bangladesh bank
Bangladesh Bank closing around 200 MFS accounts a day in Hundi crackdown: Governor Abdur Rouf
Bangladesh Bank (BB) Governor Abdur Rouf Talukder on Monday (March 11, 2024) said that around 200 mobile financial services (MFS) accounts are closing each day due to their Hundi connection.
The central bank is checking rigorously trade transactions through LC and mobile financial services to prevent money laundering activities by any means, he said.
The governor said this in the opening ceremony of the money laundering prevention workshop held at the head office of the Criminal Investigation (CID), Bangladesh Police in the capital on Monday.
Rauf highlighted the steps taken to prevent money laundering since his joining the Central Bank as Governor.
He said, “When I joined Bangladesh Bank in 2022, there was a severe crisis of foreign exchange in the country. At that time took the first step to stop over-invoicing.”
Read more: Inflation, currency prime focus of BB’s next monetary policy
Again, money laundering occurs despite keeping the profit of export products abroad. Initiatives are also taken to prevent that, he mentioned.
The governor expressed the strong stand of the central bank on banning hundi.
He said that expatriates may send Tk500 to their family in the country, then he gives it to someone he knows abroad and asks him to give it to his family in the country.
That money remains abroad. In contrast, a representative in Bangladesh paid the amount. As earlier payment was made through home delivery, now it is done through MFS.
Read more: Entry-level women's recruitment doubles in banking sector, but board representation still lagging
Around 200 such accounts are being closed every day. Later some accounts were opened again with guarantees, permanent action was taken against some of them, he said.
Highlighting the context of the campaign against money changers, the governor said that USD $45 to $50 million transactions are done through money changers in the country every year. About $270 billion in transitions are made in the banking channel.
But despite a small fraction of transactions, when money changers hiked the dollar rate, many expatriates tried to hold on to remittances. This is how the dollar crisis was created, Rouf pointed out.
“That is why the campaign against money changers is ongoing. Also, avoid dealing in cryptocurrencies. It is completely illegal in our country,” said the BB Governor.
CID Chief and Additional IGP Muhammad Ali Mia in the chair, head of Bangladesh Financial Intelligence Unit (BFIU) Md. Masud Biswas also spoke at the function.
Read more: Bangladesh received $2.16 billion remittances in February, highest in fiscal
Entry-level women's recruitment doubles in banking sector, but board representation still lagging
The women employment in the banking sector increased by 1407 in July-December period of 2023, and the overall perrcentage of women employees at banks stood at 16.37 percent in Bangladesh.
Meanwhile just 13.51% of board members in the banks are women.
Bangladesh Bank’s (BB’s) latest report on gender equality revealed this information. There are 33346 women employees in 61 banks in the country, which is 16.37 percent of the total employees of banks, according to the report.
The BB report shows that among the scheduled banks in 2023, 43 private commercial banks have the highest number of women employees 22,248, which is 16.32 percent of the total employees.
Foreign commercial banks have the highest proportion of female officers, 24.18 percent as compared to other banks.
In the period July-December 2023, the participation of women as board members was only 13.51 percent. Among them, foreign commercial banks have the highest female board member participation rate at 17.54 percent.
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On the other hand, there is no participation of women board members of specialized commercial banks in the discussed period.
According to the reports submitted by banks during the period July-December 2023 shows that the participation rate of women employees is higher at the entry-level 17.04 percent and mid-level 15.79 percent than at the higher levels 9.36 percent.
Analysis of the obtained data shows that the participation of women in the banking sector is high at the initial stage.
At the same time, the participation rate of female employees under thirty years of age 20.99 percent is more than double that of female officers above 9.58 percent in scheduled banks.
Bangladesh’s place has improved by 12 steps in the gender gap report of the World Economic Forum (WEF) in 2023, as women's employment increased in the country.
The BB report shows that Bangladesh is holding the 59th position in 2023 improving from 71st in 2022 in the gender gap of WEF, among 146 countries in the world.
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Executive Director of CDP Dr. Fahmida Khatun said that women's employment is usually increasing with the developing socio-economic scenario of the country and decreasing the ratio of women's employment does not match that calculation.
She focused on the need to study why the ratio of women employment has been decreasing in the banking sector.
Bangladesh Bank’s spokesperson Mezbaul Haque told UNB that women's employment has increased in the banking sector following the central bank’s policy to reduce the gender gap in banks and financial institutions.
The central bank prefers women both in employment and entrepreneurship development. Loan disbursement and interest incentives have been given to women encouraging them involved in financial inclusion.
The BB is still working to ensure a sound environment in the workplace of banks. Facilities including maternity leave and daycare opportunities for women’s employees have increased, he said.
