second key development relates to the sharp decline in inter-bank rates which fell from a peak of around 20 percent in January 2012 to around 12% a year later. The third development centers around the healthy growth in private sector credit which grew by 17.4% in November 2012, while public sector credit growth was only 5%.

BB is intensifying its focus on improving the transmission of monetary policy by strengthening market mechanisms and a key area is strengthening secondary market trading in government securities. Measures taken to this end include enhancing the shorter-dated portion of bills/bonds issues, where there is greater investor appetite, and launching an electronic trading window on BB’s website.

This will be helpful in bringing dynamism. Its effectiveness/ success still to be reviewed.

Recent measures include tightening loan classification and provisioning requirements towards convergence with global best practices, introducing online supervisory reporting requirements on financial transactions and strengthening onsite and offsite vigilance. Various measures to detect fraud have been implemented; BB has strengthened its supervision capacity as well as reiterated the role that bank boards and management play in this regard. BB will focus on improving the quality, timeliness and transparency of reporting from the financial sector.

These measures will contribute towards discipline & stability in financial sector.

BB will also commence special diagnostic examinations at the four SOCBs in early 2013 and will begin publishing a set of quarterly performance indicators on these banks. BB will continue to focus on ensuring that credit is used for productive purposes consistent with financial inclusion goals.

These measures will significantly contribute to restore confidence on SOCBs that had shaken by recent Hallmark scandal.

BB’s policies have also contributed to stabilizing the capital market and BB will continue to collaborate with the BSEC.

The approach of BB is highly appreciable. It is to be ensured that BB holds dialogue with the stakeholders of capital market, particularly with the stock exchanges while deciding the issues that might have impact on capital market.


Recent shift in exposure of banks to capital market from 10% of liability to 25% of equity will shrink the exposure by Tk 4,654 crore (Tk 46 billion) over next three years according to the exposure statistics of 29 listed banks.

The FY13H2 monetary policy stance is designed to ensure that the credit envelope is sufficient for productive investments to support the attainment of the government’s FY13 real GDP growth target while keeping it consistent with the targeted 7.5% average inflation rate for FY13. In view of the risks to output growth due to the uncertainties around the global economy, BB will reduce all repo rates by 50 basis points effective immediately.

This is going to be a very effective tool to manage growth risk. Reserve Bank of India recently reduced repo twice and received benefit out of such reduction.

(v) Cohesiveness of monetary policy with other policies

Since some common goals of both fiscal and monetary policies are price stability, GDP growth and full employment, it is important

that fiscal policy and monetary policy function in the same direction and are complementary to each other. A mismatch may, in fact, result in economic disaster. Bangladesh Bank, NBR and BSEC should work in a well coordinated and harmonious way. The various policy instruments like fiscal policy, monetary policy, industrial policy, commercial policy, etc. should be harmonized with each other so that our economy can achieve the desired growth.

(vi) Easing foreign exchange laws

Foreign exchange laws and rules should be critically examined in the context of present day global and local economic scenarios, and the same should be updated to facilitate business and not to hinder the same. Business should not be for rules; rather rules should be for business.

(vii) Enforcement of Anti Money Laundering law

The Anti Money Laundering law should be vigorously enforced. This will ensure accountability and help combat financial crimes. In this regard, training and awareness for the people in the real business can be very useful.

(viii) Stringent supervision

In the backdrop of recent unearthing of increasing bank scams, supervision, inspection and audit of commercial banks by Bangladesh Bank should be widened and strengthened. Since Bangladesh Bank lacks inadequate number of skilled/trained manpower to provide such services widely and effectively, Bangladesh Bank may take the professional services from the firms of chartered accountants in order to widen and strengthen its supervision, inspection and audit net in the banking sector. The above PPP model of audit work will enhance and strengthen the Supervisory role of Bangladesh Bank who as a regulator oversees the entire banking mechanism.

(ix) Issuing bond, debenture & treasury bills to substitute Govt. borrowing

Government should reduce bank borrowings, and may meet a significant part of its deficit budget financing by issuing government bonds. Banks may be allowed to issue bonds to raise fund. Bangladesh Bank should allow and encourage long-term bonds, debentures and treasury bills to be traded in the secondary market.

(x) Foreign investment by Bangladeshi companies

Bangladesh Bank may think of allowing investment by Bangladeshi Companies in certain projects in foreign countries in a limited scale. The following conditions need to be fulfilled for such investments:

a. The proposed project should be feasible and should have adequate profit potentials.

b. There should be an adequate


scope for employment of professionals and skilled manpower from Bangladesh in the project.

c. Profit should be repatriable from the investee country (as per law/regulation of that country) and should be remitted to Bangladesh as soon as possible.

d. The pay back into Bangladesh of the remitted fund invested abroad should be realistically projected to be maximum seven years.

e. Any other realistic conditions as Bangladesh Bank thinks proper, considering the interest of Bangladesh.

(xi) Financing against listed securities

Commercial banks may extend loan against listed securities upto 50% of the face value or market value, whichever is lower. Bangladesh Bank should refinance

50% of this loan amount at the bank rate for eventual lending by the commercial banks at maximum 4% margin. In this respect Bangladesh Bank may create a Capital Market Development Fund and allocate a sizeable amount for the Fund. It may make a regulation whereby any dividend of a listed company, remaining undisbursed for more than 5 years, will be deposited to Bangladesh Bank against the Capital Market Development Fund created for refinancing of loans to Capital Market by Commercial banks.

It may worth mentioning that recently BB issued a circular whereby the commercial banks may finance a stock dealer for transacting A & B category shares upto 70% and 60 % of average market value respectively subject to maximum Tk 3 crore. Practically it is not being available due to many constraints.

Recent Economic Trends of Bangladesh

Highlights on some of the significant economic indicators are provided below:

GDP: Our GDP size during 2011-12 at current price was $112 bn.

Bangladesh GDP grew by 6.30 % in 2012. It has managed to keep the GDP growth above 5 % over the last decade through the development of micro credit and garments industry.

IMF projects a robust GDP growth in coming years, i.e. 6.05 %, 6.10 % and 6.7 % in the 2012, 2013 and 2014 calendar year.

National savings increased from 28.78 % of GDP in FY2011 to 29.40 % of GDP in FY2012 due to increase in remittance. Investment also increased from 25.15 % of GDP in FY2011 to 25.45 % of GDP in FY2012.


GDP Trend of Bangladesh

Inflation: General inflation (annual average) rate reached 10.6 % in FY2012 which was 8.8 % in FY2011. Food inflation started to somewhat slow down since January 2012 while non‐food inflation was on the rise since July 2011 and at the end of the fiscal year, annual average non‐food inflation reached as high as 11.2%.

Trade: During 2011-12, total export was $ 24.3 bn and import $ 35.4 bn

Overall export growth stood at 5.9% in FY 2012 which was only 86.5% of the target (USD 26,500 mn). During the last

ten months of FY 2012, export earnings increased by only 1.3% compared to the same period of FY 2011.

Imports decreased to 2,640.50 USD mn in October 2012 from 2,976.90 USD mn in September 2012. Historically, from 1995 until 2012, Bangladesh Imports averaged 4,628.72 USD mn.

In November 2012, total remittance inflow was USD 1,098.25 mn. The rates of growth in remittance were -24.45%, 24.04%, -0.57% and -1.87% in November,

October, September and August of the 2012 year.

At the end of April, the overall balance was in the negative terrain. However, during the last two months of FY2012, trade balance remained under control due to falling import payments and the BoP situation began to see some positive turn.

Reserve: The average rate of growth in reserves was 13.4% during FY 2009/10 to FY 2011/12, despite the negative rate of growth in reserves in FY 2011-12.

Month-wise comparisonof reserves among thethree fiscal years

The Author is currently working asCFO, Chittagong Stock Exchange


Capital Market: The daily average turnover in Bangladesh capital market reduced to Tk 275 crore in 2013 from Tk 1,783 crore in 2010 (about 85% fall). The capital market experienced a hard time with DSE market capitalization has reducing to Tk. 2,40,000 cr in 2012 from Tk. 2,61,000 cr of 2011. DSE all share price index has also declined and reached to at 3,577.21 in 2012 from 4,383.94 of 2011.

In order to ensure transparency and accountability in the capital market, efforts have been given to restructure the capital market. Initiatives have been taken to amend the securities laws. The Act of parliament to demutualize the stock exchanges of the country has been passed this year. A ten-year master plan has been approved for the capital market.

Apart from these, several other economic reform initiatives have been taken by the Government to ensure sustained economic development which includes strengthening the public financial management through proper implementation of the ADP, Ensuring Private Participation in Infrastructure Sector under PPP, reforming the financial sector by amending Banking Companies’ Act.

Concluding remarks

Against the backdrop of the global economic slowdown, the Bangladesh economy performed strongly over the past few years. Compared to the global average, Bangladesh has witnessed higher GDP growth rates. Despite a fall in world output during the immediate aftermath of the financial crisis in 2009, Bangladesh has consistently exceeded growth rates of five percent since 2009. Goldman Sachs has placed Bangladesh on its "Next-11" list in 2005. The United Nations has listed Bangladesh as one of the 18 countries in the world that have made rapid progress in human development in the last three decades. Bangladesh’s per capita income had also increased by about 175 percent between 1980 and 2012. All what Bangladesh needs is pursuing consistent, balanced and transparent economic policies and good governance practice in all respects to open up doors of unbound potentials.

References:

• Analytical Review of Bangladesh’s Macroeconomic Performance in Fiscal Year 2013- Centre for Policy Dialogue (CPD)

• Bangladesh Economic Update Half-Yearly Assessment of the Economy of Bangladesh December 2012 – Unnayan Onneshan

• www.tradeeconomics.com and Bangladesh Bank website.

• Dhaka Stock Exchange and Chittagong Stock Exchange websites

The sustainability of economic development largely depends on effective and efficient financial systems of a country. The development without strong national financial systems could be development by chance and would not last long. National Financial System is a machine of allocating resources amongst peoples to turn the wheel of national economy. The larger flow of funds and efficient allocation thereof would register a healthy economic output. So, it is a fuel to convert into power of national economy and it needs to be handled carefully with efficient hands so that it could generate national economic power without burning the machine, the driver and owner of the machine. With the changing scenario of the world business and economy, financial systems have been shaping globally with reforms & retreat for moving forward with integrated policy encompassing new ideas, thoughts and concepts day by day. In the backdrop of Bangladesh’s weak financial systems, Bangladesh government has sincerely identified the major problems in the financial systems and finally a number of reform measures were initiated broadly under the Financial Sector Reform Program (FSRP) and subsequently under Banking Reform Committee (BRC) and Commercial Bank Restructuring Project (CBRP) in different phases commencing

National Finance Performance & Stability-an Analysis to Reform & Retreat with Integrated Policy

Dipok Kumar Roy ACA

from 1990. The banking sector has been well regulated and efficient to some extent compared to other components of financial systems. After the debacle of capital market in 1996, reforms were made substantially like introducing the circuit breaker or each share, dematerialization of shares, updating of laws and regulation for ensuring control etc. Nevertheless, some incidents make questionable the efficiency of the banking systems, cause the financial system and economy to tremble and make the experts, regulators and government distracted from reform and retreat again for suitability of GDP. Recent incidents of Hallmark and some more in banking systems, capital market debacle in 2010 bring the issue ahead to review the systems again for finding out the way to resolve & control it prudently. Sometimes, some semiformal sectors like specialized four banks for providing industrial & agricultural financing, other specialized banks and corporations like House Building Finance Corporation, Samabay Bank, private cooperative banks have fallen under question of role & performance and some informal sectors like destiny and others post threats to the economy for illegal financial operation cheating general peoples. All formal & semiformal sectors of financial systems could not be stringed together on a thread to move the wheel of national economy


THE COUNTRY'S

INFLATION, AS MEASURED

BY CONSUMERS' PRICE

INDEX (CPI), MOVED

SLIGHTLY IN DECEMBER

2012 ON POINT-TO-POINT

BASIS. THIS IS MAINLY

BECAUSE OF THE

INCREASE IN PRICES OF

FOOD ITEMS. THE

INFLATION RATE MOVED

UP TO 7.69 PER CENT IN

DECEMBER LAST FROM

7.41 PER CENT OF THE

PREVIOUS MONTH ON THE

POINT-TO-POINT BASIS,

ACCORDING TO THE

BANGLADESH BUREAU OF

STATISTICS (BBS). ON THE

OTHER HAND, THE

INFLATION RATE CAME

DOWN TO 8.74 PER CENT

ON ANNUAL AVERAGE

BASIS IN DECEMBER

FROM 8.98 PER CENT IN

NOVEMBER 2012. BASED

ON CURRENT TRENDS, THE

AVERAGE INFLATION

TARGET OF 7.5 PER CENT

ANNOUNCED IN THE FY13

BUDGET APPEARS

ACHIEVABLE, THOUGH

RISKS REMAIN.

with a smooth speed towards sustainable development. We have inducted mutual fund management by asset Management Companies to make the capital market efficient but the role of mutual fund as well is still under a question mark & operational performance is inefficient. In spite of focusing target based SMEs and agriculture investment by banks and financial institutions, we could not serve SMEs to bring them in line with large enterprises capable to enter into capital market. We could not add the Venture capitalists in the financial systems yet with a legal frame, policy and fund assistance to serve SMEs with financial and technical business support services for emerging as larger industry and services for bringing them in capital market. Our micro finance has extensive role in access to finance of asset less people and change their economic conditions and living standard but its operation and monitoring are not well regulated as the lender does not use the loan fund for economic activities properly and use it for otherwise non-income generating purpose. As such, same person is availing the credit facility with different micro financiers without any financial needs of economic activities which has made the micro credit system and its effective and efficient operation questionable. The growth of both the general insurance companies and life insurance companies are not strong and premium is below 1% of GDP where


in India and Sri Lanka it is 5.10% and 3% of GDP respectively. Cooperative society could be a strong productive, marketing and financing base in rural area or the areas where formal financial systems do not work well. The Cooperative societies in our country could not reach a satisfactory level and failed to create public movements towards its formation and successful operation.

The Bangladesh Economic Update for October 2012 issued by the World Bank projects that GDP will grow at around 6% in FY 13 despite an unfavorable global economy. The noteworthy achievements are (i) Bangladesh’s reaching among the top 35 out of 150 countries in IMF’s October 2012 World Economic Outlook and (ii) registering 6% plus consistent growth over most of the last ten years through strong exports and inward remittance growth. Service sector’s growth rate is more than 6% and occupies about 50% of GDP where financial systems register growth rate generally 9% to 11% over the years and share about 2% of GDP. If we review cross country comparison especially with India, it is observed that financial sector growth in India is more than 10%, almost close to us, but its share in GDP is more than 5%. So, the growth rate of financial sector together with the sectoral shares of GDP of Bangladesh, it is evident that Bangladesh is less efficient to contribute to GDP.

Financial Sector Growth Rate and Share of GDP, Source, Annual Report 2011-12, Bangladesh Bank

10

1.9

11.6

1.9

9.6

29.5 2.1

02468

101214

Financial Sector Growth Financial Sector Share of GDP

2008-09 2009-10 2010-11 2011-12


If we consider the three aggregate indicators, such as, domestic credit to the private sector as a ratio of GDP (cr_y), Average annual lending rate on lending by banks (Ir) and broad money to GDP (m2-y) ratio in

comparison with other countries in South Asia, it is observed in 2011, as per World Bank data source, that the ratios of Bangladesh are comparably at satisfactory level and fairly close to India.

Financial Development Indicators:

68.7

13.3

48.8

77.8

10.2

50.6

38

14.4

18.4

38.01

9.4

30.6

0 50 100

m2_y

Ir

cr_y

Sri Lanka

Pakistan

India

Bangladesh

cr_y= Domestic credit to private sector as percentage of GDP

Ir = Average annual lending rate on lending by banks

m2_y=Board money as a percent of GDP

Source: The World Bank

However, in the year 2013 as well, the financial sectors specially the banks and FIs may remain in stress due to accommodative liquidity policy (something seems to be balanced between expansionary and Contractionary monetary policy), stress of capital market and merchant banks. The implementation of accommodative Monetary Policy would say how the supply of money could be accommodative with demand and support its growth and control inflation.

Performance

Banking sector: Bangladesh banking sector has shaped with the size of total assets of BDT 5867.6 billion & loan and advances of BDT 3792.5 billion against deposit of BDT 4509.7 billion as on 31 December 2011, where loan deposit ratio is 84%, as per Annual Report 2011-12 of Bangladesh Bank. Growth rates of total assets and loan are 27% and 22%

respectively where as in 2010, these growths were 24% and 20% respectively. The growth of balance sheet size is steady over the years. Efficiency and stability of financial systems would register satisfactory performance with sustainable development. To understand how the banking sector is performing over years, we need to review the CAMELS rating of the banking sector as whole.

Capital Adequacy Ratio (CAR): Banking sector of Bangladesh is in a healthy state in terms of capital adequacy if the Non-performing Loan (NPL) could be controlled and restricted from moving it up maintaining good asset quality. Capital adequacy ratio related BASEL-II has been implemented fully. As per Bangladesh Bank Report actual risk based capital of all banks was 11.31% in 30 June 2012 and 10.85% in 30 September 2012 as against required level of 10% as described in BASEL-II. Non Performing Loan (NPL) in the

banking sector declined to 7.2% in June 2012 from 13.60% on 30 December 2005, which increased to 8.75% in September 2012. Due to Capital market debacle at the end of 2010 and non-performing of investors’ loan with merchant banks, experts project that the rate of NPL may go up unless liquidity inflows and capital market turns around. Currently, liquidity and exchange rate in the interbank money and foreign exchange markets are in stable condition. As per the said report differences in deposit growth and lending growth have been lowering lately, loan-deposit ratio is currently 77.66% (08 November) and weighted average exchange rate is now Tk. 79.60/US dollar. Banks are preparing to adopt and implement the BASEL-III, Capital Requirement principles in near future.


The chart of the capital to risk weighted assets represents that the capital of FCBs and PCBs are adequate against the 10% of the risk weighted assets or Tk. 4 billion whichever is higher with effective from July- September 2011 quarter. Subsequently it was lowered to 9% of the risk weighted assets or Tk. 2 billion whichever is higher. Excepting SCBs and DFIs, other banks like PCBs and FCBs maintained more than 12% and banking industry as a whole more than 11% and as on 30 September 10.85%. However, considering the cross country comparison in south Asia, Bangladesh is far below than India, Sri Lanka and Pakistan. We should develop our asset quality and increase profitability to make the capital adequacy ratio stable.

Asset Quality: Asset quality is an important indicator of banking performance because of its profitability and sustainability depends on good quality asset. Non-performing Loan (NPL) was reduced year to year and it reached to 7.2% from 10.8 % in 2008. Due to capital market crash in 2010 its ultimate effects came into banks and NBFIs into two ways, one is for direct investment by banks and NBFI and another is for merchant bank operations, the wholly owned subsidiary of them, providing loan to investors. In case of direct investment, both banks and NBFIs invested beyond their legal limit, for banks 10% of liabilities and for NBFIs 25% of equity. Once the instructions came from Bangladesh bank to maintain the legal limit of

capital market investment, huge force sales placed causing gap of demand and price fall took place trending to downward by turns, securities blocked in hands of people and made the market disaster on liquidity. Banks and NBFIs loans became non-performing due to liquidity blocked of its own, different organizations and individuals invested in securities and started to affect repayment of loan or recycling of loan. NPL gradually reduced but in 2012 it again started to rise creating concern on the performance stability and development of banking sector.

Amongst all, DFIs and PCBs are main concern for bad asset quality and they pose threat to banking sector as a whole. Based on bank’s own assessment of NPL and required provisions, the shortfall of on provision was BDT 10.9 billion as on 30 June 2012.

Management Soundness and Efficiency: It is very difficult to measure management soundness and efficiency but is most essential for banking sector’s strength and growth. If the Board is leader, then

the management is associate of leader and follower of them to implement. No desired output would come unless the management is efficient.

Year-wise CAR & Cross Country Comparison:Banks Capital to risk weighted assets ra o:

2008 2009 2010 2011 2012(June)

SCB 6.9 9.0 8.9 11.7 11.2

DFIs -5.3 0.4 -7.3 -4.5 -4.3

PCBs 11.4 12.1 10.1 11.5 11.4

FCBs 24.0 28.1 15.6 21 21.5

Total 10.1 11.6 9.3 11.4 11.3

Countries Aggregate Capital Adequacy Ra o (%)

2009 2010 2011 2012(Sept.)

Bangladesh 11.7 9.3 11.4 10.85India 14.0 14.6 13.5Sri Lanka 16.1 16.2 14.3

Pakistan 14.0 14.0 14.1

Ra o of NPL and Statement of Provision

Banks NPLs (%) to total loans

2008 2009 2010 2011 2012(June)

SCB 25.4 21.4 15.7 11.3 13.5

DFIs 25.5 25.9 24.2 24.6 23.8

PCBs 4.4 3.9 3.2 2.9 3.8

FCBs 1 9 2.3 3.0 2.9 3.2

Total 10.8 9.2 7.3 6.1 7.2

Banks Required provisions and provision maintained (BDT Million)

2008 2009 2010 2011 2012(June)

NPL 224 8 224.8 227.1 226.4 290

Req. Prov. 136.1 134.8 149.2 148 2 178.4

Prov. Made 126 2 137.9 142.3 152.7 167.5

Excess/(shor all) -9.9 3.1 -6.9 4.6 -10.9

Prov. Maint. ra o 92.7 102.3 95.4 103 93.9


Management of DFIs and PCBs represents less efficient to generate income compared to expenses. Management efficiency of PCBs was improving and reached to 67% level in 2010 near to level of FCBs, but in 2011 it again reached to 71.70% whereas FCBs improved to 47% from 64.7% of 2010. Surprisingly in 2011 the efficiency of SCBs increased compared to that in 2010. Corporate governance is the main issue to register less

efficiency of the banks. The less compliant of corporate governance the less efficient is the management. We don’t need to analyze, the norms and style of corporate governance and its efficiency is visible.

Earning Performance: ROA, ROE and net interest income are showing rising trend up to 2010. In spite of increasing interest income in 2011 to BDT 146.70 billion,

ROA and ROE in 2011 reduced to 1.5% and 17.0% from 1.81% and 21.0% respectively in 2010. So it is evident that earning efficiency was not proportionate to increase of assets and equity. Within the industry and even over the years within same category of banks it significantly differs & does not provide a consistent growth of earnings.

Liquidity: FCBs hold highest liquidity followed by SCBs. DFIs and PCBs suffered huge liquidity crisis. All conventional banks had to maintain Statutory Liquidity Reserve (SLR) 19% of total demand

and time liabilities including 6% Cash Reserve Requirement (CRR) (at present 5.5%), Islamic banks had to maintain these 11.5% where as all specialized banks excepting Basic Bank Ltd. are

exempted from SLR. Lower surplus created pressure the money market in 2011 that led to higher call money rate in 2011 and jumped to more than 40% sometimes.

Over the years CAMELS rating of most of the banks assessed by Bangladesh Bank shows satisfactory (rank 2) and fair (rank

3) picture instead of strong (rank 1). The rating should be developed from satisfactory to Strong whereas 3 banks dropped from strong

category in CAMELS of 2011. So performance as a whole was stagnant or stable as whole, not remarkably improved.

Banks Expenses-income Ra o2008 2009 2010 2011

SCB 89.6 75.6 80.7 62.7DFIs 103.7 112.1 87.8 88.6PCBs 88 8 72.6 67.6 71.7FCBs 72 9 59.0 64.7 47.3Total 90.4 72.6 70.8 68.6

Income earned to expenses made i.e, income expense ratio could be the measurement of management efficiency. The total expenditure to total income, operating expenses to total expenses, earnings and operating expenses per employee, and interest rate spread are generally used to expose management soundness and efficiency. Technical competence & leadership of mid and seniorlevel management, compliance with banking laws and regulations andcompliance of all policies including sound internal policies with adequately and appropriately, ability to plan and respond to changing circumstances etc. are also taken into consideration to demonstrate the quality of management.

Banks Return on Assets (ROA) Return on Equity (ROE) Net Interest Income (BDT Million2008 2009 2010 2011 2008 2009 2010 2011 2008 2009 2010 2011

SCB 0.76 0 96 1.14 1.3 22.55 26.15 18.43 19.7 7.9 12.11 19.8 34.3DFIs -0.63 0 37 0 23 0.1 -6.95 -171.68 -3.23 -0.9 1.9 1.92 6.2 4.9PCBs 1.49 1 55 2.11 1.6 16.4 20.95 20.9 15.7 48.5 56.71 82.8 91.4FCBs 2 92 3.18 2 93 3.2 17.8 22.38 17.0 16.6 12.6 10.71 13.0 16.1Total 1 27 1 37 1 81 1.5 15.6 21.72 21.0 17.0 70.90 81.46 121.9 146.7

ROA and ROE of India in 2012 was below 1.5% and

15% respectively that represent that

comparatively Bangladesh banking sector earning performance is better.

All banks suffered liquidity constraints from 2008 to 2011. Amongst them, DFIs and PCBs suffered

extremely. The figures give us the liquidity picture that led the money market to raise higher lending

rate of banks more than even 18%.

Banks Liquid Assets/Deposits (%) Excess Liquidity/Deposit (%)

2008 2009 2010 2011 2008 2009 2010 2011SCBs 32.93 25.13 27.22 34.7 14.9 17.6 8.2 15.7DFIs 13.73 9.68 21.33 12.3 4.9 7.1 2.3 2.5PCBs 20.77 18.28 21.54 23.9 4.7 5.3 4.6 7.0FCBs 31.36 31.85 32.18 30.5 13.3 21.8 13.2 11.8Total 24.83 20.66 23.09 26.5 8.4 9.00 6.0 9.3


CAMELS

No. of Banks

Total Banks1 or strong 2 or Sa sfactory 3 or Fair 4 or Marginal 5 or Unsa sfactory

2008 2 28 10 4 4 482009 3 32 8 4 1 482010 5 32 7 2 1 472011 2 33 9 2 1 47

If we review the above performance indicators, we observe that performance of PCBs and FCBs as a whole provide sound and healthy pictures where SCBs and DFIs do not. The substandard performance of them reduced the performance of the banking sector as a whole. It could be said in other way, the banking sector could be more vibrant, strong and stable if SCBs and DFIs could register good performance. Amongst PCBs, some of them may not be sound and strong on the CAMELS rating assessment and Bangladesh Bank should identify those to regulate and nourish them with SCBs and DFIs so that any

unexpected incident does not shake the banking sector as whole.

