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Bangladesh’s Banking Sector Grapples with Unprecedented Losses of Tk 92,261cr

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A recent assessment by the Centre for Policy Dialogue (CPD) sheds light on the alarming state of Bangladesh’s banking sector, revealing a staggering amount of Tk92,261 crore stolen through 24 major scams since the fiscal year 2008-09. CPD Executive Director Fahmida Khatun disclosed this unsettling figure during a press briefing on December 23, cautioning that the total loss might surge even higher if smaller irregularities, such as loan write-offs, rescheduling, and court stays, were considered. Khatun emphasized the three-and-a-half-fold surge in loan defaults since 2012, attributing it to various irregularities.

The consequences of these defaults are reverberating through both public and private banks, exacerbating liquidity crises and escalating provision deficits. Dr. Fahmida pointed to a worrying trend in the overall banking system, particularly highlighting concerns in state-owned banks, particularly the specialized banks.

She criticized the central bank’s role in safeguarding public funds, citing weak policy measures influenced by beneficiaries. Dr. Fahmida expressed concerns about the increasing influence of a consolidated group in controlling the country’s banking sector. The impact of attempts to control inflation through increased bank interest rates has been negligible, leading Dr. Fahmida to propose reinforcing the Competition Commission and calling for heightened monitoring of syndicates.

During the press conference, Professor Mustafizur Rahman, a distinguished fellow of CPD, emphasized the heightened risks in the current state of the economy. He drew attention to the substantial transfer of wealth from the poor to the rich due to excessive inflation and proposed coordinated measures involving interest rates and exchange rates.

In terms of income inequality, Rahman highlighted a drastic increase in the wealth gap, urging the importance of tax collection to ensure fairness in distribution. However, he expressed concern about the lack of improvement in revenue collection, warning against a situation where the entire income is spent on revenue expenditure, making development entirely dependent on loans.

In conclusion, the CPD researchers called for a shift in focus from taking loans for new large-scale infrastructures to advancing current projects and profitably managing existing infrastructures.

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Top Bank Executives Ordered to Address Currency Exchange Scandal

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The Bangladesh Bank has issued orders to the top executives of nine commercial banks, instructing them to transfer officials allegedly involved in foreign currency exchange irregularities at Hazrat Shahjalal International Airport. In a Thursday meeting, Deputy Governor Kazi Sayedur Rahman cautioned CEOs against the recurrence of such incidents, urging heightened oversight and security measures at airport booths.

Bangladeshi expatriate workers and travelers typically convert foreign currencies to Taka at bank booths and money exchangers upon returning to Bangladesh. However, some officials were found to be involved in exchanging foreign currencies directly without issuing proper vouchers or with fake vouchers, a practice considered money laundering.

The implicated banks include state-run Sonali, Janata, Agrani, and Probashi Kallyan, along with five private banks: Pubali, Jamuna, City, Mutual Trust, and Standard. The Anti-Corruption Commission (ACC) verified the allegations following a formal complaint, conducting a raid and investigation at Shahjalal Airport on Monday.

ACC officials discovered that foreign currency arriving at Shahjalal Airport, meant to be deposited through the banking channel, was being manipulated by unscrupulous officials. Some were purchasing dollars and selling them in the open market without proper documentation, and in certain cases, currencies were being smuggled abroad.

In-bound passengers frequently exchange US dollars, euros, riyals, ringgits, pounds, and dinars at the airport, according to ACC officials. The central bank’s directive aims to curb malpractices and ensure the proper handling of foreign currency transactions at the airport.

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Cenbank Grants Approval to 8 Additional CA Firms for Auditing

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Following a thorough assessment of appeals from various audit firms in alignment with the enlistment policy, Bangladesh Bank (BB) has opted to augment the existing roster by incorporating eight additional chartered accountant (CA) firms.

With this recent inclusion, a total of 39 audit firms now meet the criteria for auditing banks and finance companies, according to a circular issued by BB today.

This circular has been disseminated by Bangladesh Bank, exercising its authority as stipulated under section-39(1) of the Bank Company Act, 1991 (Amended up to 2023) and section-37(1) of the Finance Company Act, 2023.

As per the circular, a single firm is permitted to audit a maximum of six banks and finance companies within a financial year.

The enlisted audit firms (Chartered Accountants) are: Qasem & Co; Wahab & Co; ACNABIN; Ahmed Zaker & Co; Ahsan Manzur & Co; Anil Salam Idris & Co; Arun & Company; Aziz Halim Khair Choudhury; Basu Banerjee Nath & Co; Chowdhury Bhattacharjee & Co; Das Chowdhury Dutta & Co; Dewan Nazrul Islam & Co; G Kibria & Co; Hoda Vasi Chowdhury & Co; Hoque Bhattacharjee Das & Co; Howladar Yunus & Co; Hussain Farhad & Co; Islam Aftab Kamrul & Co; Islam Jahid & Co; K M Alam & Co; Kazi Zahir Khan & Co; Khan Wahab Shafique Rahman & Co; M J Abedin & Co; M M Rahman & Co; M Z Islam & Co; MABS & J Partners; Mahamud Sabuj & Co; Mahfel Huq & Co; Malek Siddiqui Wali; Masih Muhith Haque & Co; MRH Dey & Co; Nurul Faruk Hasan & Co; Pinaki & Company; Rahman Rahman Huq (KPMG); S. K. Barua & Co; Shafiq Basak & Co; Snehasish Mahmud & Co; Syful Shamsul Alam & Co; Zoha Zaman Kabir Rashid & Co.

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Cenbank Unveils Roadmap to Slash Default Loans Below 8% by 2026

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The Bangladesh Bank has unveiled a roadmap aiming to reduce default loans to below 8% by June 2026. As of September last year, default loans in the banking sector amounted to Tk1.55 lakh crore, approximately 10% of the total outstanding, according to Bangladesh Bank data.

he new roadmap is in line with the International Monetary Fund (IMF) conditions as part of a $4.7 billion loan package. It emphasizes the pivotal role of shareholder directors and managing directors in the recovery process. Furthermore, the central bank has modified the loan write-off policy, allowing banks to write off loans in two years instead of the previous three, potentially reducing default loans by 2.76%, equivalent to Tk43,300 crore.

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