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Bangladesh received $2.16 billion remittances in February, highest in fiscal
Bangladesh received inward remittances of USD $2.16 billion in February, which is the highest in 8 months (July-February) in the current fiscal year 2023-24.
According to the provisional data of the Bangladesh Bank (BB) revealed on Sunday, the expatriates sent $2.16 billion remittance to the country through the legal channel. In the previous month January, the expatriates had sent $2.10 billion in remittances.
Bangladesh has received so far $13.26 billion in inward remittances in the first eight months of the year through the legal channel.
Md Mezbaul Haque, BB spokesperson, told UNB that inward remittances flow increased in the legal channel as the government and banks are providing incentives.
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He said the central bank instructed banks to provide additional incentives from their financial sources, which keeps a role in increasing the flow of inward remittances in the legal channel.
With the government's 2.5 percent incentive on expatriate income, banks can buy dollars at an additional 2.5 percent higher price. A total of 5 percent is getting incentives. As a result, remittances are coming to the country through legal channels.
The executive director of the private research institute South Asian Network on Economic Modeling (SANEM) Prof Dr. Selim Raihan said that a total of 5 percent incentive on remittances will help to boost remittances temporarily. But there will be no long-term solution.
Dr. Raihan said,”To increase remittances, hundi should be stopped. If you want to stop hundi, you have to stop money laundering. Now a lot of money is being smuggled abroad. It has to be controlled by any means.”
Read more: How to safely send remittance to Bangladesh?
Stop loan default culture to save economy: Anisul Islam Mahmud
The main opposition Jatiya Party lawmaker Anisul Islam Mahmud on Tuesday (February 13, 2024) demanded the government of Bangladesh put an end to the loan default culture to save the country’s economy.
“In this situation, we need to stop the culture of wilful loan default,” he said.
Anisul Islam, a veteran parliamentarian and the deputy leader of the opposition, placed the demand in the House, taking the floor on a point of order.
Citing a newspaper story, he said the banking sector's defaulted loans soared by over 20 percent to Tk 145,633 crore in 2023 as both governance and accountability continue to get looser.
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“Whenever this issue is being discussed, we are told that Bangladesh Bank and other banks are taking measures to reduce this (defaulted loans). But we never see that defaulted loans are declining, rather it is going higher,” he said.
The Jatiya Party MP said the amount of defaulted loans was Tk 28,000 crore as of 2008. The number of defaulted loans has increased to Tk 1.45 lac crore since 2008 to as of today which is very alarming.
He said there is a cash crisis and a dollar crisis in the banking sector. Some strong measures have been taken to tackle this situation.
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Anisul said Bangladesh Bank (BB) is telling that they want to reduce the amount of defaulted loans from existing nine percent to eight percent of total outstanding loans.
“But their (BB) track record says that they will not do so,” he continued.
The opposition lawmaker requested the Finance Minister to give importance to stopping the loan default culture.
“The issue of loan default culture has been discussed in parliament so many times. But nothing has happened,” he added.
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Central bank issues advisory on formation of bank boards to ensure good governance
Bangladesh Bank (BB) has issued a notification regarding the formation of a bank's board of directors, as well as prescribing the responsibilities of the directors as per the ‘Bank Company Act’.
The Banking Regulations and Policy Department (BRPD) of Bangladesh Bank on Sunday issued the notification to ensure dynamism and good governance in the banking sector.
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The notification was sent to the managing directors and chief executive officers of all scheduled banks for immediate execution.
According to the notification, the number of directors of a bank will be a maximum of 20, and independent directors will be three.
However, if there are less than 20 directors, there cannot be more than two independent directors. At the same time not more than three members from a single family can be directors, the notification stated.
CID finds technological negligence behind Bangladesh Bank forex heist
To be a member of the board of directors, the minimum age of the concerned person must be 30 years. And should have 10 years of management business or professional experience.
According to the central bank, this policy has been formulated to ensure good governance in the banks. At the same time, the board of directors of the bank must be formed by suitable and professionally competent persons to carry out the business activities properly and smoothly.
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“The bank's activities are mainly conducted with the money of the depositors. In this case, it is essential to protect the interest of the depositors. For this reason, the responsibility of the board of directors of a bank company is more important than that of other companies,” the BB notification stated.
Amendments were brought in the Bank-Company Act in 2023 to ensure good governance in the banking sector.
Plastic goods manufacturers demand reconsidering decision over cash incentives' rate
Bangladesh Plastic Goods Manufacturers and Exporters Association (BPGMEA) has demanded reconsidering the decision regarding the change in the rate of cash incentives for the industry.
In a statement, BPGMEA president Shamim Ahmed said the change in the rate of cash incentives is not helpful and timely for the industry.
“Rather, it will bring unintended risks and disasters to other industries including the plastics sector", he added.