Non-Banking Financial Institutions: Non banking financial institutions are specialized in leasing and hire purchase financing in addition to restricted loan facilities regulated under the Financial Institutions Act 1993. At present 29 NBFIs are in operation holding BDT 309 billion total assets aggregately as on 30 June, 2012. The investment and assets growth of this sector show moderately upper trends but the performance of those investments and assets deteriorated. As per sector Report on NBFI of Lanka

Bangla Securities Ltd. published in April 2012, “Operating performance of the leading NBFIs were robust until 2011. After the capital market debacle profit of these NBFIs also declined significantly. According to data from the third quarter 2011 combined profit of major 6 NBFIs declined by 56% compared to 98% growth in 2010.”

If we review CAMELS rating of NBFIs, we observe that maximum companies of this sector had deteriorated asset quality, earning capability and management efficiency and faced liquidity crisis.

Virtually, the liquidity in NBFIs was always constraint because of not allowing to collect money through saving or current accounts excepting term deposits. NBFIs face dilemma to attract term deposit from mass people. In addition to that, NBFIs use banking sector as source of funds and due to high cost of fund, cost of lending is high as well. Banking lending rate to NBFIs and other commercial projects are almost same where NBFIs lend the

borrowed money from banks at a higher rate covering cost of fund and profit. As a result, Banks and NBFIs are in uneven competition with the same projects. By borrowing with a very high rate from NBFIs, the project might not be profitable and has always a risk of deteriorated asset quality. Taxation system for NBFIs in Bangladesh is not in accordance with international practice in case of finance lease. As per income tax law, the depreciation allowance is

given to lessee as allowable expenses for finance lease to determine the taxable income where in India, Sri Lanka and Pakistan and maximum countries over the world such allowances are provided to lessor, the leasing company or NBFI, considering the legal owner of the assets irrespective of accounting treatment as assets in lessee’s book.

Performance Indicator TotalNBFI

No. of NBFI obtained ra ng points

1 (strong) 2 (sa sfactory) 3 (fair) 4 (Marginal) 5 (unsa sfactory)

Capital Adequacy 29 18 2 6 0 3

Asset Quality 29 6 9 13 1 0

Management Efficiency 29 2 15 11 1 0

Earnings & Profitability 29 4 16 7 2 0

Liquidity 29 4 7 16 2 0


Capital market is always speculative and risk driven. Hence, volatility of the market is also a very common feature even in the efficient vibrant market. Such speculation driven volatility could not be avoided in a developing country like Bangladesh by any means because of individual rumor based syndicated investment in the open market transaction instead of active role of professionally managed mutual fund. In such a market like Bangladesh, very few investors consider business fundamentals and invest analyzing the financials intending to earn expected rate of return even in the worst scenario. When market efficiency comes up in discussion, it is said the financial reporting transparency. True. Financial Reporting transparency is must to provide the reliable information to the investors to consider while investing. The reporting transparency would not work for good investments of investors

unless they can be educated at least on simple evaluation of shares or professionally managed mutual funds is to on the driving seats of the investors. The philosophy of making short term profit makes them speculative and decisive to move up the market irrespective of real value of shares turning it into gambling with bubble. The expert say, the expansionary monetary policy upto 2010 led to create the bubble more due to availability of money where banks, financial institutions and merchant banks was open for investing or providing greater size of marginal loan to investors. As such, the people unemployed or employed or even the rural people entered capital market to pocket so easy income with all the cash, bank balances or converting cash from selling out the assets acquired by inheritance. Merchant banks provided loan to them in addition to their own investment. At the end of 2010, regulators were

concerned about the bubble of the market and experts whispered about collapse a sudden. Bangladesh Bank had taken measures to control the market pulling down the inflation horse by putting a leash on the liquidity. Banks and financial institutions were instructed to withdraw investment and keep the investment within the scope of legal directions. The conservative monetary policy and directions to banks adversely affected the capital market and day by day DGEN index started to fall making investors frustrated, aggrieved & protesting. Index jumped up to 8918 points in December 2010 and then collapsed back to 3500 points in 2012. The regulators and government worked together to make the market bullish with the policy and funds but failed to go back. That did not restore the trust of the investors and the bearish behavior of the market has not yet been removed. At present, it is said

Bank, 26.02

Telecommunica on, 12.11

Fuel and Power, 13.6NBFI, 7 88

Pharmaceu cals, 8 94

Insurances, 5.29

Engineering, 3.78

Cement, 4.56

Food & Allied, 3.96

Tex le, 4.67

Mutual Fund, 1.84Ceramic, 1.16

Tannery, 0.63

Service & Real Estate, 0.52

Trave & Leisure, 2.11 IT Sector, 0.52 Jute, 0.02 Paper & Miscellaneous, 2.57

prin ng, 0.02

Market Cap as on 20 March 2013

Capital Market: Let’s review of the market structure and its price volatility in 2013:

Indicators As on 28 March-13

Indicators Highest Records Recent records20/3/2013

Recent records27/03/2013

No. of listed securi es 516 DGEN index 8918 3939 3794.29Equi es 243 DSEX Index 4305 3857 3681.66

Mutual Fund 41 Market Cap. (BDT bn) 36807 2310.27 2242.37

Treasury Bonds 221 Market turnover (BDT mn) 32450 1.45 1.16Corporate Bonds 3 Annualized P/E 12.85 12.40Debenture 8

As to sector performance, there are no significant reasons or fundamentals of performances. Although it is said, the

market is truly priced now ; the price is not affected based on sector based real

performance. At the week end of 27 March 2013, gaining sectors were

telecommunication 0.58%, Pharmaceuticals -1.73%, Mutual Fund -3.25%, Bank -4.41% and top losing

were travel & Leisure -8.69%, BFI -6.25%, Cement -5.30 and

Engineering- 5.19% where at the week end on 19 March 2013, top gainer

sectors were cement, bank, engineering and tannery. So the market performance is not consistently stable

and based on fundamentals.


the market is corrected and balanced priced based on valuation of shares. However, the market is extreme volatile. The confidence of investors is not being restored due to losing money day by day investing even in good securities. Panic and the volatile decision of investors both from individual and institutions specially banks and financial institutions, merchant banks, policy makers & regulators wounded the market and made more bearish and as on 02 April, 2013 total transaction was only BDT 1060 million.

Stock exchanges, the members of them and merchant banks, the other key players of the market need to be effectively regulated with the laws and rules BSEC has. Lot of allegations are pertaining against them by different quarters for market manipulation or doing unlawful works to influence price of the securities. Efficient capital market is must to mobilize domestic savings and also to ensure broadening the base of industrial ownership. Entrepreneurs get capital and feasible project through a sound capital market and ICB has important role to speed up capital market in Bangladesh by collecting savings through unit funds, mutual funds, underwriting, and bridge financing and investing in any other company listed or to be listed with stock exchange and providing capital support to investors and

entrepreneurs. The functions of ICB have been limited at present and should be further reviewed in this crucial time to make the market better performed and controlled.

Insurance Companies: Insurance companies deal with risk and possibilities. Both for individual and business, the insurance company has pivotal role in protecting them (individuals and business) from unforeseen financial loss. As such, the insurance is a substance of indemnity excepting the life insurance as the life cannot be indemnified with value. In Bangladesh at present a total of 62 insurance companies are in operation consisting of 2 state-owned corporations, 43 general insurance companies and 17 life insurance companies including only 1 foreign life insurance company titled Metlife Alico. The insurance industries has reached current stage offer verious steps: (i) The government nationalized insurance industry along with banks in 1972 by President Order No. 95 and all companies and organization carrying on insurance business came under nationalization order (ii) The Insurance Corporation Act (Act of VI), 1973 was enacted to emerge two state owned specialized corporation namely Sadharan Bima Corporation (SBC) and Jiban Bima Corporation (JBC) (iii) The Insurance Corporations

(Amendment) Ordinance 1984 (LI of 1984) was introduced to allow private sectors to conduct insurance business in addition to the above SBC and JBC (iv) The Insurance Act, 1938 and the Rules made there under were promulgated and administered by Department of Insurance (DOI) under Ministry of Commerce upto 2010 and finally (v) The Insurance Act 2010 was enacted in 2010 with the suggested amendments by consultant & study committee and Insurance Development and Regulating Authority (IRDA) started operation to regulate insurance companies from 2011. The Rules under the act are to be made and in process.

As stated earlier, the gross premium of one year of Bangladesh is still below 1% of GDP. In comparison with other countries it is observed that we are far away from them. In India and Sri-Lanka it is 5.10% and 3% respectively where as in the developed country generally it varies from 9% to 15%. We have ample scope to insure more people and assets both with life and non-life insurance respectively. Lack of awareness and wrong perception of the role of insurance companies keep the people away from insurance. On the basis of gross premium as on 31 December, 2011, the structure of insurance industry of Bangladesh is as follows:

62.81, 77%

19.25, 2 3%

Total Premium (BDT billion %)

Life Non-life

3.08, 5%

59.74, 95%

Life Premium (BDT bilion, %)

State Owned-JBC Private

1.98, 10%

17.27, 90%

Non-Life Premium (BDT billion, %)

State-Owned SBC Private


In a study by a group of students of Dhaka University in 2011 on life insurance company in Bangladesh, it was found that profitability of most of the leading life insurance companies are satisfactory in terms of Return of Equity (ROE), Return on Capital Employed (ROCE), Return on Assets (ROA) and Earning Per Share (EPS). In 2010 amongst leading 7(seven) companies, ROE from 33.91% to 48.78%, ROCE from 15.63% to 21.40%, ROA from 14.23 to 16.32 and EPS from 720.11 to 18,289.78

are very standard record of profitability. In 2011, life insurance company earned income from investment Tk. 14,194 million in addition to create life fund and non life insurance companies earned net profit of Tk. 4,966 million with profit of all 44 companies.

The growths of premium, life fund, investment and total assets in 2011 compared to those in 2010 for life insurance companies were 8.00%, 20.18%, 23.54% and 21.18%

respectively and the growths of premium, investment and total assets in 2011 compared to those in 2010 for non-life insurance companies were 16.35%, 23.70% and 24.37% respectively, which are remarkably emerging both in life and non-life insurance business. Lack of awareness, lower per capita income, inefficient agent, religious superstition and the organizational chaos in paying claim allowed the industry slower penetration in the market.

In order to make the insurance business more competent and sound some issues like minimum capital, use of account payee check for commission, commission ceiling to agents, restrictions of directorship and setting premium based on specified tariff rate etc. The Insurance Act 2010 has been enacted repealing the earlier Insurance Act 1938. Addressing the unhealthy competition existing in the industry due to lack of proper regulating with rules and guidelines, Insurance Development and Regulatory Authority (IDRA) has been formed under Insurance Regulatory Authority (IRA) Act 2010.

Credit Rating Agency: Credit rating is the assessment of credit worthiness of any individual or corporations. The rating company is a new dimension of financial systems to rate the securities and institutions for investing therein. Credit rating is essential to assess the investment due diligence of individual, securities either debt or equity of corporations and institutions/companies as a whole to reach a rank of credit viability. The Investors or financer would decide finally, based on the rated rank provided by the rating company, how they would invest considering the risks associated or what mitigating measure would be

taken in investing or financing in that securities, individual or corporations. The Credit Rating Companies Rules 1996 (subsequently amended in 2009) of Bangladesh Securities and Exchange Commission (BSEC) is the regulating rules of rating of debt instruments & right offers of equity shares of premium. Meanwhile some more initiatives are taken like direct listing rules of Dhaka Stock Exchange (DSE) to have at least BBB rating, Bangladesh Bank made mandatory for all banks with annual surveillance in 2006 and the insurance regulator also made it mandatory through an SRO

-

100,000

200,000

300,000

400,000

500,000

600,000

20102011

Premium , 58,159 Premium

, 62,814

Life Fund 147,600 Life Fund

177,381

Investment, 124,102

Investment, 153,318

Total Assets, 167,47

3

Total Assets, 202,94

6

Premium Life Fund Investment Total Assets

0%

20%

40%

60%

80%

100%

20102011

Premium, 16544 Premium, 192

49

Investment, 22926 Investment, 28

360

Total Assets, 44580 Total

Assets, 55444

Premium Investment Total Assets

Life Insurance (BDT in million) Non-Life Insurance (BDT in million)


annually for all general insurance companies and biannually for all life insurance companies. Banks also use credit rating tools for credit worthiness and risk measurement to provide loans to clients. At present, there are 8 (eight) credit rating companies in Bangladesh whereas it is 5 in India, 2 each in Pakistan, Sri-Lanka and Malaysia. Compared to small size of the financial systems in Bangladesh, 8 companies are too many to survive with cost efficiency should be rating of made mandatory for all companies to issue securities instruments and avail credit lines to bring under accountability about the worthiness of issuing or availing to protect public interest. These will raise the competition amongst them for professional works and only quality service providers would sustain in the market.

The rating is a tool to ensure sound practice of financial systems. So, a good quality of rating is very essential so that eligible persons or organizations or securities get privilege to avail equity or debt

from public or financial institutions or the organization dealing with public money is under proper control based on rating report. Our regulators should ensure that practice at a very starting age of credit rating in Bangladesh before involving any bad culture in accomplishing rating process. They should focus on the performance in quality rather than fight on profitability.

Co-operative Society: Cooperative concept is very ancient and has developed as modern cooperatives for over 200 years. Cooperatives have the immense opportunities to mobilize resources for activating rural economy and underserved area or segment, where state and public sector have failed or have impediment to work, through developing entrepreneurship, community based programs and activities and delivering goods & services. Cooperatives can alleviate poverty and can ensure food security & employment generation through the above economic activities. As such, the mission statement of the Department of

Co-operative Societies is “The Department of Co-operatives is committed to poverty reduction and socio economic development of Bangladesh through strategic management of human, agricultural, natural, technical, financial and other resources for the sustainable development of co-operatives as a business-oriented unit.” How far we succeeded? Cooperatives have not been added as stronger and influential sector of financial systems in spite of Govt. attempt in policy & papers and establishing national co-operatives and department of cooperatives to regulate them. Excepting ‘Milk Vita’, one of the national cooperatives, other national and central cooperative are not performing well to contribute to GDP remarkably. We have three types of co-operative as follows from the record of department of cooperatives, Rural Development and Cooperation Division that might differ to some extent with annual report:

Co-operative movements have not been spread over and established in rural areas so far the micro finance occupied. Co-operative movements can change the life of poor or ultra poor people if the following types of cooperative could be run with the intended objectives to achieve: (i) Producers’ cooperatives- for producing product and services to sell to members and all (ii) Service

Cooperatives- for providing services to its members (iii) Financial Cooperatives or credit union/cooperative banking- for providing loan, investment and insurance services (iv) Multi Stakeholder cooperatives- for providing common services to members being different categories and status (v) Consumer cooperatives- for providing good for consumption to members (vi)

Worker cooperatives- for providing work to its members. The producers’ cooperative could be divided into (i) Agriculture cooperatives (ii) Utility cooperative (iii) Housing cooperative (iv) Handicrafts cooperative etc., whatever the name is, the ultimate objective is grouping the same class of producers or service providers with a view to bring under one umbrella as cluster to

Type of co-operatives Basic factNational Co-operative Societies No. of Central Cooperative Societies: 21

Amongst them some of famous national Co-operatives are: Bangladesh Milk Producer’s Cooperative Union Ltd. (Milk Vita), Bangladesh Samabaya Bank Ltd., Bangladesh Jatiya Samabaya Shilpa Samity Ltd., Bangladesh Samabaya Shilpa Sangstha Ltd., The Eastern Cooperative Jute Society Ltd. etc.

Central Co-operative Societies No. of Central Cooperative Societies : 1,107No. of Member of Cooperative Societies : 1,33,188Working Capital of Cooperative Societies: : Tk. 1,026.80 croreName?

Primary Co-operative Societies No. of Primary Cooperative Societies : 163,408No. of Member of Primary Cooperative Societies : 8,505,738Working Capital of Cooperative Societies : Tk.1,909 38 croreName?


strengthen structurally, financially and technically. In Bangladesh, in urban area we see a lot of credit cooperatives operated haphazardly going beyond the cooperating objectives and attainment of resource mobilization.

Some projects and programs have been undertaken by the government that may have some figures and facts in recording over the years, but the performance of them is not remarkable. As said earlier, we need to establish cooperative movements to get together on specialization basis and this will give synergy effect of

peoples’ works to go ahead with prosper and prospects.

Micro Finance: Bangladesh has been widely known all over the world as the successful country of micro finance with group savings model. As recognition of its achievement, the nobel committee jointly awarded Dr. Muhammad Yunus and Grameen Bank Nobel Peale Prise GB is a special bank registered under Grameen Bank Ordinance 1972. BRAC, another big micro finance institution in Bangladesh, has been shaped as international institution. At present microcredit programs in

Bangladesh are implemented by NGOs, Grameen Bank, state-owned commercial banks, private commercial banks, and specialized programs of some ministries of Bangladesh government. At present as on 30 June 2011, total outstanding micro finance was BDT 248 million in the hands of 35 million borrowers (grameen bank 8.4 plus other MFIs 26.08) including BDT 72 billion of Grameen Bank. Other than Grameen Bank, all MFIs held BDT 173.79 billion. As per MRA, the structure and growth of micro finance in MFIs (other than GB) is shown below:

As per report of MRA on NGO- MFIs in Bangladesh, Volume VIII, 2011 loans of the above amount are classified into two groups; (i) Upto BDT 50,000 is micro credit and (ii) above BDT 50,000 is micro enterprise loan. Amongst the sectoral distribution, about BDT 135 billion (77%) is micro credit and the remaining 41 billion is micro enterprise loan (23%). Out of these micro enterprise loans of 41 billion, TOP ten NGO held 19% and remaining 4% was held by the rest 576 NGOs.

Particulars June, 2008 June, 2009 June, 2010 June, 2011No. of Licensed NGO-MFIs 293 418 516 576

No. of Branches 15,077 16,851 17,252 158,066No. of Employees 98,896 107,175 109,597 111,828

No. of Clients (Million) 23.45 24.85 25.28 26.08Total Borrowers (Million) 17.79 18.89 19.21 20.65

Amount of Loan Outstanding (Tk., millions)

134,680.96 143,134.03 145,022.66 173,797.60

Amount of savings (Tk. millions)

47,386.19 50.610.04 51,362.93 63,304.44

Profitability of NGO-MFIs (ref, MRA Report, NGO_MFIs inBangladesh, June 2011)

Name of MFIs Portfolio Yield Interest rate Spread

Return On Assets

Operational Self Sufficiency

BRAC 28.83 22.323 2.77 111.09ASA 26.32 22.61 10.27 159.26Bureau Bangladesh 31.80 20.79 0.52 95.93TMSS 23.54 18.42 2.38 105.58Jagorani Chakra Foundation 23.1 16.24 5.88 135.87Society for Social Services 25.05 19.12 4.8 118.25Shakti Foundation for Disadvantage Women

28.28 19.36 4.22 118.07

United Development Initiatives for Programmed Actions- UDDIPON

24.67 18.96 1.8 103.12

Pdakkheo Manabik Unyan Kendra 21.84 15.42 1.12 92.67RDRS Bangladesh 23.72 19.36 3.53 99.07Average of TOP 10 NGOs 25.72 19.26 3.73 113.89Average of 576 NGOs 20.33 16.26 1.18 102.88

MicroEnterpriseLoan, 41, 23%

Micro Credit, 135, 77%

MFIs Loan Outstanding Other than Grameen bank (BDT, BN & %)

Micro Enterprise Loan Micro Credit


Micro finance fund is comprised of generally fund from donors, Palli Karma Sahayak Foundation (PKSF), banks, client’s savings, surplus over expenses etc. The fund composition of micro fiancé as per the said report is below:

Fund Composition of micro credit (BDT, bn):

0

50

100

150

200

2008 2009 2010 2011

3 6440.53 47.44 63.3

22.7122.67 24.48

31.77

23.4823.9 23.01

23.5831.17

36.26 42.3450.3

4.43

8.85 10.917.73

Clients' Savings Loan from PKSF Loan from Commercial Banks Donors' Fund Cumultaive surplus Other funds

Microcredit has extensive role (i) for access to finance for poor or ultra poor people to bring them into economic activities and (ii) for empowering women as majority of clients are from poor families and women. Now micro credit is regulated by ‘The Microcredit Regulatory Authority (MRA)’ under the "Microcredit Regulatory Authority Act 2006” to promote and foster sustainable development of microfinance sector through creating an enabling environment for NGO-MFIs in Bangladesh. Bangladesh is at 5th rank in the indicator of “Loan Accounts at MFIs’ as assessed by World Economic Forum in the report of 2012.

Stability:

IMF conducted the Financial System Stability Assessment of Bangladesh Financial system in 2009 based on the Financial Sector Assessment Program (FSAP) and published the report in February 2010. The key findings of that report are:

• “The soundness of the financial sector has been

strengthened since the 2003 FSAP. Nonperforming loans in the banking system have decreased steadily since 2003, and the stated capital position of banks has strengthened. Meanwhile, the total assets of the banking system have doubled during this period and credit to the private sector has risen threefold. The rapid growth in non-traditional banking activities in recent years is generating new risks, underlining the importance of strengthening the regulatory framework.

• Nevertheless, significant long-standing risks and vulnerabilities remain. Loan classification, provisioning, and even capital remain uneven in the banking sector, creating potential vulnerabilities. Non-prudential government intervention—such as interest rate ceilings, moral suasion, directed credit and explicit requirements to ease debt service for some sectors of the economy—increases risks, reduces transparency, and

creates inefficiencies. Moreover, inadequate information, attributable to non-transparent accounting and reporting, affects market discipline.

• Stress tests suggest that credit risk continues to have a larger impact relative to other single-factor shocks. Exchange-rate risk does not present a major threat because the net open positions of many banks are negligible. Since the country relies heavily on remittances and exports, a protracted global economic slowdown could affect banks‘asset quality. Although financial soundness indicators are generally favorable, the asset quality of commercial loans portfolios remains weak, with a large share of loans classified in the substandard, doubtful, and loss categories. Despite the major improvements resulting from Bangladesh Bank‘s restructuring program including the corporatization of state banks, they remain financially weak.”


Bangladesh Bank also published Financial Stability Report in August 2012 with an extensive analysis of performance of financial sector performance including banks, FIs, capital market etc. The report reveals all indicators positive growth, reduction of NPL and increase of provision surplus etc. excepting reduction of the profitability in 2011. This feature reminds us of the point raised by IMF in stability report on weak loans portfolio, vulnerabilities of loan classification & provisioning and global meltdown affecting adversely the profitability of the banks. However, Bangladesh Bank

is aware of careful regulation. Bangladesh Bank correctly recognized that a liberalized, market based, and effectively supervised and regulated financial sector is necessary in order to promote and sustain rapid growth in Bangladesh. As such, the Bangladesh Bank, as the supervisor of the country's financial sector, should carefully supervise & monitor the operations, liquidity conditions and other financial developments for taking appropriate actions as required.

According to assessment of World Economic Forum, Bangladesh is in

37th position in ranking for financial stability pillar, the best rank for Bangladesh amongst seven pillars. The judgment of this pillar was based on 16 (sixteen indicators) where Bangladesh was in very good position for (i) Manageability of public debt (ii) Output loss during bank crisis (iii) frequency of banking crisis (iv) External Debt to GDP (v) C/A balance to GDP and finally (vi) External Vulnerability Indicator. Some of the indicators are not applicable (N/A) as the financial market is not yet expanded to that level for happening anything so.

Good ranking in financial stability may not represent a set of fit, competent and well structured financial systems but the system’s so far existence have the capability

to allocate funds efficiently and absorb the shock as they arise. As we are relatively stable with 37th position out of 62, we need to reform the areas (where we are

weak) to make such a set of fit, competent and well structured financial systems that can avail the opportunities of emerging deterring the threats using strength we have.

0 10 20 30 40 50 60

Change in Real effec ve Exchange Rate (N/A)

External Vulnerability Indicator

C/A Balance to GDP

Dolariza on Vulnerability Indicator (N/A)

External Debt to GDP

Net Interna onal Investment to GDP (N/A)

Frequency of banking crisis

Financial Strength Indicator (N/A)

Aggregate measure of real estate bubbles (N/A)

Tier 1 Capital Ra o

Output loss during banking crisis

Local currency sovereign ra ng (N/A)

Foreign currency sovereign ra ng

Aggregate macroeconomic indicator

Manageaibility of public debt

Credit default swap spread (N/A)

Stability Rank, Source: WEF


Reforms & Retreats with Integrated Policy

Bangladesh falls one step down in 2012 in ranking of Financial Development Index compared to that in 2011 as per report of World Economic Forum (WEF). The forum ranked 62 countries as top leading financial systems where Bangladesh was ranked in 57 in 2012. Financial Development Index addressed 7 (seven) pillars grouped into 3 (three) broad categories:

Each of above 7 pillars has equal weight of 14.29% (14.29x7=100%) and is sub categorized with weight within each pillar’s weight of 14.29. However, the rank was finally awarded for a country based on the rank and value of 7 pillars obtained from sub categories’ rank & value of seven pillars based on the value & rank of 121 indicators under sub categories (i.e, 121 Indicators ranking- 24 subcategories ranking-7 Pillars ranking- Country ranking). In 2012 amongst 62 countries, 20 countries of Asia were placed in the rank of world’s leading financial systems and capital markets that may be presented below:

Categories Pillars1. Factors, Policies and Ins tu ons 1. Ins tu onal Environment

2. Business Environment3. Financial Stability

POLICY MAKERS

2. Financial Intermedia on 4. Banking Financial Services5. Non-banking Financial Services6. Financial Markets

FINANCIAL INTERMEDIARIES

3. Financial Access 7. Financial Access END USERS OF CAPITAL

0 1 2 3 4 5 6 7

58. Pakistan

57. Bangladesh

52.Vietnam

50. Indonesia

49. Phil ipines

47. Kazakhstan

40. India

34. Thailand

33. Jordan

31. Saudi Arabia

26. UAE

25. Bahrain

24. Israel

23. China

21. Kuwait

18. Malaysia

15. Korea Repub.

7. Japan

4. Singapore

1. Hong Kong SAR

Total Score

2.61262 2.922.953.123.133.29

3.553.563.683.843.933.9444.03 4.24 4.42

4.9 5.1 5.31 7The Financial Development Index 2012-Asia Part, Source; WEF


Hong Kong SAR is top 1 in the world ranking followed by USA and UK respectively. We are far away from other countries in Asia especially from India, Thailand, Kazakhstan and Philippines. The above financial development index indicates that Bangladesh needs to reform a lot. If we review Indicators of each sub categories under pillars we could find out our loopholes and where reforms are

needed for sound and efficient financial systems.