He also demanded change of the decision on an urgent basis before having a major negative impact on exports and maintaining 10 percent cash support against the export of plastic products until 2026.
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The statement came against the backdrop reduction of cash incentives for the plastic sector from 10 percent to 8 percent through Bangladesh Bank's FE circular number-02 dated January 30.
It said that the plastic sector is an emerging and promising sector. It is diversifying export products according to the needs of foreign buyers and earning foreign exchange by exporting 150 varieties of plastic products to about 126 countries using modern technology.
Direct exports in FY 2022-2023 amount to USD 209.86 million. As a backward linkage industry exports to the country's largest export sector garments and other industries, earns about US$ 950 million.
That is, the export volume (Direct and Deemed) is above 1.2 billion US dollars. Some 1.5 million people are employed here in which 30 percent of them are women. It has been growing at a rate of 20 percent for the past two decades. The position of the plastic sector in exports is 12th.
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The current government has also included the plastic sector as a priority sector in the Import and Export Policy-2024.
The circular does not mention the introduction of alternative incentives in the duty-compliant system post-LDC transition, the statement said.
However, many middle-income countries have been providing alternative incentives rather than direct incentives for their industries.
The issue of providing alternative incentives has come up in various government and private studies of the country.
"We do not think that sudden reduction of the existing system, without an alternative system, is a helpful step for industry and economy", Shamim said.
On the other hand, he said, while the incentive package is being cut, competing countries are increasing support for their industries such as Export development fund in India, Vietnam Trade Policy and Promotion Project, and even in rich countries like the USA, cotton cultivation is subsidized to encourage export trade. Bangladesh will face the challenge of double transformation after 2029.
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At such a time, as long as the LDCs were enjoying benefits as per the provisions, it would have been more reasonable to extend other facilities, including cash incentives through which the industry could be sustained, BPGMEA president Shamim said.
In the past two years, due to various reasons including the Covid-19 epidemic, Ukraine-Russia war, Palestine-Israel war, economic instability and deadlock have been created in Bangladesh, like the whole world, he added.
CID finds technological negligence behind Bangladesh Bank forex heist
Criminal Investigation Department (CID), a specialized police unit, has found technological negligence for the incident of cyber heist of $101 million from Bangladesh Bank’s account in 2016 during their investigation into the case.
"Investigation of the case is at the final stage. During investigation, what we found was technological negligence as the BB was not technologically sound when the incident took place, that is the reality," said CID Chief Additional IGP Mohammad Ali Mia, while exchanging views with the newly elected Executive Committee (EC) of Bangladesh Crime Reporters Association (CRAB) at the CID headquarters in the city on Monday.
Death of Bangladesh Bank official: HC asks why failure to keep footpaths safe should not be declared illegal
DIG Mainul Hasan, Additional DIG Khondkar Rafiqul Islam, Md Kamrul Ahsan and other senior officers of the CID, while CRAB President Kamruzzaman Khan, Vice President Shaheen Abudal Bari, General Secretary Sirajul Islam and other members of the executive committee attended the view exchange meeting.
When asked about the progress in the money laundering case from the Bangladesh Bank Reserve, the CID chief said, "We are investigating the case, the investigation is almost in a good position."
Bangladesh government is also trying to bring back the stolen money. Besides, there is also a case registered in a court in New York regarding this. The judge in that case in New York has already concluded the hearing, the CID chief said.
"Without the support of Interpol, we will not be able to arrest the accused," he added.
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He, however, said, what we want is how to bring back the fund.
Replying to a question, the CID chief said: "Although the Bangladesh Bank was not technologically sound when the forex reserve was stolen, the Bangladesh Bank's Governor recently informed us that they have already overcome the problem and there is no more technological weakness. Now they are technologically sound."
International hackers stole $101 million from the Bangladesh Bank account with the Federal Reserve Bank through fraudulent instructions against their target of about $1 billion in February 2016.
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Bangladesh has so far recovered around $18 million of the $81 million transferred to the Philippines. It was later suspected that Dridex malware was used for the attack.
On March 15, 2016, Deputy Director of Accounts and Budgeting Department of Bangladesh Bank Zubair Bin Huda lodged a case against unidentified people under Money Laundering Prevention Act at Motijheel police station.
Death of Bangladesh Bank official: HC asks why failure to keep footpaths safe should not be declared illegal
The High Court has issued a rule over the death of a Bangladesh Bank official in the capital's Mouchak Market area. The High Court has asked why the failure of the government to keep footpaths safe should not be declared illegal.
The HC bench of Justice Mustafa Zaman Islam and Justice Md Atabullah came up with the rule following a writ petition filed by Supreme Court lawyer Advocate Mosharraf Hossain.