The 121 indicators under different categories of seven pillars represent the whole pictures affecting the financial systems. Hence, if we analyze the ranking of each indicator, we may conclude our decision on the area where reforms are needed. With a view to emphasizing immediate

reforms we may divide the rank into three groups like rank 1-30 very good or good, rank 31-49 moderate where reforms need to develop better and above 50 is vulnerable where reforms are must and immediate to develop. The following table would analyze our positions in financial systems and the places where we need reforms:

Analysis of Bangladesh Financial Development Index awarded by World Economic Forum:

PillarsSub

categoriesRan

kScore

out of 7Remarks

1.Institutional Environment

-Financial Sector

Liberalization-Corporate

Governance-Legal and Regulatory

issues-Contract

Enforcement

6161625862

2.51.13.32.92.6

Each of four categories of Bangladesh is about last ranked from 58 to 62 out of total 62. 22 indicators out of 26 vulnerable and hence, significant reforms areneeded to develop the following indicators under the ‘pillar Institutional Environing’:-capital account liberalization-Commitments to WTO Agreements on trade Services-Extent of incentive based compensation-Efficiency of corporate boardsReliance on professional management-Willingness to delegate-Ethical behavior of firms-Protection of minority shareholders’ interest-Regulation of securities exchange-Property rights-Intellectual property protection-Diversion of public funds-Public trust in politicians-Corruptions perceptions index-Central bank transparency-Judicial independence-Irregular payments in judicial decisions-Time to enforce a contract-Number of procedures to enforce a contract- Cost of enforcing contracts

Out of 26 Indicators offour categories, only three indicators such as ‘burden of government regulation (33)’, ‘Strength of legal right index (24)’ and ‘Strength of investor protection index (17)’ have good and moderate rank. One indicator ‘Domestic financial sector liberalization’ was not applicable.


2.Business Environment

-Human Capital-Taxes

-Infrastructure-Cost of doing

business

6262556257

2.72.83.41.43.1

Each of four categories is about last ranked from 57 to 62 out of total 62. 18 indicators out of 22 indicators were vulnerable and hence, significant reforms are needed to develop the followingindicators under ‘Business Environment’ :-Quality Management School-Quality of math and science education-Extent of staff training-Local availability of specialized research and training services -Brain drain-Tertiary enrolment-Irregular payment in tax collection-Marginal tax variation-Quality of overall infrastructure-Quality of electricity supply-Internet users-Broadband Internet subscriptions-Telephone subscriptions-Mobile telephone subscriptions-cost of starting a business-cost of registering property-Time to register property

Out of 22 indicators of four categories only 5indicators such as, ‘Distortive effective on taxes (37), Time to pay taxes (46), ‘cost of closing a business (17), Time to start a business (37) ‘Time to close a business (48)’ are in moderate index where reforms also required to develop more.

3.Financial Stability

-Current Stability-Banking system

Stability-Risk of

Sovereigndebt crisis

3792352

4.45.64.62.8

Only one out of three categories “Risk of sovereign debt Crisis’ is ranked 52 out of total 62.

4 indicators out of 16 were vulnerable & should be taken as reform measures to develop as follows:

-Tier1 Capital Ratio-Foreign currency sovereign Rating-Local currency sovereign rating-Aggregate macroeconomic indicator

We are best in stability pillar amongst 7 pillars. Out of 16 indicators, 6 indicators like, External vulnerability indicator(5), Current balance toGDP (25), External Debt to GDP (7), Frequency in banking crisis (16), Output loss during banking crisis (top ranked, 1!),and manageability of public debt (12) we are in good ranked. 6 indicators not applicable for Bangladesh.


4.Banking Financial Services

-Size index-Efficiency

index-Financial

information disclosure

50413559

3.002.005.001.00

Only one out of three categories ‘Financial Information Disclosure’ is ranked 59 out of 62. Others two are moderate ranking 41 and 35 respectively.

2 indicators out of 14 indicatorswere vulnerable & hence, should be taken as reforms measures to develop as follows:

-Public ownership of banks-Private credit bureau coverage

Out of 14 indicators of three categories, 2 have very good ranked such as, Central bank assets to GDP (18) and Aggregate profitability indicator (2) and 9 indicators such as ‘ deposit money bank assets to GDP (43), Financial systems deposit to GDP (38). M2 To GDP (45), private credit to GDP (45), Bank deposit to GDP (39), money market instrument to GDP (33), bank overhead costs (37), bank operating costs to assets (32)and public credit registry coverage (32) are seems to be moderate where development is also needed.

5.Non-banking financial Services

-IPO activity-M & A activity

-Insurance-

Securitization

6035615958

1.21.31.01.41.0

Three out of four categories are inlast ranked from 58 to 61 where one is in middle ranked(35) or moderate.

Out of 14 indicators of four categories, reforms measures should be taken to develop thefollowing 7 vulnerable indicators:

-M & A activity-M & A transaction value to GDP-Share of total turnover of M& A Deals-Non-life insurance penetration-Relative value added of insurance to GDP-Securitization to GDP-Share of total number of securitization deals.

Out of 14 indicators we have 6 indicators good and moderate rank on‘Life Insurance Density(15)’ ‘IPO market share(42), IPO access amount(34), Share of world IPOs (20), life insurance penetration (43) and non life insurance density (33).’ Yet, reforms are also needed in these area to improve the ‘Non-banking financial services pillar’One indicator is not applicable for Bangladesh.


6.Financial Markets

-Foreign exchange markets

-Derivatives market-Equity market

development-Bond market

development

41n/a

n/a31

53

1.8n/an/a2.61.0

Out of four categories, bond market development is ranked 53 and equity market development seems to be moderate.

Out of 17 indicators, reforms measures should be taken to develop on the following4vulnerable indicators:

-Stock Market capitalization to GDP-No. of listed companies per 10,000 peoples-Private international bonds to GDP-Public international bonds to GDP

Out of 17 indicators we have only good ranked on stock market turnover ratio (4) and another 3 have moderate rank such as “Private domestic bond market capitalization to GDP (42), stock market value traded to GDP (40) and Public domestic bond market capitalization to GDP (45). 9 Indicators are related to derivatives foreign exchange swap that are not related to Bangladesh.

7.Financial Access

-Commercial access-Retail excess

515637

2.82.82.9

One category ‘retail excess’ is ranked 37, seems to be moderate.

Out of 12 indicators reforms measures should be taken to develop the following 4 vulnerable indicators:

-Financial market sophistication-Venture capital availability-Foreign Direct investment to GDP -Debit card penetration

Out of 12 indicators we have very good ranked for 2 such as, Loan account to MFIs (5) and Loan form a financial institutions (3) and 6seem to be moderate like ‘ease of access to credit (40), financing through local equity market (34), ease of access to loans (48), market penetration of bank accounts (44), commercial bank branches (45) and total number of ATMs (48)where reforms are also needed.


Major reforms so far taken by Bangladesh Bank from 2009 to September 2011 as per report of “Bangladesh Bank Recent Reform Initiatives” are : (i) Currency management and payment systems, in other way, countrywide electronic payment infrastructure replacing the traditional paper based clearing and settlement system (ii) Regulatory reforms like liberalization of interest rate, rationalization of charges, prohibition on bank loan for purchasing land, single borrower exposure limit waived for power sector, prudential regulation for customer financing, guidelines on Environment Risk Management (ERM), Basel-II Implementation and planning to implement Basel-III, guideline on ICT Security for Banks and Financial Institutions, 2010 (iii) Supervision of banks and financial institutions like Stress Testing became mandatory for the scheduled banks , Published

Financial Stability Report for the first time, Integrated Risk Management Guidelines, Established Risk Management Unit (RMU) in banks , Risk Based Capital Adequacy(RBCA) guideline revised, Implementation of Basel II accord, Safeguard policy for the banks on capital market activities, Accounting Guidelines for Repo Transactions, Islamic Interbank Fund Market (IIFM), Diagnostic Review Report (DRR), Introduced Digitized Data Reporting System and Software, Expansion of Non-Banking Financial Institutions, Prudential Regulations for NBFIs, Basel accord implementation for NBFIs, (iv) Financial inclusion- Bank account for farmers, Bank account for unemployed youth, Bank account for hardcore poor, Banking service for physically handicapped people, Bank accounts for Freedom Fighters, Bank accounts for beneficiaries under Social Security Program,

Bank account for distressed people, Bank Account for Small Life Insurance Policy Holder, Bank Account for Aila Affected People, Loans to farmers for spice cultivation, Major Policy Reforms in SME and Refinance Schemes, Special Incentives and Performances for Women Entrepreneurs, Mobile Phone based Financial Services, School banking and many more on the issue of Foreign exchange policy and reserve management , Anti Money Laundering and Combating Financing of Terrorism , Central Bank Strengthening Project, Corporate Social Responsibility, Green banking: Banking for environmental protection, Digital Bangladesh Bank and HR Development and capacity building through training and Masters of Banking Management (MBM) Course.

The indicators of the above tables

are broad areas of financial systems developments and considering each indicators the related factors are to be identified, analyzed and then reforms measures should be taken. The identified and analyzed factors of all indicators under seven pillars would provide the picture of whole financial systems covering banks, financial institutions, insurance companies, venture capitalists, microcredit or other financial institutions, capital market and its intermediaries, environment including human capital, tax, infrastructure and other laws and justice prevailing in the systems, Corporate

Governance, equity market, bond market, foreign exchange market, its rate and operation, FDI, cost of doing business, currency stability, risk of sovereign debt crisis, efficiency, financial information disclosure, size and structure of sector, securitization, IPO activities, business merger and acquisition, access to finance etc.

Retreat is organizational own process to review the strategy and policies and update thereof based on the opinion and analysis of stakeholders. We have no tradition to organize retreat of each organization. In Retreat program at the end of the year or starting of

the year, the organizational own strategy and policies should be reviewed based on lesson learned from past year and performance through daylong session with senior management, customers, lenders, and all other stakeholders. The issues affecting national policy or regulations may be conveyed to the regulator to reform or to take necessary action after due diligence when the central bank chief sits with all bank and financial institutions. In Japan, ‘kaizen’ is an idea of continuous development and the kaizen is “Change for better” where all employees from cleaner to leading crew of organization put comments on the developments which are taken into consideration for a healthier organization and happier workforce. The retreat programs would help the banks and all other financial institutions for better planning and to reach the target with efficiency and efficiently.

Financial systems development do not depend only on the reforms measures taken by central banks or by Bangladesh Securities Exchange Commission (BSEC) for capital market. Financial systems and macro economics are inter-related and hence, in order to develop the macroeconomic indicators we musts develop the financial systems indicators. We have to tailor all components of both formal and semiformal sectors of financial systems on a thread towards formation of capital and circulation thereof for economic activities. We need to ensure good corporate governance, prudent regulations, fair and equitable justice, more financial inclusions through cooperatives with a suitable model of resources utilization, venture capital with SMEs friendly policies, rules and regulations for vibrant SMEs, effective operations of MFIs,



insurance companies & capital market with proper regulation under demutualized framework with ensuring the role of ICB, mutual fund, credit rating agency, merchant banks, stock exchanges etc.

The role is not only for Bangladesh bank or other regulators; this role is comprehensive role of the government and us, the peoples, as stakeholders. All sectors of financial systems are inter-related and keeping one sector weak, we cannot make other sector remarkably strong. At every level financial institutions like

microcredit and micro enterprise institutions, venture capitalists, co-operatives, banks and NBFIs should have integrated policy to emerge industrial or any business undertaking from micro level. On the other hands, Insurance companies, Capital market and its all players & intermediaries and credit rating agent must be efficient to carry on the performance of financial institutions to build a strong base of country’s financial systems. So, the policies should be integrated encompassing all sectors of financial systems. The ultimate objective is to create a healthy environment of macro economy

with the strong and sound financial systems and we should integrate all sectors of the systems in policy papers for integrated efforts to uplift our national opportunities.

Bangladesh is now in a discussion as one of the most emerging country in the world registering more than 6% GDP growth consistently over the last ten years together with export and remittance growth. Goldman Sachs named it one of the “Next Eleven.” In April 2010, Standard & Poor’s, an American Financial services i.e. rating company, awarded Bangladesh a “BB- Stable/B”, the

The Author is an AssociateChartered Accountants of ICAB

sovereign credit rating, for a long term in credit rating which is below India but well over Sri-Lanka and Pakistan in South Asia. These are all words of hope to move ahead. Yes, we have strength to go beyond what we are achieving now.

Where are we blocked? Analysts

and wise say, we are not poor, we are poorly managed. World Bank says, “Among Bangladesh’s most significant obstacles to growth are poor governance and weak public institutions.” We need to ensure good governance in corporate as well as in the state and to strengthen our public institutions including state owned banks, NFIs,


insurance companies, co-operative societies and all others governing sectors of the financial systems with a view to harvesting handful output.

There are people, we can never forget; they live by their words; their deeds are the treasures of the future generation. I am remembering a man having great virtues; ICAB was in his heart-a legendary accounting professional, for whom, we can all be proud of. He is Mufazzal Hussain Chowdhury FCA, known to us as M H Chowdhury.

Md. Mufazzal Hussain Chowdhury FCA, the second President of ICAB and the fifth to be enrolled at ICAB, was a pioneer in our profession. Mr. Chowdhury who served ICAB as President from 1973 to 1974 passed away on August 2, 2011 in the USA.

Mr. Chowdhury’s career had spanned almost half a century. In 1954, he was the first in Chandpur district, and fourth in the erstwhile East Pakistan, to qualify as a Chartered Accountant. He joined as a partner of A Qasem and Co. Chartered Accountants in 1955 and left practice in April 1958 to join as a covenanted officer in the reputed multinational company Duncan Brothers (Pakistan) Ltd. In 1965 he successfully completed the manager’s course in Ashridge Management College, Hertfordshire, U.K. In the same year he was appointed Finance Director of the company. He was elected a Fellow of the British Institute of Management in 1966.

A Tribute to Late MufazzalHossain Chowdhury FCA

Parveen Mahmud FCA

In 1971 he was transferred to his employer’s head office in London, and returned to Bangladesh in February 1972. In that year he was appointed Chairman and Managing Director of the company. He resigned from Duncan Brothers in December 1974 to join the National Oil Corporation of Libya. He left the corporation in June 1985 as its Financial Advisor. Upon his return to Bangladesh he set up a chartered accountancy firm under the name and style of Chowdhury Hossain Zaman Co. Due to illness he left practice in October 2001 and moved to the USA to live with his daughters.

During my tenure as President in 2011, I took the initiative to gather the history of ICAB from the Past Presidents and senior members of the profession. Mr. Chowdhury was one of those I had reached out to as he was an icon in the profession and had been involved with both the Institutes of Chartered Accountants of Pakistan and Bangladesh since their inception. At that time he was living in the USA. I telephoned him and requested him to send a write up on ICAB. Although he was unwell and had to be hospitalized several times, he agreed to send a write up.

Mr. Chowdhury became a member of the first Council of the Institute of Chartered


THERE ARE

PEOPLE, WE CAN NEVER

FORGET; THEY LIVE BY

THEIR WORDS; THEIR

DEEDS ARE THE

TREASURES OF THE

FUTURE GENERATION.

I AM REMEMBERING A

MAN HAVING GREAT

VIRTUES; ICAB WAS IN

HIS HEART-A

LEGENDARY

ACCOUNTING

PROFESSIONALS, FOR

WHOM WE CAN ALL BE

PROUD OF. HE IS

MUFAZZAL HUSSAIN

CHOWDHURY FCA.

KNOWN TO US AS M H

CHOWDHURY.

Accountants of Pakistan and was continuously elected to the Council until 1971. He was elected its Vice President three times as well. In recognition of his merit the erstwhile government of Pakistan awarded him the honorific title T. Pk., which he relinquished in 1971. Upon independence of Bangladesh, Mr. Chowdhury was instrumental in piloting the Institute of Chartered Accountants of Bangladesh. He was elected to the office of President of the Institute upon its establishment in January 1973.

Late Mufazzal Hussain Chowdhury had paved the way for us in the profession and always focused on its advancement. He endowed two scholarships for CA students, but did not name these after him. It is only after his death that the Article Students Committee, decided to name the scholarships as “M. H. Chowdhury Scholarship.”

I was touched by his courteousness and magnanimity despite his seniority and iconic stature in the profession when he e-mailed me to wish on Eid-ul-fitr in August 2011. He wished


me from abroad, before I could have wished him! During Eid-ul-Azha in November 2011, he did not forget to wish me. On 7th September 2011, Mr. Chowdhury e-mailed me “A Short History of Accountancy Profession in Bangladesh” with the following preface:

“As promised earlier I enclose for your proposed publication an article on the captioned subject which I sincerely trust will meet approval. I would, however, request you to check the Register of Members to ascertain there from the correct number of members enrolled on the establishment of the ICAB and replace my figure with the actual one. For ascertaining the correct names and numbers you may check the Register of Firms and correct the information given in the article.

Please show this article to Mr. Azizuddin FCA of ACNABIN to check on the information I gave regarding Auditors Certificate Rules 1932, and the Pakistani laws, please correct the information if necessary. I do not have any of the said documents.”


I am ever grateful to Mr. Chowdhury for taking the pain to send me the write up on 5th January 2012, even in a deplorable health condition. Along with that, he sent me an e-mail. The words of inspiration and feeling expressed for the profession and its people are really worth mentioning.

And those words of true belongingness are only possible from those who have a depth of

wisdom and knowledge gathered over many years of their contribution to their profession and society. I was humbled by his words, which only happens when our near people who are far greater in stature than ourselves.

After I heard about the passing away of Mr. Chowdhury, I contacted Mr. Azizuddin FCA, Past President of ICAB and obtained his permission to print Mr. Chowdhury’s write-up,

which is attached here. I hope, this write-up will be compiled with the write-ups from other contributors, and edited and published in one cohesive narrative of the legacy and history of our profession in the country, in the near future.

The Author is Managing Director,Grameen Telecom Trust andPast President, ICAB


A Short History of theAccountancy Professionin Bangladesh By: Late Md. Mufazzal Hussain Chowdhury FCA (enrollment #05)

Prior to 1932, the government used to control the accountancy profession in British India through the Ministry of Commerce. For this purpose, the government established a small number of commercial colleges throughout British India. A few of those colleges would prepare students for an annual examination known as Government Diploma in Accountancy (GDA) conducted by the Ministry of Commerce. A qualified GDA could practice as a public accountant. Additionally, those permitted to practice the profession of accountancy in British India were members of the Institute of Chartered Accountants in England & Wales (ICAEW), who would use the initials ACA/FCA, and designate themselves as Chartered Accountants. As well as, members of the Society of Incorporated Accountants and Auditors (ISAA), who went by the initials ASAA/FSAA, and used the designation Incorporated Accountants & Auditors. Anyone wishing to qualify in the examinations of the ICAEW would have to serve in the UK a certain number of years as an article clerk with a practicing Chartered Accountant. On the other hand, anyone wishing to qualify in the examinations of the ISAA could

serve a number of years as either an article clerk or audit clerk with a practicing Incorporated Accountant in either British India or the UK. However, such a person would have to take and pass the required examinations held in the UK. In 1932, the government promulgated the Auditors’ Certificate Rules. Under the new Rules, services as an article clerk/audit clerk (three years/six years) with a qualified practicing accountant were obligatory before one could take examinations conducted annually by the Ministry of Commerce. While an article clerk was required to pay non-refundable premium of sums ranging from Rs.3000/- to Rs.4000/-, an audit clerk would not. An audit clerk would get a certain amount of monthly allowance not enough to make both ends meet. The Rules recognized qualification and membership of five bodies of accountancy within the British Commonwealth, including the ICAEW and ISAA, and permitted members of those bodies to practice the profession of accountancy in British India on payment of prescribed fees. Additionally, certain senior officials

holding certain number of years’ experience in particular position(s) could practice after retirement. Again, anyone holding 10 years’ experience in Taxes Department could take the Registered Accountant’s examination without requiring service of articles of clerkship. Anyone qualifying in such examinations was designated Registered Accountant, could use the initials RA and could practice the profession of accountancy on payment of prescribed fees. The Ministry of Commerce was solely responsible for regulating the profession of accountancy in British India. A Board of Accountancy, consisting of government nominated persons, would render advices to the Ministry on matters relating to the Registered Accountants’ examinations etc. On the establishment of Pakistan on August 14, 1947, the government of Pakistan adopted the Auditors’ Certificate Rules, 1932 and continued to control the profession of accountancy through the Ministry of Commerce.

Around 1956, a few Registered Accountants formed a body called the Pakistan Institute of Accountants with the objective of establishing an Institute of


Chartered Accountants. On his return in 1958 from the UK as an Incorporated Accountant, Mr. Rezaur Rahman joined Price Waterhouse Peat & Co., Chartered Accountants, in Chittagong. In the early 1960s, Price Waterhouse Peat & Co. closed its operations in Pakistan, whereupon, Mr. Rezaur Rahman set up Rahman Rahman Huq & Co. (now Rahman Rahman Huq) and took over its clientele. He was an active member of the Pakistan Institute of Accountants, in the drafting of the Chartered Accountants of Pakistan Ordinance 1961, and the by-law. The writer gratefully acknowledges Mr. Rezaur Rahman, who included his name, as a member of the first council of the Institute of Chartered Accountants of Pakistan and inspired him to serve the cause of accountancy profession. In all elections of the council, both Mr. Rezaur Rahman and the writer would win. Mr. A Qasem continued to obtain nomination to the council by government. The head office of the Institute was in Karachi. The Ordinance catered for formation of Regional Committees in Karachi, Lahore and Dhaka. The government had power to nominate one-third of the members to the council. The Secretary to the Ministry of Commerce was the President of the Council–none would dare to oppose him. The by-law, however, provided election to that office by the members of the Council. The general members belonging to a region elected certain number of members of that Regional Committee.

In 1963, to solve the problems of the students living in Chittagong, the writer established an unofficial body known as Chittagong District Association of Chartered Accountants. The Council granted a paltry sum of Rs.500/- to the Association to establish a library.

The Chittagong Chamber of Commerce graciously granted a free space on top of its car garage with electricity to accommodate the library. The Association spent the grant on purchase of one table, two benches, one ceiling fan and one bookshelf. The members and the Asia Foundation donated books. The ICAEW supplied its free publications from time-to-time. In 1969, Mr. Faiz Ahmed FCA took over charge of that library. In Dhaka, the office of the Regional Committee was set up in a one-room rented space in the Red Cross building at Motijheel

On December 16, 1971, upon the independence of Bangladesh, the government did not adopt the Institute of Chartered Accountants of Pakistan Ordinance 1961. Instead, it formed an Ad- hoc Committee of 11 members consisting of the members of the ICAP with Mr. A. Qasem FCA as President. The writer joined the parent company of Duncan Brothers (Pakistan) Ltd., in May 1971. He returned to Dhaka in February 1972, when he learnt that Mr. A Qasem had resigned from the Ad-hoc Committee being unable to face student demonstration in front of his residence for acceptance of certain demands. Thereafter, neither did Mr. Qasem attend any meeting of the Ad-hoc Committee nor did he visit the Institute. The writer also

learnt, during this time, of his appointment as a member of the Ad-hoc committee. The Ad- hoc committee formed a sub-committee to draft an ordinance and the by-laws of the proposed Institute and appointed the writer chairperson. Furthermore, it authorized him to look after the day-to-day affairs of the proposed Institute.

During the preparation of the draft ordinance and by-law, I had received considerable assistance from Mr. Rafiqul Islam FCA and valuable advice from Mr. Rezaur Rahman who had settled in London after his escape from Pakistan in October 1971, but would visit Bangladesh occasionally. We made a good number of amendments to the Pakistani Ordinance and the by-law inserting new provisions, deleting some and amending a few others. A few of those provisions are:

I. inserting a provision stating that after expiry of the term of the third Council power of the government to nominate will cease automatically,

II. empowering the Council solely to frame, re-frame, cancel or amend the by-law without prior or subsequent approval of the government,


III. requiring private limited companies to appoint auditors only from members of the ICAB,

IV. requiring ICAB members to practice Management Consultancy only with its existing practices by providing a new definition of the word “practice”-old law would allow practice of Management Consultancy by formation of unlimited liability company,

V. requiring a member intending to practice to be engaged the whole time in his practice either as a sole proprietor or by formation of partnership,

VI. totally forbidding a member to become partner in more than one firm,

VII. prohibiting a member to be in full time employment and at the same time to be engaged in practice,

VIII. requiring ICAB members not to charge premium for engaging an article clerk;

IX. deleting the provision of engaging audit clerks,

X. changing the designation of article clerk to article student,

XI. allowing formation of association by article students only under the supervision of the Council,

XII. and inserting a new schedule titled Schedule D regarding ethical requirements for practice of Management Consultancy.

The draft was ready by September 1972 and placed before the Ad-hoc Committee for approval. Soon thereafter, the Ad-hoc committee approved and sent the draft of the ordinance and by-law to Mr. M R Siddiqui, FCA, at the time Minister of Commerce. Mr. M R Siddiqui, without any delay, obtained approval from the Ministry of Law and sent it to the President of Bangladesh who promulgated, in January 1973, the Institute of Chartered Accountants of Bangladesh Ordinance, 1973, and the Institute of Chartered Accountants of Bangladesh By-law, 1973. At this point, I must acknowledge with gratitude the provision free of charge of stationery and typing assistance by Duncan Brothers (Bangladesh) Ltd., as needed by the proposed Institute.

The Ad-hoc Committee used the Dhaka Regional Committee’s one-room office cum-library at the Red Cross building for its activities. In or about June 1972, Mr. M Yunus, who was an assistant secretary of the ICAP, Karachi, managed to escape from Pakistan, joined the proposed Institute, and became Secretary upon the establishment of ICAB. The Ad-hoc Committee after the formation of the ICAB held an election of its Council, which in its first meeting unanimously chose the writer as President. Since then the ICAB has continued to grow to the position where it is now under the competent guidance, wisdom and selfless diligent work of all the subsequently elected Presidents.

After its establishment, the ICAB granted membership to any member of the ICAP present in Bangladesh who applied to it and

paid the prescribed fees. As far as I remember, number of such members amounted to more than 40. Again, based on my memory, the following firms obtained from the ICAB certificates of practice on application and payment of fees: 1. A Qasem & Co., 2. S F Ahmed & Co., 3. M MRahman & Co., 4. Ata Khan & Co., 5. J A Gomes & Co.,6. Rahman Rahman Huq.,7. M J Abedin& Co., (successor

to A G Merchant & Co.), 8. S A Zaman& Co. (now

defunct) 9. Howlader Yunus & Co., 10. A C Nath & Co. (successor to

Basu Banerjee & Co.)11. Hoda Vasi Chowdhury & Co.

(successor to A F Ferguson & Co.)

12. A Wahab & Co., 13. Howlader Mahfel Huq & Co., 14. Z U Ahmed & Co., 15. Mufazzal Ali Mallick & Co.16. Badrul Ahsan & Co.,17. M A Jalil & Co. 18. K M Alam & Co.19. H S Dhar & Co. (now defunct)

I would be failing in my duty if I do not mention the late M M Rahman FCA who, as a member of the Board of Trustees of the Dhaka Improvement Trust (now RAJUK), obtained allotment of the land in a prominent place where the impressive building of the ICAB now stands. I must also express gratitude to the Government of Bangladesh for providing generous annual and other special grants and assistances to the ICAB for improvement of quality of training and education of the members as well as those of the article students.


Preparing Accountantsfor Future ChallengesICAB President Md Abdus Salam in an interview withthe Daily Star States that existing curricula match global standards

Md. Abdus Salam FCA, President of the Institute of Chartered Accountants of Bangladesh (ICAB) had conversation with Daily Star Reporter Md Fazlur Rahman on various professionals issues in an exclusive interview that was published in the Daily Star on 25 April 2013. The qualified Chartered Accountants shared his vast experience, knowledge and his mission & vision with the media in the interview. His interview with Daily Star is a part of his on-going activities to make the Institute more vibrant and to let the people know about the ICAB curriculum that mach global standard for creating CA professionals to meet the future challenges.

The Institute of Chartered Accountants of Bangladesh (ICAB) is integrating global practices and ethics in its curriculum to prepare accountants who will be able to produce credible financial statements and tackle future shocks in the financial sector, its president said.

ICAB President Md Abdus Salam FCA said, since the devastating economic and financial crisis of 2008-09, the national institute is grooming its chartered accountants to take on tough times in protecting the companies they work with.

“We have incorporated curricula and syllabus that match global

standards and meet demands of the time,” Salam told The Daily Star in an interview at his office in Dhaka last week.

“We are following the same syllabus as in other countries. We have incorporated the ethics of International Federation of Accountants, the global organisation for the accountancy profession,” he said.

The ICAB is a professional organisation, supporting more than 1,200 chartered accountants and 20,000 students. It provides insight and leadership to the accountancy and finance profession at home and abroad.

Salam said a new kind of awakening is going on globally on the evaluation and standing of the

accountancy and how people in the profession could be incorporated to foster national development.

The ICAB has a strategic partnership with Institute of Chartered Accountants in England and Wales (ICAEW), the world’s oldest institution in the sector.

“The evaluation of the profession has increased in the last five years following the global financial crisis,” Salam said.

He said he does not think that top leaders in the profession prepared for the global economic storms, which broke the financial systems around the world.

Md Abdus Salam FCA, President-ICAB in aninterview with The Daily Star


“The top-brass should have foreseen the crisis much before it was unleashed. The debacle came because it was not in their planning process,” he said.

Accountants play key roles in ensuring financial transparency in trade and commerce and the financial sector. However, there is mistrust in the profession as there are allegations that CA firms help prepare false balance sheets, have the audit reports approved to evade taxes, or flatter balance sheets to attract investors.

“Many generalise without understanding the reality. Top management of any company is responsible for any false report, but accountants are always blamed.”

He said the CAs in Bangladesh and around the world are now prepared and have repositioned themselves to counter any future challenge.

“We have asked our accountants to remain alert as crisis can come any time. It is now integrated in our planning process.”

He said they have arrangements with countries like Ireland and Australia so they accept ICAB’s certification. The organisation is also going to sign ‘mutually recognition’ arrangements with developed countries, including Canada.Salam said there are a few professions that can match the potential of chartered accountancy currently. “Many of our students

have found jobs overseas. There is even a possibility to send more CAs to Africa.”

He said the ICAB is overseeing whether the CA firms are properly auditing the balance sheets of respective companies. “We have a quality assurance board, quality assurance department and technical and research committee. We also have an investigation and disciplinary committee.”

“We regularly monitor whether audit reports have been prepared in line with the set guidelines. The ICAB takes action against the CA firms that fail to stick to the guidelines. Recently, we took punitive measures against some firms that were found guilty of misconduct.”

He said the ICAB is serious about ethics and standards of the International Federation of Accountants.

Salam is satisfied with the quality of audit reports being produced by the local accountants and auditors. “They match international standards and are in line with corporate best practices.”

“We are proud that the audit reports and financial statements awarded by the ICAB have won the highest number of South Asian Federation of Accountant awards.”

On the recent financial irregularities such as Hall-Mark Group that misappropriated more than Tk 2,500 crore from Sonali

Bank, Salam said a company’s internal audit department should spot any irregularity.

The CAs also have limitations, said Salam, also a council member of the ICAB. “The difficulty with auditing is that auditors do not audit all the offices or branches of an office, company or bank. They audit randomly, on a risk-weighted basis.”

“Everybody thinks that as CAs certify the audit reports, they are responsible for irregularities. But that is not right.”

They cannot go through thousands of pages of company documents dealing with thousands of crores of taka within two months to unearth irregularities. It is not possible for them, he said.

The 57-year-old said the number of students entering the accountancy profession is increasing day by day. On an average, 1,700 students enrol to study chartered accountancy a year.

The ICAB has also partnered with the Office of the Comptroller and Auditor General in joining a Tk 450-crore World Bank project to audit the spending of the country’s union parishads, the last tier of the local government.

(The interview was published in the Daily Star on 25 April 2013)

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The Institute of Chartered Accountants of Bangladesh (ICAB)

I Proposal for increase of Government Revenue

Section Reference Subject Matter Existing provision/Situation Proposal Reasons/Justification

01. Reintroduction of Dividend distribution tax for non listed Companies with two tire and Exclusions of Dividend from total income on which Dividend Distribution tax is payable.

“Charge of Dividend Distribution tax”

There is no control on the dividend with regards to paid up capital.Withholding tax on Dividend to foreign shareholder is made subject to DTA which varies within the range of 10% to 15%.Withholding tax rate for Bangladeshi shareholders is

For company 20% Other than company 10%

Tax rate for dividend income for Company is 20%.For individual in line with respective rate.

A new section may be inserted after section 16CCC as follows:

Notwithstanding anything contained in this Ordinance where a Company registered under ‡Kv¤úvbx AvBb, 1994 (1994 m‡bi 18 bs AvBb) and not listed with any stock Exchange in Bangladesh declares dividend whether interim or otherwise on or after the first day of July 2013, the company shall pay in addition to tax payable under this Ordinance dividend distribution tax at the following rates on such dividend within sixty days from the date of such declaration:

Dividend Dividend distribution tax

a) where declared dividenddoes not exceed 50% of Paid-upcapital...........................15%

b) Where declared dividend exceeds 50% of the Paid-up capital.......................... 25%

Provided that the Provision of this Section shall not apply in case of dividend referred to in sub clause (dd) and sub clause (e) of clause (26) of Section 2 of the Ordinance.............................................................New Para 21A with the following provision may be inserted after Para 21 of Part A of the Sixth Schedule of the Ordinance.

“Any income from dividend for which dividend distribution tax is payable by the company”

It is necessary to have a reasonable capital base and reasonable payout ratio particularly for FDI’sTax burden of the individual shareholder for the Private limited Company needs to be rationalized as corporate tax rate is 37.50%.

02. Special provision for computing profits and gains of foreign companies engaged in the business of civil construction, errection, testing or commissioning in connection with turnkey project

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A new clause may be inserted u/s 28 of the Ordinance:“Notwithstanding anything to the contrary contained in this Ordinance in the case of an assessee, being a foreign company, engaged in the business of civil construction or the business of erection of plant or machinery or testing or commissioning thereof, in connection with a turnkey project, a sum equal to fifteen per cent of the amount paid or payable (whether in or out of Bangladesh)to the said assessee or to any person on his behalf on account of such civil construction, erection, testing or commissioning shall be deemed to be the profits and gains of such business chargeable to tax under the head “Profits and gains of business or profession”.

To increase Revenue from foreign contractors and justified imposition of tax on contract under turnkey project.

03. Increase of the rate of TDS under section 52.Section 52 (Rule 16)

TDS from the suppliers, contractor, subcontractors

The existing rate of TDS under section 52 (Rule 16) is as follows :Sl. No.

Amount of payments

Rate ofDeduction

of tax at the time of making

payments.1. Where the payment

does not exceed taka 2,00,000(two lakh)

Nil

2. Where the payment exceeds taka 2,00,000 (two lakh) but does not exceed taka 5,00,000(five lakh)

1%

3. Where the payment exceeds taka 5,00,000 (five lakh) but does not exceed taka 15,00,000(fifteen lakh)

2.5%

4. Where the payment exceeds taka 15,00,000(fifteen lakh) but does not exceed taka 25,00,000(twenty lakh)

3.5%

5. Where the payment exceeds taka 25,00,000 (twenty five lakh)but does not exceed taka 3,00,00,000 (three

4%

Proposed to revise the rate as follows:

Sl. No.

Amount of payments

Rate of Deduction of tax at

the time of making

payments.1. Where the payment

does not exceed taka 2,00,000(two lakh)

Nil

2. Where the payment exceeds taka 2,00,000 (two lakh) but does not exceed taka 5,00,000(five lakh)

1%

3. Where the payment exceeds taka 5,00,000 (five lakh) but does not exceed taka 15,00,000(fifteen lakh)

2.5%

4. Where the payment exceeds taka 15,00,000(fifteen lakh) but does not exceed taka 25,00,000(twenty lakh)

3.5%

5. Where the payment exceeds taka 25,00,000 (twenty five lakh)but does not exceed taka

5%

To rationalize the rate of TDS and to increase Government Revenue.

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crore)6. Where the payment

exceeds taka 3,00,00,000 (three crore)

5%

7. In case of oil supplied by oil marketing companies-

(a) Where the payment does not exceed taka 2,00,000 (two lakh)..............................................Nil

(b) where the payment exceeds taka 2,00,000 (two lakh).......................0.75%

3,00,00,000 (three crore)

6. Where the paymentexceeds taka 3,00,00,000 (three crore)

6%

7. In case of oil supplied by oil marketing companies-

(a) Where the payment does not exceed taka 2,00,000 (two lakh).............................................Nil

(b) where the payment exceeds taka 2,00,000 (two lakh).................0.75%

04. To introduce higher rate of TDS if the person receiving payment does not have TIN certificate and VAT registration certificate.52A & 52AA

Deduction of tax at source from professional fees & Technical services and from certain services.

Existing Rate of TDS is 10% Apart from the existing rate of 10% TDS, higher rate of TDS @15% may be introduced if the Payee fails to furnish TIN, VAT registration certificate to the payer.

Expansion of Tax netIncrease of Govt. revenue.

05. Introduction of withholding tax @ 1% from gross payment to freight forwarders against any sea freight, Airfreight, othercharges and commission etc. and deletion of existing section 52M.52M Connection of tax

from freight forwarders

U/S 52M Freight forwarding agency commission is subject to deduction of tax at source @ 15%

As worldwide freight forwarding business run on revenue sharing basis, rather than commission basis hence to ensure revenue collection and control on the expenditure claim, it is recommended that :

TDS will be on gross amount payable to freight forwarder @ 1%.Existing provision u/s-52M may be deleted.

Enhancement of revenueControl of tax evasion

06. Introduction of collection of tax at source from subcontractors of RMG by the Industrial exporters @ 0.8% where the payment is made without establishing any Back to Back letter of credit or local letter of credit and consider such income u/s82 (C).

Technically subcontract is included under section 52 for deduction of tax at source.

Practically the above situation of subcontractors of RMG is not always considered

Collection of tax at source from subcontractors of RMG by the Industrial exporters @ 0.8% is recommended where the payment is made without establishing any Back to Back letter of credit or local letter of credit and such income may be considered for assessment u/s 82(C).

To ensure revenue from this sector.

07. Increase of rate of TDS from agent of foreign buyer @10% instead of existing 7.5%

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53EE Deduction of tax from commission or remuneration paid to agent of foreign buyer

Where, in accordance with the terms of the letter of credit or under any other instruction, a bank, through which an exporter receives payment for export of goods, pays any amount out of the export proceeds to the credit of any person being an agent or a representative of the foreign buyer, as commission, charges or remuneration by whatever name it may be called, the bank shall deduct or collect tax in advance at the rate of [seven and a half percent] on the commission, charges or remuneration so paid at the time of such payment.

The rate of seven and a half percent may be increased to ten percent

Stream of revenue willbe increased.

08. To introduce TDS from payment of signing money by the real estate developers. Collection of tax from signing money

The developer shall deduct tax @10% at the time of payment from the person receiving such money.

Credit of such tax should be allowed in the year of completion of transfer of the property.

To ensure collection of Govt. revenue.

09. To introduce Collection of tax at source from payment of booking money to hotel, community centre, convention hall, conference centre etc.

Collection of tax from booking money

Hotel, Community Centre, Convention hall, Conference centre run by company shall collect tax @10% at the time of receiving booking money from the person against conference, meeting etc.

Collected tax shall be deemed to be an advance payment of tax by the person from whom tax has been collected at source and shall be given credit for in the assessment of his tax.

To ensure collection of Govt. revenue.

10. Imposition of tax on income from ITES and software development business.6th

Schedule, Part-A,Para-33

Income derived from the business of software development & ITES

Income derived from the business of software development & ITES is exempt from tax .

To impose tax @ 5% on income derived from the business of ITES and software development except export

To increase tax net and Government revenue as the exemption in this sector is continuing for a long time.

11. Imposition of tax on income from poultry firming withdrawing the exemption.6th Schedule, Part-A, Para-

42

Income from poultry farming

Income from poultry farming is exempt from tax under certain conditions

Tax @ 5% on income from poultry farming may be imposed.

It will increase the stream of revenue and be rational with similar others sectors.

12. Imposition of tax on capital gain earned by nonresident assessee withdrawing the exemption.6th Schedule

Part – A,Para 43

Capital gain arising from transfer of share of a public company listed in any Stock Exchange by non resident

Capital gain of nonresident assessee is exempted provided that such exemption is also available in the country in which the assessee is resident

Recommended to withdraw the exemption for imposition of tax on capital gain of nonresident assessee

To remove the discrimination between resident & nonresident assessee

13. Change of Rule 33B to impose higher tax on rent free accommodation.Rule – 33B Rent free

accommodation For rent free accommodation, the rental value of the accommodation or 25% of the basic salary whichever is

Proposed to change the Rule as follows:

To maintain relevance with Rule 33A.

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less is included in income of the employee.

For rent free accommodation, the rental value of the accommodation or 25% of the basic salary whichever is higher is to be included in income of the employee.

14. To increase the percentage of deemed income under Rule 39 from 10% to 16%Rule 39 Computation of

income of contractor, etc., of an oil company residing outside Bangladesh

Under Rule 39 income, profit and gains derived from such operation shall, subject to provision of this rule ,be deemed to be an amount equivalent to ten percent of the gross earnings from such operation

Proposed that under Rule 39 income, profit and gains derived from such operation shall, subject to provision of this rule , be deemed to be an amount equivalent to sixteen percent of the gross earnings from such operation

This will remove unnecessary complication in the process of assessment.

15. Imposition of tax on actual income basis withdrawing presumptive income from transport sector.S.R.O No-220/222/22

4/

Presumed income for transport vehicle, lorry, cargo, etc.

According to the SRO’s fixed rates of tax are imposed for vehicle like bus, minibus, truck and vessel, lorry, etc. regardless of their actual income.

The system of presumptive tax for these sectors causes substantial revenue leakage. This sectors should be brought under normal system of assessment by withdrawing relevant SRO’s.

Suitable provision for collection of tax at source may be introduced in Chapter VII of the Ordinance.

This would be helpful for revenue collection. This would also ensure transparency in the sectors.

16. To include a proviso for imposing higher tax on income from Fish Farming, Dairy etc.SRO :

238/2011, dated

06.07.2011

Reduced Tax Rate of 5% on Income from Fish Farming Dairy, etc.

Up to 30.06.2013 To include a condition “ Provided that if any income

derived from such head is invested other than the said area than additional 5% tax is to be paid in the year of such investment by the companyTo extent the time up to 2015

Considering industry specific character.

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II. Proposal for Changes on the ground of natural justices and reasonability


17. Effective constitution of the Tribunal bench. Section-11and Section

12

Establishment of Appellate Tribunal and Excercise of power of the Tribunal by Benches

There are provisions for appointment of non departmental personnel as member of the Tribunal (e g Chartered Accountant, Cost and Management Accountant, Income tax practitioner, legislative expert, Advocate and Distric Judge

Presently almost all benches are run by the departmental personnel

To make the Tribunal more effective it is proposed to include a non-departmental member in each bench

Alternatively,the provisions of judicial member and accountant member which was deleted by Fiance Act 2002 may be reintroduced

This would make the Tribunal effective and assessee’s confidence level will improve

18. Charge of Mimimum tax for company should be withdrawnSection 16CCC

Charge of minimum tax

Notwithstanding anything contained in any other provisions of this Ordinance, every company shall, irrespective of its profits or loss in an assessment year for any reason whatsoever, including the sustaining of a loss, the setting off of a loss of earlier year or years or the claiming of allowances or deductions (including depreciation) allowed under this Ordinance, be liable to pay minimum tax at the rate of zero point five zero (0.50%) per cent of the amount representing such company's gross receipts from all sources for that year.

Removal of Section 16CCC of ITO-1984 is recommended

Income tax should be based on income, not on revenue Income is computed by deducting allowable expenses from revenue This basic prinviple is ignored in formulating this section

Company may incur loss and carry it forward Charging of minimum tax is a restriction on the fundamental principle for set off of loss and carry forward Moreover, some times it may lead payment of tax out of equity

19. Modification of provisions for Charge of Mimimum tax for company to enjoy the previlge of reduced or special rate of taxes granted under different provisions of the Ordinance unless the provisions of Section 16CCC are removed.

Section 16CCC

Charge of minimum tax

1 Notwithstanding anything contained in any other provisions of this Ordinance, every company shall, irrespective of its profits or loss in an assessment year for any reason whatsoever, including the sustaining of a loss, the setting off of a loss of earlier year or years or the claiming of allowances or deductions (including depreciation) allowed under this Ordinance, be liable to pay minimum tax at the rate of zero point five zero (0.50%) per cent of the amount representing such company's gross receipts from all sources for that year.”Explanation For the purposes of this section, 'gross receipts' means-(a) all receipts derived from the sale of goods; (b) all fees or charges for rendering services or giving benefits including commissions or discounts; (c) all receipts derived from any heads of incomeWhile Paripatra-1(Incometax)/2011 of NBR has a clarified that income stream that will be assessed u/s 82(C){Final discharge of tax liability} shall not be under the ambit of minimum tax under section 16CCC

To facilitate the exemptions granted under Part A of Sixth Schedule of ITO-1984 and benefit of reduced rate of taxes and exemptions and concessions under different SROs or orders issued by NBR, it is necessary to introduce a provisio before the word “Explanation” of Section 16CCC“Provided that nothing contained in this section shall apply to classes of income referred in section 82(C) of the ordinance, Part A of Sixth Schedule of the ordinance and the reduced rate of taxes referred under different SROs or General Order for the time being in force

As the companies, enjoying tax holiday and the tax exempted companies have no tax while there are several implication payment of minimum tax in field level, an explanation is required on the issue regarding payment of minimum tax.

For instances, some companies are paying tax at reduced rate. Hence, the companies, paying tax at reduced rate, should be excluded from the application of section 16CCC considering justice to those companies

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20. Amendment to allow the subsequent refund of relevant loans as allowable deduction in the year of repayment if made through Account Payee Cheque or bank transfer.

19(26) Receiving loan by company

Where an assessee, being a company, receives any amount as loan from any other person otherwise than by a crossed cheque or by bank transfer, the amount so received shall be deemed to be the income of such assessee for that income year in which such loan was taken and shall be classifiable under the head "Income from other sources"

New proviso may be inserted

“Provided that where the loan in this sub section is paid back in subsequent income year, the amount so paid through account payee cheque or bank transfer shall be deducted in computing the income in respect of that subsequent year

Fundamental principle of Single point tax to be established.

21. Amendment to allow the subsequent refund of relevant loans as allowable deduction in the year of repayment if made through Account Payee Cheque or bank transfer.

19(28) Receiving loan & gift by individual assessee

Where an assessee being an individual receives any any sum, or aggregate of sums exceeding taka five lakh as loan or gift from any other person otherwise than by a crossed cheque or bank transfer, the amount so received shall be deemed to be the income of the such assessee for that income year in which such loan or gift was taken and shall be classifiable under the head "Income from other sources":

New proviso may be inserted

Provided that where the loan in this sub section is paid back in subsequent income year, the amount so paid through account payee cheque or bank transfer shall be deducted in computing the income in respect of that subsequent year

Fundamental principle of Single point tax to be established.

22. NBFI’s Interest income in relation to classified loan should be treated in consistent with commercial and specialized banks. Section 28(3) of

ITO 1984

Income from business or profession.

Existing Section: 28 (3) reads as follows:

“Notwithstanding anything to the contrary contained in any other provisions of this Ordinance, in the case of Bangladesh Shilpa Bank, Bangladesh Shilpa Rin Sangstha, Investment Corporation of Bangladesh and any commercial bank including the Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank, the income by way of interest in relation to such categories of bad or doubtful debts as the Bangladesh Bank may classify in the income year in which it is credited to its profit and loss account for that year or, as the case may be, in which it is actually received, whichever is earlier.”

The word “and” after the words Bangladesh Krishi Bank may be replaced with a coma and the words “and any Non Banking Financial institutions” may be inserted after the words Rajshahi Krishi Unnayan Bank.

All the activities of Non Banking Financial Institutions (NBFIs) are supervised and controlled by Bangladesh Banksimilar to commercial banks. Like commercial banks, NBFIs are required to comply more or less with all the regulatory requirements particularly in terms of lending, capital adequacy, risk management, provisioning, etc. As NBFIs are regulated by the same authority and through similar regulations like commercial banks, tax treatment for same issue should be done in the similar way.

23. Increase of allowable limit of perquisite to Tk. 3,50,000 from Tk. 2,50,000 (Per person per year) 30(e) Deduction not

admissible in certain circumstances

The maximum limit of allowable perquisite is Taka 250,000.

The amount may reasonably be increased to Taka 350,000

Taka 250,000 as allowable limit is quite inadequate considering the present economic situation.

24. Enhancement of rate of investment tax credit to 15% instead of 10% Section 44(2)(b)

Investment tax credit

Present rate of investment tax credit is 10%

Proposed to increase the rate to 15% to encourage investment

It was 15% up to the year 2007 now to be reintroduced considering general growth of

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investment trend.

25. Extension of exemption of tax of newly established industrial undertaking setup between the period July 2011 to June 2015instead of July 2011 to June 2013.

Section -46B

Exemption from tax of Newly Established Industrial Undertakings.

Specified Industrial Undertaking setup between the period of 1st day of July 2011 and 30th June 2013 are eligible for exemption of tax for five years at different rates based on location and year as well.

Such exemption may be extended to the new industrial undertaking setup by June 2015.

Considering industry specific incentive

26. Extension of exemption of tax of newly established physical infrastructure facility setup between the period July 2011 to June 2015 instead of July 2011 to June 2013.

Section -46C

Exemption from tax of Newly Established Physical Infrastructure Facility.

Newly established physical infrastructure facility set up between the period of 1st day of July 2011 and 30th June 2013 are eligible for exemption of tax for five years at different rates.

Such exemption may be extended to the new physical infrastructure facility setup by June 2015.

To encourage the sector and infrastructure development of the country.

27. Timing and audit of return U/S 75A.75(A) 2(C) Return of

withholding tax Return under Section 75A is to be filed by the fifteenth day of October, January, April and July of the financial year for which the tax is deducted or collected;

Proposed that the return alongwith certificate from a Chartered Accountants is to be filed by the next thirty days from the end of the quarter.

To ensure reliability of the return and to make the submission more easy.

28. To make exercise of section 82C optional and to delete sub section (6), (7) and (8) u/s 82 (C) 82(C) Tax on income of

certain personsThe provision of sub-section (6) (7) and (8) of section 82C provide for imposition of additional tax over and above the tax deducted at source.

a) To include the following sections for final discharge of tax: 52A, 53BBBB, 53E, ;

b) Sub sections (6), (7) and (8) of section 82C may be deleted in order to restore the original idea of final settlement.;

c) The assesses eligible for final discharge of tax liability under section 82(C) may exercise the option for final settlement or not.

This is obviously unreasonable and against the basic principle of “Final Settlement”. and self-contradictory. This self-contradiction may be removed by deleting those sub-sections. Moreover, basically at present there are no difference between normal assessment and assessment under section82C. Hence assessmentunder section 82C should be optional.

29. To make ADR effective and efficient Section-152F to

152S

Alternative dispute resolution

The ADR was introduced in 2011 and was expected to Act as an alternative to the normal appeal system.

The system of Alternative Dispute Resolution (ADR) has not yet gained the expected popularity. NBR should launch a vigorous and effective campaign to make it more popular and easier.

This is a tax-payer friendly measure and its progress would promote tax-payers confidence as well as improve revenue collection.