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Road Transport and Bridges secretary, home secretary, CEO of Dhaka South City Corporation, chairman of Rajdhani Unnayan Kartripakkha and Dhaka Deputy Commissioner have been made respondents to the rule.
However, the court did not pass any interim order in this regard. The High Court said that a case of unnatural death has been filed and investigation is underway. No interim order will be issued.
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Dipannita Biswas Dipa (Dipu Sana) was working as assistant manager of Sadarghat Branch of Bangladesh Bank. After work on January 10, she was walking home after getting down at Shantinagar from the office bus. When she came in front of the Party Centre at 1171 New Circular Road around 7:30 pm, a brick made of cement and sand suddenly fell on her head and she fell on the ground.
Later, locals took her to Sirajul Islam Medical College and Hospital where doctors declared her dead.
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Dipannita's husband Tarun Kumar Biswas filed a murder case at Ramna Model Police Station on the same day. Unknown people have been accused in the case. Dhaka Additional Chief Metropolitan Magistrate Sultan Sohag Uddin set February 18 for submitting the report in the case.
Special bonds issued to pvt banks to clear liabilities with power plants
In a significant move to stabilize its power sector, the Bangladesh government has secured Tk 2,062 crore through the issuance of special bonds. This initiative, aimed at clearing outstanding liabilities to private power plants, involves a collaboration with two prominent private banks: City Bank and Pubali Bank.
A comprehensive agreement was inked on Wednesday at the Secretariat, marking a critical step in addressing the financial challenges faced by the power sector. As per this agreement, the government will issue bonds worth Tk 1,985 crore to City Bank and Tk 77.50 crore to Pubali Bank, as confirmed by the Ministry of Finance.
Sources reveal that the government’s inability to disburse subsidy funds had left private power plants struggling to meet their financial obligations, leading some to the brink of insolvency.
Read: Bangladesh's imports drop over 18% in first half of FY2023-24
To counter this crisis, the government’s issuance of special bonds comes with an 8 percent coupon rate, mirroring the repo rate set by Bangladesh Bank. Notably, any future fluctuations in the repo rate will correspondingly adjust the bond interest rate.
At the term’s end, the government will settle the bank dues along with interest, subsequently reclaiming these bonds. Unlike typical 15–20 year bonds, these special bonds have a maximum tenure of 10 years, a move tailored to the urgent needs of the power sector.
Key players in the power sector, including Summit Power, United Power, Confidence Power, Baraka, Kushiara, Doreen, and Akron Power, are among the beneficiaries of this initiative. The Finance Division also disclosed plans for phased agreements with other banks, including BRAC Bank and Bank Asia, to further address the sector’s liabilities.
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Reflecting on the agreement’s significance, managing directors of several banks expressed optimism. While banks can leverage these bonds with Bangladesh Bank, it provides the government with crucial financial breathing space.
This strategic financial maneuver stands as a testament to the government’s commitment to ensuring the stability and sustainability of Bangladesh’s power sector.
BB announces new monetary policy to tackle inflation
Bangladesh Bank (BB) on Wednesday announced a contractionary monetary policy statement for the second half of the fiscal year 2023-24 to tame inflation.
“The central bank’s priority is to control inflation at any cost. To do this we set a policy of controlling currency flow outside the bank for another step to curb the growing inflation,” said Abdur Rouf Talukder, governor of the central bank.
Bangladesh has revised down the economic growth projection for FY 2023-24 to 6.5 percent from the initial 7.5 percent considering the ongoing challenges in the financial sector.
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The authorities, however, revised the projection for inflation upwards to 7.5 percent from 6 percent as consumer prices persistently stayed high, according to the monetary policy statement.
The governor said that the central bank wants to bring down inflation to 7.5 percent by June. For this, the policy interest rate has been increased by 25 percentage points to 8 percent in the new monetary policy.
He said that the monetary target is downgraded to curb money supply cutting down private sector credit growth to 10 percent for June from the existing target of 11 percent.
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According to the new policy, the interest rate is being increased from 7.75 percent to 8 percent.
As a result, the interest rate of the money, which other banks will borrow from the BB, will increase.
Besides, the central bank hints to increase the reverse repo rate (now called the Standing Deposit Facility or SDF) minimum interest rate by 75 percentage points from 5.75 percent to 6.50 percent. If there is surplus money in the market, the central bank withdraws the money through reverse repo.
The cap on the special repo or standing lending facility (SLF) interest rate in the policy interest corridor has been reduced by 25 basis points to 9.50 percent from 9.75 percent. This will reduce the cost of borrowing money from the BB during liquidity crises in banks.
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The monetary policy announced for the first half of the current financial year (up to December) targeted private sector credit growth at 10.9 percent. But this target of credit growth like inflation has not been achieved. And till last November, credit growth in the private sector has been achieved at 9.90 percent, which is 1 percent less than the target.