30. Reduction of rate of tax payment for filing Reference Application to High Court.160(1) Reference to

High Court Division

In case of making Reference Application to the High Court tax payers has to pay:

a) 50% of the net tax payable after the Tribunal’s order if the amount of tax payable exceeds Taka 10 lakh; and

b) 25% if the amount does not exceed Taka 10 lakh

The provision of paying at least 25% or 50% (as may be applicable) of the demanded tax for making a Reference application to High Court (sec-160 of ITO 1984) causes genuine hardship and hassle for the taxpayer. As such we propose to fix the flat rate of 25% for all cases.

This amount can be quite large in some cases and a heavy burden for the tax payer. Seeking justice at the High Court level should be made easier for the tax payers.

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31. Revision of the allowable limit of Motor Vehicle for claiming normal depreciation. 3rd Schedule

11(6) (a)Maximum Allowable Cost of a Motor Vehicle for Normal Depreciation Allowance

At present the ceiling is Tk. 20 Lakh Recommended to increase the limit to Tk. 40 Lakh

Considering increased price of motor vehicle

32. Allowance of amortization/depreciation on intangible assets. Amortization/Depreciation on Intangible Assets

wollA oTAmortization/Depreciation on Intangible Assets like License fee, etc. as Deductible Expenses in case of Information Technology Related Companies including Mobile Operator and other Telecom Companies, a new provision may be included in 3rd

Schedule

Considering the cost of intellectual property used in such businesses and allow ability of such cost.

33. Extension of time for exemption to handicraft exporters 6th

Schedule, Part-A, Para

- 35,

Exemption of Income from Export of Handicrafts.

Exempted up to 30.06.2013 May be extend to 30.06.2015 Considering industry specific incentive

34. Enhancement of limit of yearly turnover of SME and clear definition of SME may be introduced. 6th

Schedule, Part-A, Para

- 39

Exclusion of SME income from the total income

Presently, Maximum Yearly Turnover of Tk. 24 lakh is set as pre-condition for exclusion of Income of Small and Medium Enterprise (SME).

Recommended to increase the limit of Maximum Yearly Turnover to 50 Lakh as a pre-condition for exclusion of Income of Small and Medium Enterprise (SME). Further separate definition of SME should be introduced.

This limit was fixed in the year 2008 (4 to 5years before) which may now be revised considering inflation.

35. Exemption to commercial producer of Biogas.Production of Biogas commercially

To include in the Sixth schedule to extend the exemption facility to the producers of Biogas commercially

The investor will be motivated to make investment in this sector

36. Time limit to deposit TDS to be specific Rule 13 Time limit for

payment of tax deducted at source

Income tax deducted at source is to be deposited within three weeks from the date of deduction or collection

Proposed to change the Rule to allow deposit of withholding tax within the immediate next month of deduction.

This is not practical to identify each deduction or collection and deposit the same within three weeks. Deduction or collection at source is a continuous process, hence it should not be from the date of deduction rather it should be on calendar month basis.

37. Enhancement of exemption limit of house rent allowance from Tk. 15,000 to Tk. 25,000 per monthRule-33A House rent

allowance receivable in cash

The limit for exempted house rent allowance for an employee is Taka 15,000 per month.

This may reasonably be increased to Taka 25,000 per month.

This amount is unchanged since 2002.

37. Increase of exemption limit in respect of conveyance allowance from Tk. 24,000 to Tk. 48,000 p.a.Rule - 33C Maximum

Exemption Limit of Conveyance Allowance receivable in cash

Existing limit is Tk. 24,000 (Tk. 2,000 per month)

Proposed to increase the same to Tk. 48,000 (Tk. 4,000 per month)

This amount is unchanged since 2008 and quite low.

39. Enhancement of rate of allowable expenditure on distribution of free sample.Rule – 65C Allowance in

respect of Based on the limit of turnover, rates allowable for free sample are 2%, 1%

Proposed to raise the rates as 3%, 1% & 0.50% in the case of a

Considering nature of market competition in

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Expenditure on Distribution of Free Samples

& 0.50% respectively in the case of a Pharmaceutical Industry and 1.5%, 0.75% & 0.375% respectively in the case of Other Industries.

Pharmaceutical Industry and to 2%, 0.75% & 0.375% in the case of Other Industries.

businesses

40. Increase of the limit of total income for individuals from Tk. 2,00,000 to Tk. 2,50,000 for tax imposition.Finance

Act, 2012Threshold for exempted income

The exempted income for individuals is Taka 200,000

Tax exempted income for individuals should be raised from Taka 200,000 to at least 250,000.

General price index has gone up significantly during the year. This justifies the increase.

41. Enhancement of limit of net wealth imposing surcharge Finance

Act, 2012Surcharge in addition to assessed tax

The minimum limit for imposition of surcharge is Taka 2 crore of net wealth.

This amount may be increased reasonably

This amount is rather low in view of the fact that value of property has gone up remarkably in recent years

42. Corporate tax rate of banks and financial institutions may be reduced to 40% instead of 42.5%Finance

Act, 2012Corporate tax rate Corporate tax rate is quite high

compared to other regional countries, particularly the rate for banks and financial institutions 42.5% is unusually high

Corporate tax rate may be reduced to 40% particularly for the financial institution, banks.

Our corporate tax rate ismuch higher compared to other regional countries. This is a discouraging factor for corporate growth and FDI

43. Corporate Tax Rate for trading and manufacturing company should be different Finance

Act, 2012Corporate tax rate There is no difference in Tax rate for

trading and manufacturing companies There should be at least difference of 2.5% in corporate Tax rate, manufacturing companies being @ 35% and trading company @ 35%

The manufacturing companies add more value and employment to the economy.

43. Corporate Tax Rate for mobile phone operating companies should be lesser than cigarette manufacturing companies Finance

Act, 2012Corporate tax rate Tax Rate for mobile phone operating

companies-45%

Tax Rate for cigarette manufacturing companies -42.5% for non-publicly trading company.

Tax rate for both mobile phone operating companies and cigarette manufacturing companies should be 42.5%.

Health and environmental reasons.

44. Corporate Tax Rate should not be higher than individual Tax rate Finance

Act, 2012Corporate tax rate Base Corporate tax rate -37.5%

Corporate tax rate for Publicly Traded Company declaring dividend more than @20% - 24.75%; if dividend is declared@10% to 20% - 27.5%; and if dividend is declared less than @10% -37.5%Highest individual Tax rate -25%.

Corporate Tax Rate should not be higher than individual Tax rate.

High corporate Tax rates discourage FDI and also local investment.

45. Tax rebate for dividend shall be eligible for all companies Finance

Act, 2012Corporate tax rate 10% Tax rebate available for publicly

traded companies for declaring dividing more than @ 20% is not available for bank, insurance and financial institutions. There is no conditionality of declaring dividend for mobile phones and cigarette manufacturing companies for reduced Tax rate of @35% from their base rate of @45% and 42.5%.

Tax rebate for dividend shall be eligible for all companies and penalty for non-payment of dividend minimum @10% should also be applicable for mobile phone and cigarette manufacturing companies.

To be Just and fair.

46. Introduction of progressive tax rate for SMEs Finance

Act, 2012Corporate tax rate None A progressive tax rate for SMEs

either base on turnover or profit and employment may be introduced

To encourage the SMEs

47. Interest payable by the assessee on deficiency in payment of advance taxSection 73(2)

Interest payable by the assessee

The period for which interest under sub-section (1) shall be payable shall

The period for which interest under sub-section (1) shall be

Income Tax Ordinance prescribes uniform

of 12


on deficiency in payment of advance tax

be the period from the (first day of April) of the year in which the advance tax was paid to the date of regular assessment in respect of the of the income of that year or a period of two years from the said (first day of April), whichever is shorter

payable shall be the period from the (first day of April) of preceding the assessment year in which the advance tax was paid to the date of regular assessment in respect of the of the income of that year or a period of two years from the said (first day of April), whichever is shorter

assessment year for all tax payers. That is, all tax payers pay tax as per rates and laws applicable for same assessment yearirrespective of the different ending day of their financial year (any date between July 1 to June 30 preceding to the assessment year). Therefore, to remove the confusion and for ensuring uniformity in calculating interest on deficiency in payment of advance tax for all tax payers, first day of April should be the preceding the assessment year

48. To Extend upto 30 June 2015 the Incentives expiring on 30.06.2013SRO : 221/2011, dated 04.07.2011

SRO : 220/2011, dated 04.07.2011

Para - 35, Part -A, 6th Schedule

Section - 46B.

Section - 46C.

Para - 42, Part -A, 6th Schedule.

SRO: 238/2011, dated 06.07.2011.

SRO: 218/2012, dated 27.06.2012) & (SRO: 21/2012, dated 11.01.2012.

15% Reduced Tax Rate for Textile Industries.

15% Reduced Tax Rate for Jute Industries

Exemption of Income from Export of Handicrafts

Exemption from tax of Newly Established Industrial Undertakings.

Exemption from tax of Newly Established Physical Infrastructure Facility.

Exemption of Income from Poultry Farming.

Reduced Tax Rate of 5% on Income from Fish Farming Dairy, etc.

Reduced Tax Rate of 10% on Investment of untaxed legal income in shares of listed companies

To Extend upto 30 June 2015 the Incentives expiring on 30.06.2013

To relieve to the Industries concerned

49. Disallowances of Expenses claimed in the Trading Account and Profit & Loss Account in violation of Provision of Section 30ASection 30A and Paragraph 29 (3) of Paripatra 1 (Income Tax) dated 27.07.2002

Disallowances of Expenses claimed in the Trading Account and Profit & Loss Account in violation of Provision of Section 30A

“Notwithstanding anything contained in sections 28, 29 and 30, the Deputy Commissioner of taxes shall not make any disallowance or deduction for any year from any claim made by an assessee in the trading account or profit or loss account without specifying reason for such disallowance or deduction.

To Issue a General Direction to the Assessing Officers to strictly comply with the provisions of Section - 30A in respect of Disallowance of Expenses claimed in the Trading Account and Profit & Loss Account and not to make disallowances on estimate and on surmise or suspicion without citing any specific instance of un-verifiability.

To avoid dispute and delay in collection of revenue.

of 12


50. To remove the Conflicting provisionsSRO No. 269/2010, dated 01.07.2010 and of the Section 53M

SRO No. 269/2010, dated 01.07.2010 and of the Para 43 of Part - A of the Sixth Schedule

To remove the conflicting provisions

The SRO provides that the tax rate for a Company being a Sponsor Shareholder is 10% whereas the Section 53M provides that the 5% TDS on such income is Final Tax liability U/S 82C.

The SRO provides Nothing whether it is applicable for both Residents and Non - Residents. However, such income of Non - Residents is Exempt from tax as per Para 43 of Part - A of Sixth Schedule if, exemption is allowed in his/her country.

To remove the conflicting provisions of the SRO No. 269/2010, dated 01.07.2010 and of the Section 53M in respect of Tax Rate for a Company being a Sponsor Shareholder on Profit on Sale of Shares of a Listed Company.

To remove the conflicting provisions of the SRO No. 269/2010, dated 01.07.2010 and of the Para 43 of Part - A of the Sixth Schedule relating to tax of Non-Residents on income from sale of shares of a Listed Company.

To remove the conflicting provisions

51. To delete Para 1(A) of 6th Schedule Part A Para 1(A) of 6th Schedule Part A and Section 44 (1)

Income derived from operation of microcredit by the NGOs

"Any income derived from the operation of the microcredit by a non-government organization registered with NGO Affairs Bureau" is excluded from total income

This should be withdrawn.Instead, income derived from the operation of the microcredit by a non-government organization registered with NGO Affairs Bureau may be given rebate or may be assessed under regular provisions at reduced rate of income tax

To be just and fair and increase Tax GDP ratio.

2

3

2

22

3

3345

5

6

7889

10

11

12

121213131414

14151515

c„ôv - 2

Sl. No. Reference Section/Rule/

SRO/OrderExisting

Provision/Situation Proposal Reasons / Justifications

K) miKv‡ii ivR¯^ Avq e„w× msµvš—t

Dr‡m g~mK KZ©‡bi AvIZv e„w×i Rb¨ R‡q›U †fÂvi, G‡mvwm‡qkb, we‡`kx †Kv¤úvwbi kvLv I wjqv‡Rv Awdm‡K Dr‡m g~mK KZ©bKvix wnmv‡e Aš—f©~³KiY cÖm‡½ t

1wewa (18K) Gi Dc-wewa (1)

mieivn MÖnbKvix KZ©„K Dr‡m g~j¨ ms‡hvRb Ki KZ©b

mieivn MÖnYKvix KZ©„K Dr‡m g~j¨ ms‡hvRb Ki KZ©b|

(1) wb¤œwjwLZ ms ’v ev cÖwZôvb‡K, AZtci ÔDr‡m g~j¨ ms‡hvRb Ki KZ©bKvixÕ ewjqv DwjwLZ †mev MÖn‡Yi mgq Dr‡m g~j¨ ms‡hvRb Ki KZ©b Kwi‡Z nB‡e, h_vt-

(K) miKvwi, AvavmiKvwi ev ¯vqËkvwmZ cÖwZôvb;(L) GbwRI;(M) e¨vsK, exgv cÖwZôvb, ev Ab¨‡Kv‡bv Avw_©K cÖwZôvb;(N) wjwg‡UW †Kv¤úvwb; ev(O) wk¶v cÖwZôvb|

Òwjwg‡UW ‡Kv¤úvwbÓ kã¸‡jvi cwie‡Z© ÒAvqKi Aa¨v‡`k, 1984 Gi aviv 2(20)-GmsÁvwqZ †Kv¤úvwbÓ kã¸‡jv cÖwZ ’vwcZ Kiv Avek¨K|

o eZ©gv‡b GKvwaK wVKvavixi †Kv¤úvbx R‡q›U †fÂvi Pzw³i gva¨‡g A‡bK wVKvavix Kv‡R wbhy³ nb| Zv‡ì †¶‡Î R‡q›U ÷K †Kv¤úvbxR GÛ dvg©m Gi wbeÜb cÖ‡qvRb nq bv Ges R‡q›U ‡fÂviwU wjwg‡UW †Kv¤úvbx wn‡m‡e MY¨ nq bv| wKš‘, Zviv ‡UªW jvB‡mÝ, AvqKi mb` I g~mK wbeÜb wb‡q eëmv K‡ib| †m‡¶‡Î Zv‡ì wewa 18K Abyhvqx Dr‡m g~mK KZ©‡bi ¶gZv bvB| Ab¨w`‡K wVKvavix eëmvq gvjvgvj ev †mev mieivnKvixM‡Yi h_vh_ KvVv‡gvMZ wfwË bvB Ges Zviv g~mK mwVKfv‡e cwi‡kva K‡ib bv|

ZvB miKv‡ii ivR¯ AvniY e„w× Kivi j‡¶¨ D³ cwieZ©b /ms‡kvab Ri“ix|

o ivR¯ Avni‡Yi ¯v‡_© we‡`kx †Kv¤úvwbi kvLv Awdm ev wjqv‡Rv Awdm mg~n‡K my¯úófv‡e Dr‡m g~mK KZ©bKvix cÖwZôvb wnmv‡e wPwýZ Kiv cÖ‡qvRb| hvnv cÖ —vweZ ms‡kva‡bi gva¨‡g wbwðZ nB‡e|

Avg`vwb ch©v‡q g~mK Ae¨vnwZi myweav evwYwR¨K Avg`vwbKvi‡Ki Rb¨ evwZj cÖ`vb cÖm‡½ t

2

Af¨š—ixb m¤ú` wefvM, A_© gš¿Yvjq, MYcÖRvZš¿x evsjv‡`k miKv‡ii GmAviI bs-180-AvBb/2012/638-g~mK ZvwiL 07 Ryb, 2012 wLª÷vã

Avg`vwb ch©v‡q (‡Uwej-1),Avg`vwb I Drcv`b ch©v‡q (‡Uwej-2),Drcv`b ch©v‡q (‡Uwej-3),cÖ`Ë †mev (‡Uwej-4) Ges eëmvqx ch©v‡q (‡Uwej-5) g~mK Ae¨vnwZ|

eZ©gv‡b D³ GmAviI Gi †Uwej-1 G †hmKj cY¨ mg~n Aš—©fy³ Av‡Q Zv‡ì †¶‡Î Avg`vwb ch©v‡q g~mK Ae¨vnwZcÖvß wKš‘, eëmvqx ch©v‡q KwZcq cY¨ e¨wZZ Ab¨vb¨ c‡Yï †¶‡Î g~mK Ae¨vnwZcÖvß bq Ges †mmKj cY¨ Avg`vwbi †¶‡Î Avg`vwb ch©v‡q AMÖxg g~mK Av`vq Kiv nq|

Avg`vwb ch©v‡qi (‡Uwej-1) mKj cY¨‡K evwYwR¨K Avg`vwbKviK KZ©„K Avg`vwbi †¶‡Î g~mK Ae¨vnwZ cÖ`vb Kivi myweav evwZj Kivi cÖ —ve Kiv nB‡jv|

o Avg`vwb cieZx© weµ‡qi †¶‡Î A‡bK evwYwR¨K Avg`vwbKviK AvBb Abyhvqx g~j¨ †NvlYv bv w`‡q cY¨ weµq K‡i| d‡j Zv‡ì weµq g~j¨ Kg nq| Avevi hvnviv g~j¨ †NvlYv w`‡q g~mK cÖ`vb K‡i weµq K‡i Zv‡ì weµq g~j¨ †ekx nq| d‡j †µZviv Kg g~‡jï mieivnKvixi wbKU †_‡K cY¨ µq Kwi‡Z D™¢z× nq Ges G‡¶‡Î ivR¯ AvniY nq bv| ZvB AvB‡bi D³ cÖ —vewU ivR¯^ Avni‡Yi ¯v‡_© ev —evqb Kiv Ri“ix|

mdU&Iq¨vi Avg`vbxi †¶‡Î g~j¨ ms‡hvRb Ki A‡ivc cÖm‡½ t

3

Af¨š—ixY m¤ú` wefvM, A_© gš¿Yvjq, MYcÖRvZš¿x evsjv‡`k

Avg`vbx I Drcv`b ch©v‡q g~j¨ ms‡hvRb Ki Ae¨vnwZ msµvš—

‡Uwej 2 Abyhvqx Avg`vbx I Drcv`b ch©v‡q mdU&Iq¨vi (H.S. Code 8523.29.12 Ges 8523.49.20) g~mK Ae¨vnwZ cÖvß|

mdU&Iq¨vi Avg`vbxi †¶‡Î g~j¨ ms‡hvRb Ki Av‡ivc Kiv DwPZ|

o ‰e‡`wkK gy`ªv wbqš¿‡b mnvqK f‚wgKv ivL‡e|

o ivR¯ e„w× cvB‡e|o ‡`kxq mdUIq¨vi Indurstiry

i Dbœqb

c„ôv - 3


SRO/OrderExisting


miKv‡ii -Gi GmAviI bs-180/AvBb/2012/638-g~mK| ZvwiL 7 Ryb, 2012 wLª÷vã

L) Ab¨vb¨ teëmvqx KZ©„K cY¨, Avg`vwb ev µq ev AR©b ev msMÖn I cY¨ weµ‡qi mv‡_ m¤ú„³ †mevi Dci †iqvZ MÖn‡bi myweav‡_© DcKi‡Yi msÁv cwieZ©b t

1aviv (2) Gi `dv (M)

ÒDcKiYÓ (Input) Gi msÁv

(Av) eëmvq cwiPvjbvi †¶‡Î, weµq, wewbgq ev cÖKvivš—‡i n —vš—‡ii D‡Ï‡k¨ Avg`vbxK…Z, µqK…Z, AwR©Z ev Ab¨ †Kvbfv‡e msM„nxZ cY¨;

aviv (2) Gi `dv (M) Gi Dc-`dv (Av) Gi wb¤œiƒc cÖwZ ’vcb Kivi cª —ve Kiv njt

(Av) eëmvq cwiPvjbvi †¶‡Î, weµq, wewbgq ev cÖKvivš—‡i n —vš—‡ii D‡Ï‡k¨ Avg`vwbK…Z, µqK…Z, AwR©Z ev Ab¨‡Kvbfv‡e msM„nxZ cY¨ Ges cY¨, Avg`vwb ev µq ev AR©b ev msMÖn I cY¨ weµ‡qi mv‡_ m¤ú„³ †mev|

o eëmvqxi †¶‡Î cY¨ msMÖn Ges wewµi ‡¶‡Î Z_v eëmv cwiPvjbvi Rb¨ wewfbœ †mev MÖnb Ri“ix (†hgb weÁvcb, exgv, †d«BU d‡ivqvwW©s, wK¬qvwis I d‡ivqvwW©s, cwienb wVKv`vi, e¨vsK KZ©„K FbcÎ †mev BZ¨vw`)| eZ©gv‡b D³ ‡mev mg~‡ni Dci cwi‡kvwaZ g~m‡Ki †iqvZ MÖnb m¤¢eci nq bv| hvnv eëmv cwiPvjbvi †¶‡Î Cost of Doing Business-‡K e„w× Ki‡Q Ges DcKiY Ki †iqvZ MÖn‡bi †¶‡Î g~m‡Ki ‡gŠwjK bxwZi mv‡_ mvsNwl©KI e‡U|

ZvB eëmv cwiPvjbv e¨q n«vmKiY Ges g~m‡Ki †gŠwjK bxwZi ev —evq‡bi Rb¨ AvB‡bi cÖ —vweZ ms‡kvabx AZxe Ri“ix|

‡mev ißvwbi †¶‡Î ißvwbi c×wZ mywbw`©óKiY t

2 wewa 27 ißvwb c×wZ

wewa-27-G cY¨ ißvwbi c×wZ we —vwiZfv‡e eY©bv Kiv Av‡Q wKš—†mev ißvwbi c×wZ we —vwiZfv‡e D‡j-L Kiv †bB|

wewa 27 Gi Dc-wewa 10-G ev bZzb Dc-wewa 11 ms‡hvR‡bi gva¨‡g †mev ißvwbi ‡¶‡Î wb¤œwjwLZ welq¸‡jv Aš—f©y³ Kiv †h‡Z cv‡i t(K) †mev ißvwbi Rb¨ †mev mieivnKvix Ges †mev MÖnYKvixi g‡a¨ ¯v¶wiZ A½xKvicÎ (‡jUvi Ae Gb‡MR‡g›U) _vK‡Z nB‡e;(L) †mev ißvwbi †¶‡Î g~mK PvjvbcÎ cÖ`vb Kwi‡Z nB‡e;(M) †mev ißvwbi wecix‡Z evsjv‡`‡k ê‡`wkK gy`ªv cÖZ¨vevwmZ nB‡Z nB‡e; Ges(N) ê‡`wkK gy`ªv cÖvwßi `wjj `vwLjc‡Îi mwnZ mshy³ Kwi‡Z nB‡e|

o ißvwb bxwZ‡Z mywbw`©ó †mev ißvwbi LvZ wba©vwiZ Av‡Q|

o evsjv‡`k †_‡K eZ©gv‡b ‡mev ißvwbi msL¨v e¨vcK nv‡i e„w× cv‡”Q|

o mywbw`©ó w`K wb‡`©kbv _vK‡j †mev ißvwbi †¶‡Î mKj cÖKvi weåvwš—i wbimb nB‡e Ges †mev ißvwb DrmvwnZ nB‡e|

K›Uªv±i KZ©„K mve-K›Uªv±i‡K ‡mev g~j¨ ev Kwgkb cwi‡kv‡ai mgq g~mK Dr‡m KZ©b bv Kiv cÖm‡½ t

3aviv (6) Gi Aaxb Dc-aviv (4KK)

cwi‡kv‡ai mgq I c×wZ

GB avivi Ab¨vb¨ weavbvejx m‡Ë¡I, †Kvb wbewÜZ e¨w³ KZ…©K cÖ‡`q g~j¨ ms‡hvRb Ki †evW© KZ…©K, wewa Øviv wba©vwiZ c×wZ‡Z, †mev MÖnYKvix ev,†¶ÎgZ, †mevi g~j¨ ev Kwgkb cwi‡kvaKvix KZ…©K †mevi g~j¨ ev Kwgkb cwi‡kvaKv‡j Dr‡m

Ò‰e‡`wkK mvnvh¨c~óÓ kã¸‡jv wejyß Kivi Rb¨ cÖ —ve Kiv nj|ïaygvÎ ê‡`wkK mvnvh¨cyó cÖKí bq, eis Ab¨vb¨ cÖKíI Giƒc myweav cvIqvi AwaKvix nIqv DwPZ| G‡¶‡Î aviv 6(4KK) Gi Ab¨vb¨ mKj kZ© AcwiewZ©Z _vKv DwPZ|

o g~mK w`‡Z nq g~j¨ ms‡hvR‡bi Dci Ges hLb K›Uªv±i‡K †mevg~j¨ ev Kwgkb cwi‡kva Kiv nq ZLb m¤ú~Y© †mevg~‡jï ev Kwgk‡bi Dci †mevMÖnYKvix g~mK Dr‡m KZ©b K‡i iv‡Lb| hw` K›Uªv±i †mev cÖ`v‡bi Rb¨ mve-K›Uªv±i, G‡R›U ev Ab¨‡Kvb

c„ôv - 4


SRO/OrderExisting


Av`vq ev KZ©bc~e©K miKvix †UªRvix‡Z Rgv Kwi‡Z nB‡et

Z‡e kZ© _v‡K †h, ê‡`wkK mvnvh¨c~ó †Kvb cÖK‡íi AvIZvq †Kvb †mev MÖnYKvix KZ…©K cÖ‡`q g~j¨ ms‡hvRb Ki hw` †mev MÖnYKvix ev, †¶ÎgZ, †mevi g~j¨ ev Kwgkb cwi‡kvaKvix e¨w³ †mevi g~j¨ ev Kwgkb cwi‡kvaKv‡j †evW© KZ…©K, wewa Øviv wba©vwiZ c×wZ‡Z Dr‡m Av`vq ev KZ©bc~e©K miKvix †UªRvix‡Z Rgv K‡ib Ges D³ †mev mieivnKvix e¨w³ KZ…©K D³ mgy`q †mevi Askwe‡kl mieiv‡ni †Kvb mve-K›Uªv±i, G‡R›U ev Ab¨ ‡Kvb †mev mieivnKvix e¨w³‡K wb‡qvM K‡ib, †mB‡¶‡Î D³ †mev mieivnKvixi mve-K›Uªv±i, G‡R›U ev wb‡qvMK…Z Ab¨ ‡Kvb †mev mieivnKvix e¨w³i wbKU nB‡Z, D³ †mevi Dci cÖv_wgK ch©v‡q cÖ‡hvR¨ g~j¨ ms‡hvRb Ki Av`vq ev KZ©b Ges miKvix †UªRvix‡Z Rgv cÖ`v‡bi `vwjwjK cÖgvYvw` Dc ’vcb mv‡c‡¶ cybivq Dr‡m g~j¨ ms‡hvRb Ki Av`vq Kiv hvB‡e bv|

†mev mieivnKvix e¨w³‡K wb‡qvM †`b Ges †mevg~j¨ ev Kwgkb cÖ`vb K‡ib ZLb mgy`q †mevg~j¨ †_‡K g~j¨ we‡qvRb nq| G‡¶‡Î g~j¨ ms‡hvRb nq bv|

o we‡qvR‡bi Dci g~j¨ ms‡hvRb Ki Av‡ivc Kiv g~mK bxwZi mv‡_ mvsNwl©K| Z_v AwaK g~mK Av‡ivc/cwi‡kva Kiv n‡”Q hv eëmv cwiPvjbv e¨q‡K e„w× Ki‡Q, †`‡ki A_©‰bwZK AeKvVv‡gv wbg©v‡Yi †¶‡Î weiƒc cÖwZwµqv m„wó Ki‡Q Ges Ki duvwKi cÖebZv e„w× Ki‡Q|

o ‡h‡nZz K›Uªv±‡ii m¤ú~Y© †mevg~j¨ ev Kwgk‡bi Dci g~mK Dr‡m KZ©b Kiv n‡”Q Ges miKvix †KvlvMv‡i Rgv cÖ`vb Ki‡Q, ‡m‡nZz mve-K›Uªv±‡ii Dci g~mK Av‡ivc Kiv g~mK Gi ‡gŠwjK bxwZi mv‡_ mvsNwl©K|

DcKi‡Yi µqg~j¨ ev g~j¨ ms‡hvR‡bi cwieZ©‡bi cwigvY †NvwlZ gybvdvi mv‡_ mgš‡qi my‡hvM _vKv mv‡c‡¶ g~j¨ †NvlYv bv ‡Ìqv Ges †iqvZ KZ©b bv Kiv cÖm‡½ t

04

aviv (9) Gi Aaxb Dc-aviv (1) Gi `dv (QQ)

Ki †iqvZ

aviv (9) Gi Aaxb Dc-aviv (1) Gi `dv (QQ) t

aviv 5 Gi

Dc-aviv (2) G Dwj-wLZ c‡Yï Ki‡hvM¨ g~j¨ wfwËi g‡a¨ Aš—fy©³bq Ggb DcKi‡Yi wecix‡Z cwi‡kvwaZ g~j¨ ms‡hvRb Ki;

(Av) Dc-aviv (2) Gi wØZxq kZ©vs‡k Dwj-wLZ eëmvqx KZ©„K µqK…Z DcKi‡Yi Dci cwi‡kvwaZ DcKiY Ki;

aviv (9) Gi Aaxb Dc-aviv (1) Gi `dv (QQ) †Z ejv n‡q‡Q †h DcKi‡Yi bvg g~j¨ wfwËi g‡a¨ Aš—f©y³ _vK‡j †mB DcKi‡Yi Dci †iqvZ cÖvß nB‡e Ges G‡¶‡Î g~j¨ †NvlYvq cÖ`wk©Z DcKiY g~‡jï n«vm e„w× †iqvZ MÖn‡Yi wfwË nB‡e bv| Ab¨vw`‡K, wewa (3) Gi Aaxb Dc-wewa (2L) Abyhvqx g~j¨ ms‡hvR‡bi cwieZ©‡bi nvi cuvP kZvs‡ki †ekx n‡j ms‡kvwaZ g~j¨ †NvlYv `vwLj Kwi‡Z nB‡e|

Ab¨w`‡K, aviv (9) Ges wewa (19) G h_vµ‡g Ki †iqvZ Ges DcKiY Ki †iqvZ c×wZi kZ©¸‡jv ewY©Z Av‡Q| wKš‘, †NvwlZ DcKi‡Yi µq g~j¨ e„w×

o DcKi‡Yi g~j¨ ev g~j¨ ms‡hvR‡bi cwigvY e„w× †c‡j hw` c‡Yï weµqg~j¨ e„w× bv Kiv nq Zvn‡j e„w×cÖvß AskUzKz gybvdvi mv‡_ mgšq nq| ZvB weµq g~j¨ e„w× bv †c‡j ms‡kvwaZ g~j¨ †NvlYvi cÖ‡qvRb bvB| G‡¶‡Î g~mK KZ…c¶ewa©Z DcKiY g~j¨ Ges g~j¨ ms‡hvR‡bi cwigvY †NvwlZ g~bvdvi mv‡_ mgšq nq wKbv Zv ‡`L‡Z cv‡i Ges mgš^q bv n‡j AwZwi³ DcKiY g~j¨ ev g~j¨ ms‡hvR‡bi cwigv‡Yi Dci †iqvZ evwZj Ki‡Z cv‡i|

o DcKiY g~j¨ e„w× †c‡jI, weµq g~j¨ e„w× bv †c‡j Ges e„w×cÖvß DcKiY g~j¨ †NvwlZ gybvdvi

c„ôv - 5


SRO/OrderExisting


wewa (3) Gi Dc-wewa (2L)

g~j¨ ms‡hvRb Ki ev, †¶ÎgZ, g~j¨ ms‡hvRb Ki I m¤ú~iK ïé av‡h©i Rb¨ g~j¨ †NvlYv

wewa (3) Gi Dc-wewa (2L) †µZvi wbKU nB‡Z cÖvc¨ c‡Yi cwieZ©b bv NwU‡j Ges g~j¨ ms‡hvRb cwieZ©‡bi nvi cuvP kZvs‡ki Kg nB‡j, Dc-wewa (2) Ges (2K) Gi weavb Abyhvqx †NvlYv cÖ`v‡bi cÖ‡qvRb nB‡e bv:Z‡e kZ© _v‡K †h, GB weav‡bi Kvi‡Y Dc-wewa (3) G ewY©Z Z`š—ev Rwic msµvš— Kvh©µ‡gi GLwZqvi ¶zYœ nB‡e bv|

n‡j Ges µq g~j¨ e„w×i cwigvY cuvP kZvs‡ki AwaK n‡j Zvi wfwË‡Z ms‡kvwaZ g~j¨ †NvlYv `vwLj bv Kwi‡j AwZwi³ DcKiY Ki A‰ea wn‡m‡e M„wnZ nB‡e Giƒc kZ© aviv (9) Ges wewa (19) G ewY©Z ‡bB| GB Bmy¨wU we‡ePbv bv K‡i g~mK KZ©„c¶ †iqvZ evwZj Ki‡Q hv AvBb m¤§Z b‡n| Bnv we‡ePbv Kwiqv wewa (3) Gi Aaxb Dc-wewa (2L) wb¤œiƒ‡c cÖwZ ’vcb Kiv cÖ‡qvRb t

Ò‡µZvi wbKU nB‡Z cÖvc¨ c‡Yi cwieZ©b bv NU‡j Ges DcKiY g~j¨ ev g~j¨ ms‡hvR‡bi cwieZ©‡bi cwigvb c~‡e© †NvwlZ g~j¨ †NvlYvi gybvdvi mv‡_ mgš‡qi my‡hvM _vK‡j, Dc-wewa (2) Ges (2K) Gi weavb Abyhvqx †NvlYv cÖ`v‡bi cÖ‡qvRb nB‡e bv|

Z‡e kZ© _v‡K †h, GB weav‡biKvi‡Y Dc-wewa (3) G ewY©Z Z`š—ev Rwic msµvš—Kvh©µ‡gi GLwZqvi ¶zbœ nB‡e bv|Ó

mwnZ mgš‡qi my‡hvM _vK‡j †iqvZ evwZj Kiv A‡hŠw³K Ges aviv (9) Gi Aaxb Dcaviv (1) Gi `dv (QQ) cwicš’x|

†mev cÖ`vbKvixi Ab¨Zg DcKiY we‡ePbv K‡i AeKvVv‡gvi wbg©vY, fvov BZ¨vwì Dci cÖ`Ë g~m‡Ki Dci †iqvZ MÖn‡bi my‡hvM cÖ`vb cÖm‡½ t

05aviv (9) Gi Aaxb Dc-aviv (1) Gi `dv (O)

Ki †iqvZ

aviv (9) Gi Aaxb Dc-aviv (1) Gi `dv (O) Abymv‡i wb‡¤œ ewY©Z †¶Î mg~‡ni †¶‡Î ÒDcKiY Ki †iqvZÓ MÖnb Kiv hvq bv t

Ki‡hvM¨ cY¨ Drcv`b ev Ki‡hvM¨ †mev cÖ`v‡bi mwnZ mivmwi m¤ú„³ nB‡jI †Kvb `vjvb-†KvVv ev AeKvVv‡gv ev ’vcbv wbg©vY, mylgxKiY,

AvaywbKxKiY, cÖwZ¯’vcb, m¤cÖmviY, cybtms¯‹viKiY I †givgZKiY, mKj cÖKvi AvmevecÎ, †ókbvix `ªe¨vw`, GqviKwÛkbvi, d¨vb, Av‡jvK miÄvg, †Rbv‡iUi BZ¨vw` µq ev †givgZKiY, ’vcZ¨ cwiKíbv I bKkv, hvbevnb, BZ¨vw` fvov ev jxR MÖnY, BZ¨vwì mwnZ mswkó cY¨ Ges †mevi Dci cwi‡kvwaZ g~j¨ ms‡hvRb Ki;

aviv (9) Gi Aaxb Dc-aviv (1) Gi `dv (O) Gi Òev AeKvVv‡gvÓkã¸wj wejyß Kivi cÖ —ve Kiv nB‡jv|

o ÒAeKvVv‡gvÓ A‡bK †mev cÖ`vbKvix cÖwZôv‡bi †mev cÖ`v‡bi Rb¨ ¸i“Z¡c~Y© DcKiY| †Kbbv AeKvVv‡gv wbg©vY ev fvov K‡i A‡bK ‡mev cÖ`vbKvix †mev cÖ`vb K‡i _v‡K|

myZivs AeKvVv‡gv wbg©vY, fvov BZ¨vwì Dci cwi‡kvwaZ g~mK DcKiY Ki wnmv‡e †iqvZ cÖ`vb Kwi‡Z nB‡e|

GKB e¨w³/cÖwZôv‡bi wewfbœ weµq ‡K‡›`ªi g‡a¨ cY¨ mieiv‡ni Rb¨ µqg~j¨ e¨vswKs ev B‡jKUªwbK gva¨‡g cwi‡kvwaZ bv n‡j †iqvZ KZ©b bv Kiv cÖm‡½ t

06aviv (9) Gi Aaxb Dc-aviv (1) Gi `dv (X)

Ki †iqvZ

aviv (9) Gi Aaxb Dc-aviv (1) Gi `dv (X) Abymv‡i wb‡¤œ ewY©Z †¶‡Î DcKiY Ki †iqvZ MÖnb Kiv hvq bv t

aviv (9) Gi Aaxb Dc-aviv (1) Gi `dv (X) wb¤œiƒ‡c cÖwZ ’vcb Kivi cÖ —ve Kiv nB‡jv t

ÒcY¨ ev †mevi DcKi‡Yi

o g~j¨ ms‡hvRb Ki AvBb, 1991 Abyhvqx Drcv`bKvix / eëmvqx / evwYwR¨K Avg`vwbKviKMY hw` cY¨ Drcv`b/msMÖn Kivi ci Zv GK ev GKvwaK weµq †K›`ª

c„ôv - 6


SRO/OrderExisting


o cY¨ ev †mevi DcKi‡Yi µq g~j¨ GK j¶ UvKv ev Z`~a¶© nB‡j Ges Dnvi mgy`q ev AvswkK µq g~j¨ e¨vswKs ev B‡jKUªwbK gva¨g e¨wZZ cwi‡kvwaZ nB‡j, †m‡¶‡Î D³ µqg~‡jï Dci cwi‡kvwaZ DcKiY Ki|

µqg~j¨ GK j¶ UvKv ev Z`ya© nB‡j Ges Dnvi mgy`q ev AvswkK µqg~j¨ e¨vswKs ev B‡jKUªwbK gva¨g e¨wZZ cwi‡kvwaZ nB‡j, †m‡¶‡Î D³ µqg~‡jï Dci cwi‡kvwaZ DcKiY Ki| Z‡e D³ weavb GKB e¨w³i/cÖwZôv‡bi Aaxb GKwU wbewÜZ ’vb nB‡Z Ab¨ GKwU wbewÜZ ’v‡b mieiv‡ni †¶‡Î cÖ‡hvR¨ nB‡e bv|Ó

nB‡Z weµq Kwi‡Z Pvb, Zvn‡j cÖwZwU weµq †K‡›`ªi Rb¨ Avjv`v Avjv`vfv‡e wbewÜZ nB‡Z nq Ges g~mK cwi‡kva Kwi‡Z nq (†K›`ªxq wbeÜb e¨ZxZ)| hwÌ Zvnv wnmve i¶YbxwZ Abyhvqx weµq bq eis óK/gRy` ’vbvš—i| Aciw`‡K †Kv¤úvbxi e¨vsK GKvD›U ‡Kv¤úvbxi bv‡g nq Ges GjvKvwfwËK nq bv Ges AbjvBb e¨vswKs Gi Rb¨ †`‡ki wewfbœ cÖvš—†_‡K GKwU e¨vsK GKvD‡›Ui gva¨‡g †jb‡`b m¤úbœ Kwi‡Z cv‡i| GgZve ’vq, wewfbœ weµq ‡K‡›`ª g~mK AvBb Abyhvqx g~mK cÖ`vb Kwi‡jI †h‡nZz †Kv¤úvbxi cÖavb weµq ‡K›`ª / KviLvbvi mv‡_ µq g~j¨ wnmv‡e Avw_©K †jb‡`b nq bv †m‡nZz GB weavbwU GKB e¨w³i Aax‡b wewfbœ wbeÜ‡bi †¶‡Î AKvh©Ki Ges A‡hŠw³K| DcwiD³ welq Av‡jvPbv Kwi‡j ev —weK A‡_© GB weavb GKB e¨w³i ‡¶‡Î mieivn we‡ePbv Kwiqv ev —evqb Kiv m¤¢e b‡n|

`wjjvw` I wnmvecÎ mdU&Iq¨v‡ii gva¨‡g msi¶Y cÖm‡½ t

07

aviv (31),

wewa 22 Gi Dc-wewa (3),

RvZxq ivR¯ †ev‡W©i mvaviY Av‡`k bs-64/g~mK/2011 ZvwiL - 29 Ryb 2011 wLªóvã,

RvZxq ivR¯ †ev‡W©i mvaviY Av‡`k bs-14/g~mK/2012 ZvwiL - 05RyjvB 2012 wLªóvã Ges

RvZxq ivR¯ †ev‡W©i bw_ bs-08.01.0000.073. 01.001.12-74ZvwiL - 01 A‡±vei, 2012Bs|

wnmvei¶b

g~j¨ ms‡hvRb Ki AvBb, 1991 (1991 m‡bi 22 bs AvBb) Gi aviv 31, g~j¨ ms‡hvRb Ki wewagvjv, 1991 Gi wewa 22 Gi Dc-wewa (3) Ges wewa 38 G cÖ`Ë ¶gZve‡j, RvZxq ivR¯^ †evW©, mswkó Kwgkbvi, Kvógm&, G·vBR G¨vÛ f¨vU Kwgkbv‡iU KZ©„K wbe©vwPZ wbewÜZ cÖwZôvb, hv‡ì me©‡kl c~e©eZx© Avw_©K erm‡i cÖ‡`q g~j¨ ms‡hvRb Ki ev †¶ÎgZ g~j¨ ms‡hvRb Ki I m¤ú~iK ï‡éi cwigvb cÂvk (50) j¶ UvKv ev Zvi AwaK, Zv‡ì †¶‡Î eva¨Zvg~jKfv‡e g~j¨ms‡hvRb Ki msµvš— wjjvw` I wnmvecÎ RvZxq ivR¯^ †evW© KZ©„K wba©vwiZ mdUIq¨v‡ii gva¨‡g msi¶‡Yi Ges cÖ‡hvR¨ †¶‡Î g~mK Kvh©vj‡q †cÖi‡Yi Av‡`k ejer Av‡Q| G D‡Ï‡k¨ †hvM¨Zv m¤úbœ mdUIq¨vi wbg©vYKvix I mieivnKvix GK ev GKvwaK cÖwZôvb‡K miKvix wewa-weav‡bi Av‡jv‡K ZvwjKvfz³ (Enlistment) Kwi‡Z Ges cÖ‡qvR‡b wb‡`©kbv I e¨vL¨vcÎ Rvwi Kwi‡Z cvwi‡e| wbe©vwPZ wbewÜZ cÖwZôvb Zvi g~j¨ ms‡hvRb Ki msµvš— wjjvw` I wnmvecÎ i¶bv‡e¶‡Yi D‡Ï‡k¨ †Kej ZvwjKvfz³ †h‡Kvb mdUIq¨vi wbg©vYKvix I mieivnKvix cÖwZôvb †_‡K Zvi cÖwZôv‡bi Dc‡hvMx

o ‡hme cÖwZôvb BwZc~‡e© D‡j-L‡hvM¨ wewb‡qv‡Mi gva¨‡g I DbœZgv‡bi KvwiMix mnvqZvq mdU&Iq¨vi †W‡fjc K‡i wnmve msi¶Y Ki‡Q Zv‡ì †¶‡Î G ai‡bi eva¨Zvg~jK mdU&Iq¨vi eënvi nB‡Z Ae¨vnwZ †Ìqv cÖ‡qvRb|

o `wjjvw` I wnmvecÎ mdU&Iq¨v‡ii gva¨‡g msi¶‡Yi ïi“i ZvwiL b~b¨Zg 30†k Ryb, 2014 ch©š—e„w×Kiv cÖ‡qvRb|

o g~mK wbewÜZ e¨vw³iv Zv‡ì wb‡Ri cQ›` Abyhvqx mdU&Iq¨vi ‡W‡fj‡ci †¶‡Î Zv‡ì cQ›`‡K cÖvavY¨ w`‡Z nB‡e Ges Zv‡ì Pvwn`v Abyhvqx Ab~¨b 6gvm mgq cÖ`vb Kiv Avek¨K|

o eZ©gv‡b Aby‡gvw`Z mdU&Iq¨vi mieivnKvix‡ì mv‡_ bZzb mdU&Iq¨vi mieivnKvix‡ì Aby‡gv`b ‡Ìqv evÂbxq|

o mdU&Iq¨vi eënvKvixi msL¨vi Zzjbvq mieivnKvix LyeBKg Ges weµq‡Ëvi ‡mev AwbðZ|

o mdU&Iq¨vi eënviKvix‡ì mgm¨v mgvav‡b AímsL¨K mieivnKvix A‡bK mgq †bq d‡j eënviKvix‡ì eëmvq mgm¨v nq|

o mdU&Iq¨vi mieivn Kivi Rb¨ mieivnKvixiv cÖPzi mgq †bq|

GB †cÖw¶‡Z wba©vwiZ mgqmxgv Ges mdU&Iq¨vi mieivnKvixi msL¨v e„w× LyeB Ri“ix|

o GQvovI †hmKj g~mK wbewÜZ e¨w³iv Zv‡ì wb‡R‡ì AvBwU `‡ji `¶Zv Øviv mdU&Iq¨vi †W‡fjc Ki‡e, Giƒc †NvlYv cÖ`vb K‡i RvZxq ivR¯ †ev‡W©i wbKU mgq cÖv_©bv K‡i Zv‡ì mgq Aby‡gv`b Ki‡j †m‡¶‡Î eZ©gvb mdU&Iq¨vi mieivnKvix‡ì Dci Pvc Kg‡e|

c„ôv - 7


SRO/OrderExisting


(Customized) ‡evW© KZ©„KZvwjKvfz³ †h‡Kvb mdUIq¨vi msMÖnc~e©K eënvi Kwi‡Z cvwi‡e|

Avevi ‡evW© KZ©„K wbe©vwPZ mdUIq¨vi, ms wkó Kwgkbvi KZ©„K wbe©vwPZ wbewÜZ cÖwZôvb mg~n KZ©„K 1 RyjvB, 2012 ZvwiL n‡Z eënvi Kiv eva¨Zvg~jK nB‡e| cieZx©‡Z RvZxq ivR¯^ †ev‡W©i mvaviY Av‡`k bs-14/g~mK/2012, ZvwiL - 5RyjvB, 2012 wLª÷vã Gi gva¨‡g D³ mgqmxgv cybtwba©viY Kwiqv Ò1 Rvbyqvwi, 2013Ó Kiv nq|

Aciw`‡K, RvZxq ivR¯^ †evW© bw_ bs-08.01.0000.073.01.001.12-74 ZvwiL - 1 A‡±vei, 2012 Gi gva¨‡g wb‡¤œ Dwj-wLZ 5 (cuvP)wU mdUIq¨vi (Software) wbg©vYKvix I mieivnKvix cÖwZôvb‡K ZvwjKvfz³ Kwiqv‡Qbt

(K) SYMPHONY Softech Ltd., 1st Floor, 160 Lake Circus, Kalabagan, Mirpur Road, Dhaka-1205.

(L) UNISOFT Systems Limited, A/2 Rupsha Tower, 7 Kamal Ataturk Avenue, Banani, Dhaka-1213.

(M) UY Systems Ltd., House: 289, Road: 19/B, New DOHS, Mohakhali, Dhaka-1206.

(N) Ennovia Technologies Ltd., House # 279 (G.F), Road # 19, New DOHS, Mohakhali, Dhaka-1206.

(O) Dhrupadi Techno Consortium Limited, House # 375/A (1st

Floor), Road# 28, New DOHS, Mohakhali, Dhaka-1206.

Avwc‡ji †¶‡Î Av‡`k cÖvwßi ZvwiL †_‡K Avwcj Av‡e`‡bi mgq wba©viY Kiv t

08aviv (42) Gi Dc-aviv (1)

Avwcj

(1) †h ‡Kvb g~j¨ ms‡hvRb Ki Kg©KZ©v ev †h ‡Kvb e¨w³ †Kvb g~j¨ ms‡hvRb Ki Kg©KZ©vi GB AvBb ev †Kvb wewai Aaxb cÖ`Ë †Kvb wm×vš—ev Av‡`k Øviv ms¶z× nB‡j wZwb D³ wm×vš—ev Av‡`‡ki wei“‡×, c‡Yï mieivn ev cÖ`Ë †mevi †¶‡Î aviv 56 Gi Aaxb cÖ`Ë †Kvb AvUK ev weµq Av‡`k A_ev cY¨ Avg`vwbi †¶‡Î

ÒD³ wm×vš—ev Av‡`k cÖ`v‡bi ev, †¶ÎgZ, Av‡`k RvwiiÓ kã¸‡jvi cwie‡Z© ÒD³ wm×vš—ev Av‡`k cÖvwßiÓ kã¸‡jv cÖwZ ’vwcZ Kiv cÖ‡qvRb|

o Av‡`k Rvwii e¨vL¨v aviv (57) †Z †Ìqv Av‡Q Ges Zvnv Abyhvqx Av‡`k Rvwii A_© GB bq †h, hvi D‡Ï‡k¨ Av‡`kwU Rvwi Kiv n‡q‡Q †m Zv m¤ú‡K© AewnZ n‡q‡Q A_ev Av‡`kwU MÖnY K‡i‡Q|

o evsjv‡`‡ki †cÖ¶vcU‡K we‡ePbv Ki‡j Rvwii ZvwiL Avi cÖvwßi Zvwi‡Li g‡a¨ e¨vcK cv_©K¨ _v‡K| †Kbbv A‡bK mgq Av‡`kwU g~mK wbewÜZ e¨w³ cvq

c„ôv - 8


SRO/OrderExisting


Customs Act Gi section 82 ev section98 Gi Aaxb †Kvb Av‡`k e¨ZxZ, D³ wm×vš—ev Av‡`k cÖ`v‡bi ev, †¶ÎgZ, Av‡`k Rvwii be¶B w`‡bi g‡a¨|

bv|

cÖ¨vKwUwms PvU©vW© G¨vKvD‡›U›U‡ì ïbvwb‡Z AskMÖn‡Yi ¶gZv cÖ`vb cÖm‡½ t

09

aviv (46) GiDc-aviv (1)

¶gZvcÖvß cÖwZwbwa I g~mK civgk©‡Ki gva¨‡g Dcw ’wZ BZ¨vw`|

o GB AvBb ev wewai Aaxb †Kvb Kvh©aviv Dcj‡¶ †Kvb g~j¨ ms‡hvRb Ki Kg©KZ©v, AvcxjvZ KZ©„c¶, †evW© ev miKv‡ii wbKU Dcw ’Z nBevi AwaKvix ev Dcw ’wZi Rb¨ ZjeK…Z †Kvb e¨w³ Customs Act-Gi section 196K †Z ewY©Z †Kvb e¨w³i gva¨‡g Dcw ’Z nB‡Z cvwi‡eb Ges D³ Section Gi weavbvejx Zvnvi Dci GBiƒ‡c cÖ‡hvR¨ nB‡e †hb Dnv GB avivi Aaxb Dcw ’wZi Rb¨ GB AvB‡bi Aaxb cÖYxZ nBqv‡Q|

aviv (46) Gi Dc-aviv (1) G D‡jwLZ ÒDcw ’wZi Rb¨ ZjeK…Z †Kvb e¨w³Ó kã¸‡jvi ci ÒPvU©vW© G¨vKvD‡›U›U Gi gva¨‡g evÓ kã¸‡jv ms‡hvRb Kiv cÖ‡qvRb Ges aviv (2)-†Z PvU©vW© G¨vKvD‡›U›U Gi wb¤œiƒc msÁv Aš—f©~³ Kivi cÖ —ve Kiv nB‡jv t

ÒPvU©vW© G¨vKvD‡›U›U (Chartered Accountant)”A_© PvU©vW© G¨vKvD‡›U›U Av‡`k, 1973 G msÁvwqZ †Kvb PvU©vW© G¨vKvD‡›U›U|

o cÖ¨vKwUwms PvU©vW© G¨vKvD‡›U›U‡ì D³ ¶gZv wek¦e¨vwc ¯^xK…Z|

o ‡h‡nZz g~j¨ ms‡hvRb Ki AvBb g~j¨ ms‡hvRb Ges Drcv`b e¨q wfwËK AvBb Ges GB e¨vcv‡i PvU©vW© G¨vKvD‡›U›Uiv wek¦e¨cx ¯xK…Z †m‡nZz PvU©vW© G¨vKvD‡›U›Uiv ¶gZvcÖvß cÖwZwbwa wnmv‡e Dcw ’Z nIqvi AwaKvi iv‡L|

Section 196K of the Customs Act, 1969

Appearance by the authorised representative

Notwithstanding anything contained in this Act, any person, who is entitled or required to attend before any officer of customs, an appellate authority, the Board or the Government in any proceedings under this Act or any, rules made attend in such proceedings by a person authorised by him in writing in this behalf, being a relative of or a person regularly employed be, the aggrieved person, or an advocate who is entitled to plead in any Court of Law, or a Customs Consultant as defined and licensed under rules prescribed in this behalf, and not being disqualified under sub-section (2).

g~j¨ †NvlYvi wecix‡Z Aby‡gv`‡bi Av‡`k cÖvwßi ZvwiL nB‡Z Avwcj Av‡e`‡bi mgq wba©viY Kiv t

10wewa (3) Gi Dc-wewa (7)

g~j¨ ms‡hvRb Ki ev, †¶ÎgZ, g~j¨ ms‡hvRb Ki I m¤ú~iK ïé av‡h©iRb¨ g~j¨ †NvlYv

(7) Dc-wewa (1) nB‡Z (6) G hvnvB _vKzK bv †Kb, Kwgkbvi wbewÜZ e¨w³i Av‡e`bµ‡g ev ¯^ZtcÖe„Ë nBqv ev wefvMxq Kg©KZ©vi Aby‡ivaµ‡g c‡Yï evRvig~j¨ DVv-bvgvi Kvi‡Y ev Zuvnvi we‡ePbvq Ab¨‡Kv‡bv we‡kl Kvi‡Y †Kv‡bv cY¨ ev cY¨ ‡kªwYi †¶‡Î Ki wbiƒc‡Yi Rb¨ g~j¨wfwË w ’i Kwi‡Z cvwi‡eb:Z‡e kZ© _v‡K †h, wefvMxq

Òg~j¨ wbiƒc‡Yi ZvwiL nB‡Z wÎk Kvh© wè‡miÓ cwie©‡Z Òg~j¨ wbiƒc‡Yi Av‡`k cÖvwßi wÎk Kvh© wè‡miÓ kã¸‡jv cÖwZ¯’vcb Kiv cÖ‡qvRb|

o g~j¨ wbiƒcb Kivi A_© GB bq †h, hvi Rb¨ GwU Kiv n‡jv †m Zv m¤ú‡K© AewnZ nBqv‡Q A_ev wbiƒc‡Yi Av‡`kwU MÖnY Kwiqv‡Q|

o ev —weK Ae ’v we‡ePbv Kwi‡j ‡`Lv hvq †h wbiƒc‡bi ZvwiL Avi cÖvwßi Zvwi‡Li g‡a¨ e¨vcK cv_©K¨ _v‡K| †Kbbv A‡bK mgq

c„ôv - 9


SRO/OrderExisting


Kg©KZ©v †NvwlZ g~j¨ A‡c¶v D”PZi g~j¨wfwË wbiƒcY Kwi‡j m s w k ó wbewÜZ e¨w³ D³ D”PZi g~j¨ wbiƒc‡Yi ZvwiL nB‡Z wÎk Kvh©wè‡mi g‡a¨ D³ wbiƒwcZ g~j¨wfwË cybwe©‡ePbvi wbwgË Kwgkbv‡ii wbKU Av‡e`b `vwLj Kwi‡Z cvwi‡eb Ges Av‡e`b cÖvwßi ZvwiL nB‡Z c‡bi Kvh©wè‡mi g‡a¨ Kwgkbvi D³ Av‡e`‡bi Ici wm×vš—cÖ`vb Kwi‡Z e¨_© nB‡j wZwb Av‡e`bwU gÄyi Kwiqv‡Qb ewjqv MY¨ nB‡e:

g~j¨ wbiƒc‡Yi Av‡`kwU g~mK wbewÜZ e¨w³ cvq bv|

w³wfwËK Drcv`‡bi †¶‡Î DcKiY ¯Ë¡vwaKvixi wbewÜZ wVKvbvq bv Avwbqv mivmwi Pzw³wfwËK Drcv`‡Ki wVKvbvq †cÖi‡Yi ¶gZv cÖ`vb Kiv Ges cÖwµqvK…Z DcKiY mieiv‡ni eë ’vi weavb Kiv t

11wewa (16) Gi Dc-wewa (3M)

Ki‡hvM¨ c‡Yï mieivn I ißvwbi †¶‡Î PvjvbcÎ cÖ`vb|

(3M) Pzw³wfw³K Drcv`‡bi AvIZvq c‡Yï ¯Ë¡vwaKvix Drcv`‡Ki wbKU DcKiY mieiv‡ni mgq dig Òg~mK-11MÓ-G wØgyLx Kve©b eënvi Kwiqv GKwU PvjvbcÎ cÖ`vb Kwi‡eb Ges Pvjvbc‡Îi wØZxq AbywjwcwU PvjvbcÎ cy —Í‡K mshy³ Ae ’vq eëmvq ’‡j Ab~¨b Pvi ermi msi¶Y Kwi‡eb|

wewa (16) Gi Dc-wewa (3M) Gi wb¤œiƒc cÖwZ ’vcb Kivi cÖ —ve Kiv nB‡jv t

ÒPzw³ wfwËK Drcv`‡bi AvIZvq c‡Yï ¯Ë¡vwaKvix Drcv`‡Ki wbKU DcKiY ev cÖwµqvK…Z DcKiY mieiv‡ni mgq ev DcKiY mieiv‡ni Rb¨ dig g~mK-11M G wØgyLx Kve©b eënvi Kwiqv GKwU PvjvbcÎ cÖ`vb Kwi‡eb Ges Pvjvbc‡Îi wØZxq AbywjwcwU PvjvbcÎ cy —‡K mshy³ Ae ’vq eëmvq ’‡j Ab~¨b Pvi ermi msi¶Y Kwi‡eb|

Z‡e kZ© _v‡K †h, c‡Yï ¯Ë¡vwaKvix Zvnvi µqK…Z DcKiY Zvnvi g~mK wbewÜZ wVKvbvq bv Avwbqv mivmwi Pzw³wfwËK Drcv`‡Ki wbKU mieivn Kwi‡Z cvwi‡eb|

Av‡iv kZ© _v‡K †h, †hB Zvwi‡L D³ DcKiY Pzw³wfwËK Drcv`‡Ki g~mK wbewÜZ KviLvbvq cÖ‡ek Kwi‡e †mB Zvwi‡Li wfwË‡Z DcKiY cÖ‡e‡ki wZb Kvh© wè‡mi g‡a¨ ¯Ë¡vwaKvix‡K g~mK-11M Pvjvb Bmy¨ Kwi‡Z nB‡e Ges g~mK-11M Gi wfwË‡Z Pzw³wfwËK Drcv`K wnmve msi¶b Kwi‡eb|”

aviv 9 Gi Dc-aviv (1) Gi mwnZ wb¤œiƒc kZ© ms‡hvRb Kivi cÖ —ve Kiv nB‡jv t

ÒAv‡iv kZ© _v‡K †h, aviv 5(2K) Abyhvqx †Kv‡bv wbewÜZ Drcv`K KZ…©K Pzw³i wfwË‡Z Ab¨ †Kvb wbewÜZ Drcv`‡Ki eªvÛhy³ cY¨

o A‡bK †¶‡Î ‡h‡nZz µqK…Z DcKi‡Yi cwieZ©‡bi Rb¨ †Kvb cÖwµqv ¯^Ë¡vwaKvixi wbewÜZ KviLvbvq nq bv †m‡nZz ¯Ë¡vwaKvixi wbewÜZ wVKvbvq bv Avwbqv mivmwi Pzw³wfwËK Drcv`K Gi wbKU mieivn Kwi‡j wb‡¤œv³ NVbv¸‡jv †_‡K Ae¨vnwZ cvIqv hvB‡et

1. DcKiY mivmwi mieivnKvix †_‡K Pzw³wfwËK Drcv`‡Ki wVKvbvq cvVv‡j mgq AcPq †iva nB‡e;

2. AwZwi³ cwienb LiP Kwg‡e;

3. c‡Yï DVvbvgv msµvš—¶wZ ‡_‡K i¶v nB‡e;

4. ¸`vgRvZ Kivi LiP n«vm cvB‡e|

o GKB mv‡_ aviv (9) Ges wewa (19) Gi ‡iqvZ MÖnY msµvš—weavbvewj ¯Ë¡vwaKvixi Rb¨ cwieZ©b Kwi‡Z nB‡e| †Kbbv aviv (9) Abyhvqx †iqvZ MÖn‡Yi Rb¨ cY¨ ev †mev ¯Ë¡vwaKvixi wbewÜZ wVKvbvq Avm‡Z nq|

o e¨q ms‡KvPbbxwZi ev cÖ‡qvR‡bi ZvwM‡` ïaygvÎ c¨vwKs/GKwU cÖwµqv Pzw³i gva¨‡g Ab¨‡Kvb Drcv`K cÖwZôv‡bi KvQ †_‡K m¤úbœ Kiv A‡bK ‡¶‡Î Avek¨Kxq n‡q hvq| GgZve ’vq, cÖwµqvK…Z DcKiY ¯Ë¡vwaKvix †_‡K Pzw³wfwËK Drcv`‡Ki wbKU Òg~mK-11MÓ Gi gva¨‡g mieiv‡ni eë ’v _vwK‡Z nB‡e|

c„ôv - 10


SRO/OrderExisting


Drcv`‡bi †¶‡Î, †evW©, wewaØviv D³ †jb‡`‡bi †¶‡Î †iqvZ MÖn‡Yi c×wZ Ges mgq wba©viY Kwi‡Z cvwi‡eb|Ó

wewa 19 Gi Dc-wewa (7) Gi mwnZ wb¤œiƒc kZ© ms‡hvRb Kivi cÖ —ve Kiv nB‡jv t

ÒAv‡iv kZ© _v‡K †h, aviv 5(2K) Abyhvqx †Kv‡bv wbewÜZ Drcv`K KZ…©K Pzw³i wfwË‡Z Ab¨ †Kvb wbewÜZ Drcv`‡Ki eªvÛhy³ cY¨ Drcv`‡bi †¶‡Î, ¯Ë¡vwaKvix, Zvnvi Drcv`b ’j e¨ZxZ, Zvnvi DcKiY mieivnKvixi wbKU †_‡K A_ev DcKiY Avg`vbxi †¶‡Î cÖ‡hvR¨ DcKiY Avg`vbx e›ì †_‡K mivmwi Pzw³ wfwËK Drcv`‡Ki wbKU mieiv‡ni eë ’v Kwi‡Z cvwi‡eb| ‡m †¶‡Î ¯Ë¡vwaKvixi µ‡qi wecix‡Z †h Ki †gqv‡` PvjvbcÎ cÖ`vb Kiv nB‡e A_ev †h Ki †gqv‡` cY¨ Avg`vbxi ïévqY mgvwß nB‡e, ¯Ë¡vwaKvix †m Ki †gqv‡ì A_ev cieZx Ki †gqv‡ì †h‡Kv†bv Zvwi‡L Zvnvi Drcv`b ’‡j DcKiY Ki †iqvZ MÖnY Kwi‡eb Ges Z`vbyhvqx Ab¨vb¨ wnmve i¶Y Kwi‡eb|”

Pzw³wfwËK Drcv`‡bi †¶‡Î Drcvw`Z cY¨ Pzw³wfwËK Drcv`bKvix KZ©„K ¯Ë¡vwaKvixi wVKvbvq †cÖiY bv Kwiqv Zvnvi wb‡`©wkZ ’v‡b †cÖiY cÖm‡½ t

12wewa (16) Gi Aaxb Dc-wewa (3N)

Ki‡hvM¨ c‡Yï mieivn I ißvwbi †¶‡Î PvjvbcÎ cÖ`vb|

Pzw³wfwËK Drcv`K Pzw³i wfwË‡Z Drcvw`Z cY¨ †KejgvÎ ¯Z¡vwaKvixi wbewÜZ wVKvbvi AbyK‚‡j mieivn Kwi‡Z cvwi‡eb Ges cY¨ mieiv‡ni †¶‡Î Dc-wewa (1) Gi weavb AbymiY Kwi‡eb|

wewa (16) Gi Dc-wewa (3N) Gi wb¤œiƒc cÖwZ ’vcb Kivi cÖ —ve Kiv nB‡jv t

ÒPzw³wfwËK Drcv`K Pzw³i wfwË‡Z Drcvw`Z cY¨ ¯Ë¡vwaKvixi Pvwn`v †gvZv‡eK †h ‡Kvb wbewÜZ wVKvbvi AbyKy‡j mieivn Kwi‡Z cvwi‡eb Ges cY¨ mieiv‡ni †¶‡Î Dc-wewa (1) Gi weavb AbymiY Kwi‡eb|

Z‡e kZ© _v‡K †h, ¯Ë¡vwaKvixi Pvwn`v †gvZv‡eK †h‡Kv†bv wbewÜZ wVKvbvi AbyK‚‡j cY¨ mieiv‡ni mgq Pzw³wfwËK Drcv`K Dc-wewa (1) Gi weavb AbymiY Kwiqv PvjvbcÎ cÖ`vb Kwi‡eb Ges †mRb¨ c„_K wnmve msi¶Y Kwi‡eb| PvjvbcÎ cÖ`v‡bi †¶‡Î, ¯Ë¡vwaKvixi m s w k ó Kg©KZ©v KZ…©K Aby‡gvw`Z g~mK Av‡ivc‡hvM¨ g~‡jï wfwË‡Z

o ‡h‡nZz Pzw³wfwËK Drcv`K KZ©„K cY¨ Drcv`‡bi ci A‡bK †¶‡Î Avi †Kvb Drcv`‡bi cÖwµqv Aewkó¨ _v‡K bv †m‡nZz Pzw³wfwËK Drcv`K Gi ’vb †_‡K ¯Ë¡vwaKvixi Drcv`bKvix wn‡m‡e wbewÜZ ’v‡b cY¨ ’vbvš—i bv K‡i mivmwi ¯Ë¡vwaKvix KZ©„K wb‡`©wkZ Ab¨ wVKvbvq mieivn Kwi‡j wb‡¤œv³ NVbv¸‡jv †_‡K Ae¨vnwZ cvIqv hvB‡et2. Pzw³wfwËK Drcv`K †_‡K

¯Ë¡vwaKvixi wVKvbvq cvVv‡bvi mgq AcPq †iva nB‡e;

3. AwZwi³ cwienb LiP Kwg‡e;

4. c‡Yï DVvbvgv msµvš—¶wZ ‡_‡K i¶v nB‡e|

o GKB mv‡_ aviv (9) Ges wewa (19) Gi ‡iqvZ MÖnY msµvš—weavbvewj ¯Ë¡vwaKvixi Rb¨ cwieZ©b Kwi‡Z nB‡e| †Kbbv aviv (9) Abyhvqx †iqvZ MÖn‡Yi

c„ôv - 11


SRO/OrderExisting


A_ev cÖ‡hvR¨ †¶‡Î, ¯Ë¡vwaKvix KZ…©K `vwLjK…Z g~j¨ †NvlYvi g~mK Av‡ivc‡hvM¨ g~‡jï wfwË‡Z PvjvbcÎ cÖ`vb Kwi‡eb|”

aviv 9 Gi Dc-aviv (1) Gi mwnZ wb‡¤œv³ kZ© ms‡hvRb Kivi cÖ —ve Kiv nB‡jv t

ÒAv‡iv kZ© _v‡K †h, aviv 5(2K) Abyhvqx †Kv‡bv wbewÜZ Drcv`K KZ…©K Pzw³i wfwË‡Z Ab¨ †Kvb wbewÜZ Drcv`‡Ki eªvÛhy³ cY¨ Drcv`‡bi †¶‡Î, †evW©, wewaØviv D³ †jb‡`‡bi †¶‡Î †iqvZ MÖn‡Yi c×wZ Ges mgq wba©viY Kwi‡Z cvwi‡e|Ó

wewa 19 Gi Dc-wewa (7) Gi ci wb¤œiƒc bZyb Dc-wewa (8) ms‡hvRb Kivi cÖ —ve Kiv nB‡jvt

(8) Òaviv 5(2K) Abyhvqx, Pzw³i wfwË‡Z c‡Yï Drcv`bKvix A_©vr Pzw³wfwËK Drcv`K wewa 16(3N) Abyhvqx ¯Ë¡vwaKvixi Pvwn`v †gvZv‡eK †h †Kvb wbewÜZ wVKvbvi AbyK‚‡j cY¨ mieivn Kwi‡eb| wKš‘ ¯Ë¡vwaKvix Zvi Drcv`b ’‡j Pzw³wfwËK Drcv`K KZ…©K PvjvbcÎ cÖ`v‡bi wfwË‡Z aviv 9 Gi D‡j-wLZ †gqv‡ì g‡a¨ cÖ‡hvR¨ †iqvZ MÖnY Kwi‡eb Ges Z`vbyhvqx Ab¨vb¨ wnmve i¶Y Kwi‡eb|

Z‡e kZ© _v‡K †h, ¯Ë¡vwaKvixi Pvwn`v †gvZv‡eK †h‡Kv†bv wbewÜZ wVKvbvi AbyK~‡j cY¨ mieiv‡ni †¶‡Î, Pzw³wfwËK Drcv`K KZ©„K wewa 16 (1) Abyhvqx PvjvbcÎ cÖ`v‡bi 24 NÈvi g†a¨ ¯Ë¡vwaKvix cY¨ mieiv‡ni cÖ‡hvR¨ Ki PjwZ wnmv‡e mgš^q mvab Kwiqv wewa 16 (1) Abyhvqx PvjvbcÎ cÖ`vb Kwi‡eb|”

Rb¨ cY¨ ev †mev ¯Ë¡vwaKvixi wbewÜZ wVKvbvq Avwm‡Z nq|

cY¨ ev †mev ‡di‡Zi †¶‡Î cÖ`Ë g~mK mgš‡qi mgq e„w× msµvš—t

13wewa (17K) Gi Dc-wewa (1)

‡µwWU †bvU I †WweU †bvU

†h †¶‡Î †Kv‡bv wbewÜZ e¨w³ KZ…©K PvjvbvcÎ c~iY ev cÖ`v‡bi ci ev PjwZ wnmv‡e cÖ‡`q Ki mgwšZ Kivi ci Zvnv evwZj Kivi cÖ‡qvRb nq, wKsev cY¨ mieiv‡ni ev †mev cÖ`v‡bi ci Zvnv m¤ú~Y© ev AvswkKfv‡e

Òbe¶BÓ kãwUi cwie‡Z© ÔÔGKkZ AvwkÓ kãwU cÖwZ ’vwcZ Kiv Avek¨K|

o evsjv‡`‡ki eëmvi †cÖ¶vcU we‡ePbv K‡i †`Lv hvq †h 90 w`b ciI AwaKvsk †¶‡Î cY¨ ev †mev †diZ Av‡m Ges †m‡¶‡Î cY¨ ev †mevi Dci cÖ`Ë g~mK mgš‡qi my‡hvM bv _vK‡j eëmvq ¶wZ mvwaZ nq Ges

c„ôv - 12


SRO/OrderExisting


†diZ cÖ`Ë nq wKsev cY¨ mieiv‡ni ev †mev cÖ`v‡bi cÖK…wZ †gŠwjKfv‡e cwiewZ©Z nq wKsev Pvjvbc‡Î cÖK…Z cÖ‡`q K‡ii Zzjbvq AwaK Ki Dwj-wLZ nq, †mB‡¶‡Î wZwb evwZjK…Z Pvjvbc‡Î cÖ`wk©Z Ki wKsev †diZ cÖ`Ë cY¨ ev †mevi wecix‡Z cÖ`Ë Ki wKsev Pvjvbc‡Î AwaK cÖ`wk©Z Ki PjwZ wnmve I cÖ‡hvR¨ †¶‡Î cieZx `vwLjc‡Î mgš^‡qi D‡Ï‡k¨ PvjvbcÎwU evwZj Kwiqv cY¨ ev †mevi MÖnxZvi AbyK‚‡j dig Òg~mK-12Ó-G GKwU †µwWU †bvU Bmy¨ Kwi‡eb Ges cieZx Kvh©w`‡mi g‡a¨ mswkó mv‡K©j ivR¯ Kg©KZ©vi wbKU Dnvi GKwU Abywjwc `vwLj Kwi‡eb:Z‡e kZ© _v‡K †h,(K) cY¨ mieivn ev †mev cÖ`v‡bi ci Zvnv m¤ú~Y© ev AvswkKfv‡e †diZ MÖn‡Yi †¶‡Î cY¨ ev †mev KviLvbv ev eëmvq ’j nB‡Z Acmvi‡Yi be¶B w`b ci †diZ M„nxZ nB‡j;(L) c‡Yï ¸YMZgvb Lvivc nIqvi Kvi‡Y mieivnK…Z cY¨ ev †mev cÖZ¨vnvi Kiv nB‡j;D³ wbewÜZ e¨w³i †¶‡Î GB wewa cÖ‡hvR¨ nB‡e bv|

eZ©gvb cÖwZ‡hvMxZvg~jK eëmvq wU‡K _vKv K÷`vqK nq|

Dr‡m g~mK KZ©‡bi AvIZvaxb †mev mieivnKvix KZ…©K †iqvZ MÖnb Ki‡j Ges 15% nv‡i g~mK cÖ`vb Ki‡j, Dr‡m g~mK KZ©b bv Kiv cÖm‡½ t

14

RvZxq ivR¯ †ev‡W©i mvaviY Av‡`k bs-09/g~mK/2011 ZvwiL: 12 A‡±vei, 2011

RvZxq ivR¯ †ev‡W©i mvaviY Av‡`k bs-01/g~mK/2012 ZvwiL: 28 †deªæqvwi, 2012

g~mK Dr‡m Av`vq/KZ©b Ges cieZx© KiYxq m¤ú‡K© w`K wb‡`©kbv msµvš—|

35wU †mev cÖ`vbKvix KZ©„K †mev cÖ`v‡bi wecix‡Z Dr‡m g~mK KZ©‡bi wb‡`©kbv †Ìqv Av‡Q| Ab¨vw`‡K 35wU †mev cÖ`vbKvixi g‡a¨ ÒS007.00 weÁvcbx ms ’vÓ mg~n †h‡¶‡Î ’vbxq g~j¨ ms‡hvRb Ki Kvh©vj‡qi ivR¯^ Kg©KZ©v/mnKvix ivR¯ Kg©KZ©v KZ©„K cÖZ¨vwqZ Òg~mK-11Ó PvjvbcÎ ev Òg~mK-11Ó wn‡m‡e we‡ewPZ †Kvb PvjvbcÎ cÖ`vb Ki‡e, †m‡¶‡Î g~j¨ ms‡hvRb Ki (g~mK) Dr‡m KZ©‡bi Avek¨KZv †bB|Ó

D³ 35wU ‡mev cÖ`vbKvixi g‡a¨ hw` †Kvb †mev cÖ`vbKvix 15% nv‡i g~mK cÖ`vb K‡i Ges DcKiY Ki †iqvZ MÖnb K‡i _v‡K, Zv‡ì †¶‡Î Dr‡m g~mK KZ©b cÖ‡hvR¨ nB‡e bv Ges weÁvcbx ms ’vi Abyiƒc weavb Zv‡ì †¶‡Î Aš—f©~³ Kiv DwPZ|

o DcKiY Ki †iqvZ ‡bIqv n‡j †m‡¶‡Î me©‡gvU cÖvwßi Dci 15% nv‡i g~mK †_‡K DcKiY Ki †iqvZ mgš^q K‡i Aewkó Ask cÖ`vb Kiv nq| wKš‘ hw` 15% Gi mgy`q Ask Dr‡m KZ©b Kiv nq †m‡¶‡Î †mev cÖ`vbKvix KZ©„K cÖ`Ë g~mK †diZ `vwe Ki‡Z n‡e| †diZ cvIqv ev —weK A‡_© LyeB K÷Ki Ges hš¿bv`vqK| A‡bK‡¶‡Î †diZ cvIqvI hvq bv|

¯Ë¡vwaKvix KZ©„K Pzw³wfwËK Drcv`‡Ki wbKU †cÖiYK…Z DcKiY †diZ cÖ`v‡bi weavb Aš—f©~³KiY t

15 eZ©gv‡b GB msµvš—†Kv‡bv weavb bvB

Pzw³ evwZj ev Ab¨‡Kvb Kvi‡b ¯Ë¡vwaKvix KZ©„K Pzw³wfwËK Drcv`‡Ki wbKU †cÖwiZ DcKi‡Yi †_‡K AeëüZ DcKiY †diZ †Ìqvi cÖ‡qvRb nB‡j Òg~mK-11MÓ Gi Abyiƒc Pvjvbc‡Îi gva¨‡g D³ DcKiY ïaygvÎ ¯Ë¡vwaKvixi wbKU †diZ cÖ`v‡bi weavb Kiv Avek¨K|

o eëmvqxK Kvi‡b, gvb-wbqš¿b/ev —eZv wbix‡¶mieivnK…Z DcKiY †di‡Zi weavb _vKv AZ¨vekK|

KwZcq †mevi Dci cÖ‡`q K‡ii m¤ú~b© Ask †iqvZ MÖnb cÖm‡½ t

16wewa (19) Gi Dc-wewa (1K)

DcKiY Ki †iqvZ c×wZ|

(1K) Dc-wewa (1) G hvnv wKQyB _vKzK bv †Kb, Ki‡hvM¨ cY¨

‡h‡nZz wb‡¤œv³ †mev mg~n Drcv`b ev eëmv‡qi mv‡_ m¤ú~Y©

D³ †mevmg~n e¨w³MZ eënv‡ii mv‡_ RwoZ bq eis Drcv`b ev

c„ôv - 13


SRO/OrderExisting


Gi `dv (K) Ges (L)

Drcv`b evmieivn ev Ki‡hvM¨ †mev cÖ`v‡bi mwnZ m¤c„³ GBiƒc ’vb, ’vcbv ev A½‡b eëüZ(K) exgv, M¨vm I we`y¨r weZi‡Yi Ici cwi‡kvwaZ g~j¨ ms‡hvRb K‡ii AvwkkZvsk; Ges

(L) †Uwj‡dvb, †UwjwcÖ›Uvi, d¨v·, B›Uvi‡bU, †d«BU d‡ivqvW©vm©, wK¬qvwis I d‡ivqvwW©s G‡R›U, Iqvmv, AwWU I GKvDw›Us dvg©, †hvMvb`vi, wmwKDwiwU mvwf©m, AvBb civgk©K, cwienb wVKv`vi I FYc‡Îi Ici cwi‡kvwaZ g~j¨ ms‡hvRb K‡ii lvU kZvsk, cwigvY †iqvZ MÖnY Kiv hvB‡e|

RwoZ Ges e¨w³MZ ch©v‡q eënv‡ii mv‡_ RwoZ bq t

1. exgv;2. ‡d«BU d‡ivqvW©vm;3. cwienb wVKv`vi;4. wK¬qvwis I d‡ivqvwW©s G‡R›U;5. FbcÎ ‡mev cÖ`vbKvix;6. AwWU I GKvDw›Us dvg©;7. AvBb civgk©K;8. wmwKDwiwU mvwf©m|

‡m‡nZz Dc‡iv³ †mev mg~‡ni wecix‡Z cÖ`Ë g~m‡Ki mgy`q Ask †iqvZ †hvM¨| Z`vbyhvqx wewa (19) Gi Dc-wewa (1K) Gi `dv (K) †_‡K exgv †mev Ges wewa (19) Gi Dc-wewa (1K) Gi `dv (L) †_‡K wK¬qvwis I d‡ivqvwWs G‡R›U, FbcÎ †mev cÖ`vbKvix, ‡d«BU d‡ivqvWvm©, AwWU I GKvDw›Us dvg©, AvBb civgk©K, wmwKDwiwU mvwf©m Ges cwienb wVKv`vi †mev wejyß Kiv mgxPxb|

eëmv cwiPvjbvi mv‡_ mivmwi m¤ú„³ myZivs g~m‡Ki †gŠwjK bxwZ Abyhvqx GmKj †mev mg~‡ni Dci cÖ`Ë mgy`q g~mK, DcKiY Ki †iqvZ wnmv‡e mgš^q‡hvM¨ nIqv DwPZ| Ab¨_vq eëmv cwiPjbv e¨q e„w× cv‡e|

`vwLjcÎ ‡ckKi‡Yi mgq e„w× msµvš—t

17wewa (24) Gi Dc-wewa (1)

`vwLjcÎ †ckKiY

cÖ‡Z¨K Ki‡hvM¨ c‡Yï cÖ ‘ZKviK ev Drcv`K ev eëmvqx ev Ki‡hvM¨ †mev cÖ`vbKvix‡K cÖwZwU Ki †gqv‡ì Rb¨ dig Òg~mK-19Ó G `vwLjc‡Îi `yBwU Abywjwc Ki †gqv` cieZx gv‡mi 15 (c‡bi) Zvwi‡Li g‡a¨ ’vbxq g~j¨ ms‡hvRb Ki Kvh©vj‡q Rgv w`‡Z nB‡e

Z‡e kZ© _v‡K †h, 15 (c‡bi) Zvwi‡L miKvwi QywU _vwK‡j Aek¨B Zrc~e©eZx Kvh©wè‡m h_vwbq‡g dig Òg~mK-19Ó G `vwLjcÎ Rgv cÖ`vb Kwi‡Z nB‡e|

Z‡e AviI kZ© _v‡K †h, †Kv‡bv exgv †Kv¤úvwb Ki †gqv‡ì cieZx gv‡mi wek Zvwi‡Li g‡a¨ `vwLjcÎ Rgv w`‡Z cvwi‡e|

eZ©gvb wewawU evwZj Kwiqv wb¤œiƒ‡c cÖwZ ’vwcZ Kiv †hŠw³K e‡j g‡b nq t

ÒcÖ‡Z¨K Ki‡hvM¨ c‡Yï cÖ ‘ZKviK ev Drcv`K ev eëmvqx ev Ki‡hvM¨ †mev cÖ`vbKvix‡K cÖwZwU Ki †gqv‡ì Rb¨ dig Òg~mK-19Ó G `vwLjc‡Îi `yBwU Abywjwc Ki †gqv` cieZx gv‡mi 30 (wÎk) Zvwi‡Li g‡a¨ ’vbxq g~j¨ ms‡hvRb Ki Kvh©vj‡q Rgv w`‡Z nB‡e

Z‡e kZ© _v‡K †h, 30 (wÎk) Zvwi‡L miKvwi QywU _vwK‡j Aek¨B Zrc~e©eZx Kvh©wè‡m h_vwbq‡g dig Òg~mK-19Ó G `vwLjcÎ Rgv cÖ`vb Kwi‡Z nB‡e|Ó

o eZ©gv‡b wba©vwiZ mg‡q mKj AvBb I wewa ‡g‡b `vwLjcÎ Rgv ‡Ìqv LyeB KwVb;

o ‡Kvb †Kvb gv‡m †ek K‡qKw`b miKvix QzwU †hgb C`, c~Rv BZ¨vwì Kvi‡b Kg©wèm Kg cvIqv hvq, hvi d‡j wba©vwiZ mg‡qi g‡a¨ `vwLjcÎ ‡ck Kiv hvq bv|

o ‡h‡nZz, `vwLjcÎ GKevi Rgv w`‡j Zv‡Z †Kvbiƒc cwieZ©‡bi cÖ‡qvRb n‡j cybivq Zv Rgv

j~©fbw ,zZn‡m† |qb e¢¤m vqI`†`vwLjcÎ Rgv †Ìqv e„w× Kivi j‡¶¨ Dc‡iv³ cwieZ©b Ri“ix|

KwZcq †mev‡K g~j¨ †NvlYv †_‡K Ae¨vnwZ cÖ`vb cÖm‡½ t

18

RvZxq ivR¯ †ev‡W©i mvaviY Av‡`k bs-06/g~mK/2012 ZvwiL: 7 RyjvB, 2012

†mevcÖ`vbKvix wbewÜZ e¨w³ KZ©„K mieivnK…Z †mevi g~j¨wfwË †NvlYv cÖ`vb cÖm‡½|

g~j¨ ms‡hvRb Ki AvBb, 1991 Gi aviv 5(4) I aviv 7 Gi D‡Ïk¨c~iYK‡í KwZcq wbewÜZ e¨w³ KZ©„K meivn‡hvM¨ †mevi Ici cÖ‡`q g~j¨ ms‡hvRb Ki, ev, †¶ÎgZ, g~j¨ ms‡hvRb Ki I m¤ú~iK ïé av‡h©i j‡¶¨ mswkó †mevi g~j¨wfwË m¤úwK©Z †NvlYv `vwLj Kwievi Rb¨ KwZcq

Av‡`kwUi †Uwej †_‡K wb‡¤œv³ †mev¸‡jv wejyß Kivi cÖ —ve Kiv nB‡jv t1. ÒS028.00 Kzwiqvi I

G·‡cÖm †gBj mvwf©mÓ2. ÒS034.00 AwWU GÛ

G¨vKvDw›Us dvg©Ó3. ÒS040.00 wmwKDwiwU

mvwf©mÓ

o Mš—e¨, IRb Ges MÖvn‡Ki cÖKvi‡f‡` Kzwiqvi I G·‡cÖm †gBj mvwf©‡mi g~j¨ c„_K n‡q _v‡K, †m‡nZz g~j¨ †NvlYv m¤¢e b‡n|

o ,©gvd sU›wDvKv¨G ÛG UWwAAvBb civgk©K, wmwKDwiwU mvwf©m Ges e¨vswKs I bb-e¨vswKs †mev cÖ`vbKvixi †¶‡Î

c„ôv - 14


SRO/OrderExisting


†mevmg~n‡K wba©viY Kwij| 4. ÒS045.00 AvBb civgk©KÓ

5. ÒS056.00 e¨vswKs I bb-e¨vswKs †mev cÖ`vbKvixÓ

‡h‡nZz wdm wbw`©ó _v‡K bv Ges Kv‡Ri aiY, mg‡qi cÖ‡qvRbxqZv, `¶Zv, Kv‡Ri cwiwa BZ¨vw` we‡ePbv Kwiqv wdm wba©vib Kiv nq †m‡nZz g~j¨ †NvlYv m¤¢e b‡n|

o D³ ‡mevmg~‡ni g~j¨ †NvlYv miKv‡ii ivR¯ Av`v‡q †Kvb cÖfve †d‡j bv| Bnv g~mK Kg©KZ©vi Ges †mev cÖ`vbKvixi ïay mgqB bó K‡i bv eis AcÖ‡qvRbxq kÖgI e¨q nq|

Avg`vwbK…Z Jl‡ai Dci g~mK cÖ`vb c×wZ mywbw`©óKiY Ges cvBKvix I LyPiv ch©v‡q g~mK Ae¨vnwZ cÖ`vb KiY t

19

RvZxq ivR¯ †ev‡W©i bw_ bs-8(15) g~mK (bx: I ev:)/95 ZvwiL : 4 Ryb, 2001

†`‡k Drcvw`Z Jl‡ai g~mK‡hvM¨ g~j¨ I cÖ‡`q g~mK wba©viY cÖm‡½|

†`‡k Drcvw`Z Jl‡ai †¶‡Î cvBKvix I LyPiv ch©v‡q cÖ‡hvR¨ g~mK Ae¨vwnZ †`qv mv‡c‡¶Drcv`b ch©v‡q eëmvq ch©v‡qi g~mK cÖ`vb Kivi weavb Av‡Q|

wKš‘ Avg`vwbK…Z Jla, wUKv BZ¨vwì †¶‡Î Abyiƒc mywbw`©ó w`K wb‡`©kbv †bB|

†`‡k Drcvw`Z Jl‡ai g~mK‡hvM¨ g~j¨ I cÖ‡`q g~mK wba©vi‡bi †¶‡Î Abym„Z RvZxq ivR¯ †ev‡W©i bw_ bs-8(15) g~mK (bx: I ev:)/95 ZvwiL : 4 Ryb, 2001 Gi Abyiƒc Av‡`k / wb‡`©kbvi gva¨‡g Avg`vwbK…Z Jla, wUKv BZ¨vwì †¶‡Î Avg`vwbKvi‡Ki nv‡ZB mgy`q g~mK Av`v‡qi weavb Ges cvBKvix I LyPiv ch©v‡q cÖ‡hvR¨ g~mK Ae¨vnwZ †Ìqvi weavb Kiv cÖ‡qvRb|

o eZ©gv‡b eëmvqxK ch©v‡qi (1g —i cieZx©) g~mK Av`vq

m‡›`nfvRb nIqvq GKw`‡K miKvwi ivR¯ Kg Av`vq nIqvi AvksKv i‡q‡Q Zv `~ixf‚Z n‡e Ges ivR¯ Av`vq e„w× cv‡e|

o ivR¯ wbqš¿Y mnRZi n‡e Ges nqivwbi AvksKv n«vm cv‡e|

o ‡`‡k Drcvw`Z I Avg`vwbK…Z Jl‡ai †¶‡Î mgRvZxq weavb nIqvB Kvg¨|

cï Lv‡`ï cywó wcÖwg·‡K g~j¨ ms‡hvRb Ki n‡Z Drcv`b ch©v‡q Ae¨vnwZ cÖ`vb cÖm‡½ t

20

Af¨š—ixb m¤ú` wefvM, A_© gš¿Yvjq, MYcÖRvZš¿x evsjv‡`k miKv‡ii GmAviI bs-180-AvBb/2012/638-g~mK ZvwiL 07 Ryb, 2012 wLª÷vã

Avg`vwb ch©v‡q, Avg`vwb I Drcv`b ch©v‡q, Drcv`b ch©v‡q, cÖ`Ë †mev Geseëmvqx ch©v‡q g~mK Ae¨vnwZ|

mvgÄm¨c~Y© bvgKiY †KvW (H.S. Code) 2309.90.10 (cï Lv‡`ï cywó wcÖwg·) Gi Dci Av‡ivcYxq mgy`q g~j¨ ms‡hvRb Ki Avg`vbx ch©v‡q Ges eëmvqx ch©v‡q Ae¨vnwZ cÖ`vb Kiv Av‡Q|

mvgÄm¨c~Y© bvgKiY †KvW (H.S. Code) 2309.90.10 Gi Aaxb cï Lv‡`ï cywó wcÖwg· Drcv`b ch©v‡q Ae¨vnwZ cÖ`vb Kiv DwPZ|

o †`‡k G wk‡íi msL¨v `ªæZ evo‡Q|

o Avg`vbx‡K wbi“rmvwnZ Kivi j‡¶¨ Drcv`b ch©v‡q Ae¨vnwZ Ri“ix|eZ©gvb eë ’vq Drcv`b‡K wbi“rmvwnZ Ges Avg`vbx‡K DrmvwnZ Kiv n‡”Q| hv †`‡ki e„nËi ¯v‡_© ¶wZKvKiK|

o eëmvqx ch©v‡q Ae¨vnwZi †¶‡Î wbtm‡›`‡n Drcv`b ch©v‡qi Ae¨vnwZ Kvg¨|

Ae¨vnwZcÖvß cY¨ ev †mev‡K †hvMvb`vi ‡mevi AvIZvgy³KiY t

21

RvZxq ivR¯ †ev‡W©i GmAviI bs-175-AvBb/2011/598-g~mK ZvwiL 9 Ryb, 2011

Ki‡hvM¨ †mevi cwiwa wba©viY

S037.00 ‡hvMvb`vi-A_© †Kv‡U©kb ev ìcÎ ev Ab¨weafv‡e wewfbœ miKvix, AvavmiKvix, ¯vqZ¡kvwmZ cÖwZôvb, †emiKvix ms ’v (GbwRI), e¨vsK, exgv ev Ab¨‡Kvb Avw_©K cÖwZôvb, wjwg‡UW †Kv¤úvbx ev wk¶vcÖwZôv‡bi wbKU c‡Yi wewbg‡q †h‡Kvb cY¨ ev †mev ev DfqB mieivn K‡ib Ggb †Kvb e¨w³, cÖwZôvb ev ms ’v|

Ò†h‡Kvb cY¨ ev †mev ev DfqBÓ Gi cwie‡Z© ÒKi †hvM¨ cY¨ ev †mev ev DfqBÓ Aš—f©y³ Kivi cÖ —ve Kiv nB‡jv|

o aviv 3 Gi Dcaviv (1) Abyhvqx, cÖ_g Zdwm‡j DwjwLZ cY¨ mg~n e¨ZxZ evsjv‡`‡k Avg`vwbK…Z mKj cY¨ Ges D³ Zdwm‡j Dwj-wLZ cY¨ mg~n e¨ZxZ mKj c‡Yï mieiv‡ni Dci Ges wØZxq Zdwm‡j D‡jwLZ †mev mg~n e¨ZxZ evsjv‡`‡k Avg`vwbK…Z ev evsjv‡`‡k cÖ`Ë mKj ‡mevi Dci aviv 5 G ewY©Z g~‡jï wfwË‡Z c‡bi kZvsk nv‡i g~j¨ ms‡hvRb Ki avh©¨ I cÖ‡`q nB‡e| †m‡nZz Ò‡hvMvb`viÓ Gi †mevi cwiwa‡Z ÒKi†hvM¨ cY¨ ev †mev ev DfqBÓ Aš—f©y³ nIqv DwPZ|

c„ôv - 15


SRO/OrderExisting


we`¨gvb weavb aviv (3) Gi mwnZ mvsNwl©K|

‡hvMvb`vi ‡mevi e¨vL¨v evwZj KiY cÖm‡½ t

22

RvZxq ivR¯ †ev‡W©i GmAviI bs-175-AvBb/2011/598-g~mK ZvwiL 9 Ryb, 2011


S037.00 ‡hvMvb`vi-A_© †Kv‡U©kb ev ìcÎ ev Ab¨weafv‡e wewfbœ miKvix, AvavmiKvix, ¯vqZ¡kvwmZ cÖwZôvb, †emiKvix ms ’v (GbwRI), e¨vsK, exgv ev Ab¨‡Kvb Avw_©K cÖwZôvb, wjwg‡UW †Kv¤úvbx ev wk¶vcÖwZôv‡bi wbKU c‡Yi wewbg‡q †h‡Kvb cY¨ ev †mev ev DfqB mieivn K‡ib Ggb †Kvb e¨w³, cÖwZôvb ev ms ’v|

‡hvMvb`vi †mevwU evwZj Kiv DwPr|

o ‡h‡nZz †mevi †KvW S099.20 Gi Aaxb ÒAb¨vb¨ wewea †mevÓ Gi cwiwa wba©vwiZ Av‡Q, †m‡nZz †hvMvb`vb ‡mevi cwiwa ÒAb¨vb¨ wewea †mevÓ Gi mv‡_ mvsNwl©K|

o gvV ch©v‡q G e¨vcv‡i e¨vcK wePz¨wZ iwnqv‡Q|

Z_¨-cÖhyw³ wbf©i †mevi e¨vL¨v cwieZ©b cÖm‡½t

23

RvZxq ivR¯ †ev‡W©i GmAviI bs-175-AvBb/2011/598-g~mK ZvwiL 9 Ryb, 2011 Ges RvZxq ivR¯ †ev‡W©i GmAviI bs-181-AvBb/2012/639-g~mK ZvwiL 7Ryb, 2012


S099.10 Z_¨-cÖhyw³ wbf©i †mev (Information Technology Enabled Services) A_© Digital Content Development and Management, Animation (both 2D and 3D), Geographic Information Services (GIS), IT Support and Software Maintenance Services, Web Site Services,Business Process Outsourcing, Data Entry, Data Processing, Call Centre, Graphics Design (digital service), Search Engine Optimization, Web Listing, E-commerce and Online Shopping, document conversion, imaging and archiving.

Infrastructure development (Combination of Hardware & Software) ms‡hvRb Kwiqv Z_¨-cÖhyw³ wbf©i †mevi cwiwa wb¤œiƒc Kivi cÖ —ve Kiv nB‡jv t

ÒDigital Content Development and Management, Animation (both 2D and 3D), Geographic Information Services (GIS), IT Support and Software Maintenance Services, Infrastructure Development (Combination of Hardware & Software),Web Site Services,Business Process Outsourcing, Data Entry, Data Processing, Call Centre, Graphics Design (digital service), Search Engine Optimization, Web Listing, E-commerce and Online Shopping, document conversion, imaging and archiving.

o eZ©gv‡b D³ ‡mev‡K wbg©vY we‡ePbv K‡i ‡mevi †KvW S004.00-G Aš—f©~³ Kiv Av‡Q| †h‡nZz, Z_¨-cÖhyw³ wbf©i †mevi c„_K cwiwa i‡q‡Q ‡m‡nZz D³ †mev‡K †mevi †KvW S004.00-G we‡ePbv bv Kwiqv ‡mevi ‡KvW S099.10-G Aš—f©~³ KivB hyw³hy³|

KwZcq †¶‡Î cY¨ I †mev µq‡K g~mK n‡Z Ae¨vnwZ cÖm‡½ t

24

Af¨š—ixY m¤ú` wefvM, A_© gš¿Yvjq, MYcÖRvZš¿x evsjv‡`k miKv‡ii GmAviI 154-AvBb/2005/445-g~mK, ZvwiL 9 Ryb, 2005

Af¨š—ixY m¤ú`

KwZcq †¶‡Î †mev µq‡K g~mK n‡Z Ae¨vnwZ †Ìqv Av‡Q

o kZfvM ißvwbKviK, kZfvM cÖ”Qbœ ißvwbKviK, ißvwb cÖwµqvKiY AÂj (Bwc‡RW) G Aew ’Z cÖwZôvb KZ©„K KwZcq †mevi µ‡qi †¶‡Î g~mK AvswkK ev m¤ú~Y© Ae¨vnwZ †Ìqv Av‡Q| ZvQvov †h‡nZz HmKj cÖwZôvb cY¨ ißvwb K‡i †m‡nZz Zv‡ì †¶‡Î cY¨ mieiv‡ni Dci k~Y¨ nv‡i g~mK Av‡ivwcZ

wbw`©ó †mev mg~n‡K bq eis Zv‡ì †¶‡Î mKj †mev µ‡qi Rb¨ m¤ú~Y© nv‡i g~mK Ae¨vnwZ cÖ`vb Kiv DwPZ|

o g~mK †h‡nZz ‡fv³vi Dci Av‡ivcbxq Ges kZfvM ißvwbKviK, kZfvM cÖ”Qbœ ißvwbKviK, ißvwb cÖwµqvKiY AÂj (Bwc‡RW) G Aew ’Z cÖwZôvb mg~n cY¨ ißvwb K‡i weavq cY¨ mieiv‡ni Dci k~Y¨ nv‡i g~mK Av‡ivwcZ nq Ges Zv‡ì †¶‡Î g~mK mgš‡qi my‡hvM bvB, †m‡nZz HmKj cÖwZôvb mg~n KZ©„K †mev µ‡qi Dci g~mK

c„ôv - 16


SRO/OrderExisting


wefvM, A_© gš¿Yvjq, MYcÖRvZš¿x evsjv‡`k miKv‡ii GmAviI 72-AvBb/95/113-g~mK ZvwiL 8 †g, 1995

RvZxq ivR¯ †ev‡W©i we‡kl Av‡`k bs-18/g~mK/2004 ZvwiL 10 A‡±vei, 2004

RvZxq ivR¯ †ev‡W©i we‡kl Av‡`k bs-04/g~mK/2005 ZvwiL 2 †g, 2005

nq|

o `~Zvevm, K‚UbxwZwe` I Kg©Pvixe„›`, ivóª`~‡Zi evm ’vb, RvwZms‡Ni wewfbœ A½ cÖwZôvb, wek¦ Lv`¨ ms ’v, wek¦ e¨vsK, wek¦ ¯v ’¨ ms ’v, Avš—R©vwZK kÖg ms ’v, Gkxq Dbœqb e¨vsK BZ¨vw` KZ©„K KwZcq †mevi µ‡qi †¶‡Î g~mK AvswkK ev m¤ú~Y© Ae¨vnwZ †Ìqv Av‡Q|

Ae¨vnwZ cÖ‡qvRb|

o g~mK ‡h‡nZz †fv³vi Dci Av‡ivcbxq Ges `~Zvevm, K‚UbxwZwe` I Kg©Pvixe„›`, ivóª`~‡Zi evm ’vb, RvwZms‡Ni wewfbœ A½ cÖwZôvb, wek¦ Lv`¨

’v¯ ¦kew ,Ksvë ¦kew ,v’smms ’v, Avš—R©vwZK kÖg ms¯’v, Gkxq Dbœqb e¨vsK BZ¨vwì Rb¨ KwZcq †¶‡Î †mev MÖn‡Yi Rb¨ g~mK Ae¨vnwZ cÖvß Ges Zv‡ì Drcv` g~mK cÖ`vb Kwi‡Z nq bv, †m‡nZz mivmwi HmKj ms ’v ev cÖwZôvb mg~n KZ©„K †mev µ‡qi Dci g~mK Ae¨vnwZ cÖ‡qvRb|

25

AwWU GÛ GKvDw›Us dv‡g©i †mev cÖ`v‡bi Dci Dr‡m g~mK KZ©b cÖm‡½

mvavib Av‡`k bs 07/g~mK/2012 ZvwiL 28 ‰Rô, 1419 e½vã/07 Ryb, 2012 wLªóvã

µwgK bs: 18†mevi †KvW: Gm 034.00†mev cÖ`vbKvix: AwWU GÛ GKvDw›Us dvg©g~mK Dr‡m KZ©‡bi nvi: 15%

µwgK bs: 18†mevi †KvW: Gm 034.00†mev cÖ`vbKvix: AwWU GÛ GKvDw›Us dvg©g~mK Dr‡m KZ©‡bi nvi: 4.5%

AwWU GÛ GKvDw›Us dvg© mg~‡ni ‡mevi wewbg‡q cÖvß A‡_i© 100% g~j¨ ms‡hvR‡bi nv‡ii wfwË awiqv 15% Dr‡m g~mK KZ©b Kiv A‡hŠw³K| AwWU GÛ GKvDw›Us dvg© mg~n wmG cvViZ QvÎ‡ì †Uªwbs I covïbvi †¶ÎI e‡U| D‡j-L¨ wek¦we`¨vjq (†mevi †KvW Gm 070.10), †gwWK¨vj I BwÄwbqvwis K‡jR (†mevi †KvW Gm 070.20), mgy‡ni Dci f¨vU m¤ú~b© cÖZ¨vnvwiZ n‡q‡Q (RvZxq ivR¯ †ev‡W©i we‡kl Av‡`k bs- 180-AvBb/2012/638-g~mK ZvwiL 7 Ryb, 2012)| Bswjk wgwWqvg ¯‹yj I Z_¨ cÖhyw³ wbf©i †mevi Dci †mevi wewbg‡q cÖvß A‡_©i 30% g~j¨ ms‡hvR‡bi wfwË aiv g~mK Dr‡m KZ©‡bi nvi 4.5% (RvZxq ivR¯ †ev‡W©i we‡kl Av‡`k bs-182-AvBb/2012/640-g~mK ZvwiL 7 Ryb, 2012)| Abyi“cfv‡e AwWU GÛ GKvDw›Us dvg© mg~‡ni ‡mevi wewbg‡q cÖvß A‡_i© 30% g~j¨ ms‡hvR‡bi nv‡ii wfwË awiqv 4.5% Dr‡m g~mK KZ©b Kiv hyw³hy³| D‡jL¨ 2011-12 mvj ch©š—gymK KZ©‡bi nvi 4.5% B wQj (GmAviI bs 200-AvBb/2011/613-g~mK, ZvwiL 29 Ryb, 2011|

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