Bank-Insurance
Liabilities hikes as Profits drops: CB
The overseas branches of Bangladeshi banks are not doing well due to financial losses and rampant irregularities, which reflects on the financial condition of last year, 2021.
At the very end of the month of the previous year, overseas branches’ net profits stood at $4.30 million, which is 1pc lower than the previous year, according to the latest data from Bangladesh Bank (BB).
It stated the total liabilities of the overseas branches of local banks stood at $315.03 million at the end of 2021, which is $31.32 million higher than the previous year.
The customers’ deposits are consisting of 87.45pc of the total liabilities, said the BB data.
Almost all the overseas branches and exchange houses are incurring losses because their expenses far exceed their income, said Mohammed Nurul Amin, former chairman of the Association of Bankers, Bangladesh (ABB).
Now overseas operations are shutting down because of scams and irregularities, he added.
The customers’ deposits in overseas branches stood at $275.50 million last year, up from $223.31 million a year ago. On the other hand, loans and advances stood at $94.32 million, which is 11.76pc higher than the previous year.
Currently, three banks — Sonali, Janata and AB — have overseas banking operations with seven full-fledged branches in India and the United Arab Emirates.
However, 20 banks are providing overseas banking services for collecting foreign remittances and other activities through 25 exchange houses, seven representative offices and five subsidiary companies.
Central bank authorities told that prudent monitoring is required to ensure overseas branches’ proper compliance with the regulations imposed by the regulators of both home and host countries.
Over the past few years, Janata Bank, Sonali Bank, Agrani Bank, National Bank, Exim Bank, Pubali Bank, Prime Bank, AB Bank and Mutual Trust Bank shut down their overseas branches and exchange houses in multiple countries after suffering huge financial losses.
The National Bank shut its exchange house in the United States in February this year. The bank’s Managing Director Md Mehmood Husain said they had to do that because the exchange house incurred losses for several years.
He added, “Not just National Bank, most of the subsidiaries of other banks are also incurring losses too due to a lack of in-depth planning. However, we still have exchange houses in Malaysia, Singapore, Greece and Maldives, and they are profitable.”
Agrani Bank and Exim Bank also closed their exchange houses in Canada last year. Mehmood said, “Most of the banks opened overseas branches and exchange houses in western countries on emotion, instead of running surveys first to check the feasibility of the move.
“The lack of in-depth survey, proper planning and having no idea about the coverage area are the key reasons behind the closure of these subsidiaries.”
He added, “The overseas branches and exchange houses also needed big investments in the necessary technology to carry out business, but most of the banks did not make adequate investments for this.”
In light of the current situation, Bangladesh Bank has mandated that all banks and financial institutions refrain from charging additional fees for late payments of credit card bills and loan installments.
The central bank issued this directive through two separate notifications on Wednesday, providing a significant relief measure to the financially burdened.
Borrowers and credit card holders who were required to make payments during the curfew and public holidays now have until July 31 to settle their dues. Bangladesh Bank has explicitly stated that banks and financial institutions are prohibited from imposing any extra interest, penalties, or late fees for installments or credit card bills due between July 18 and 25. Furthermore, no savings schemes shall be canceled for non-payment of installments during this period.
The central bank’s notification acknowledges that many borrowers and credit card users have struggled to meet their payment deadlines due to the prevailing circumstances.
Additionally, numerous depositors have been unable to make timely deposits into various savings schemes, including the Deposit Pension Scheme (DPS). To address these challenges, the new guidelines will be in effect from July 18 to 25, covering dues on loans, credit card bills, and savings scheme installments.
According to the directive, if the outstanding loan and credit card payments are settled by July 31, any accrued interest, penalty interest, additional interest, excess profit, or late fees will be waived. Similarly, if savings scheme installments are paid by July 31, no late fees or penalties will be imposed.
Moreover, any interest, penalty, or late fee already collected on loans, credit cards, or savings schemes must be refunded or adjusted, as per the Bangladesh Bank directive.
The Bangladesh Bank (BB) has announced an extension for the payment period against imports of industrial raw materials from 180 to 360 days, a measure now set to remain in place until December 2024. This policy, initially scheduled to end in June of this year, has been prolonged to facilitate trade transactions, according to a BB circular issued today.
“To support trade transactions, it has been decided to extend the policy support until December 31, 2024. The extended usance period will not apply to imports under EDF loans, as previously stipulated. All other relevant instructions remain unchanged,” the circular stated.
To ensure timely payment of salaries and bonuses to garment industry workers before Eid-ul-Azha, the branches of banks in key industrial areas will remain open on a limited basis on June 14, 15, and 16.
The Bangladesh Bank (BB) issued a notification stating that bank branches in Dhaka metropolitan, Ashulia, Tongi, Gazipur, Savar, Bhaluka, and Narayanganj will operate on these days to facilitate financial transactions for garment sector employees.
Typically, Friday and Saturday (June 14 and 15) are weekly holidays, and Sunday (June 16) will be closed for Eid. Despite these closures, the BB has mandated that banks in industrial regions stay open to manage the disbursement of wages and bonuses and facilitate the sale of export bills.
Additionally, bank branches in Chattogram metropolitan and industrial areas will also be open to support garment workers’ payments and the processing of export bills.
The BB has instructed banks to coordinate with local authorities to ensure adequate security at the branches during this period.
Eid-ul-Azha, one of the most significant religious festivals for Muslims, will be celebrated in Bangladesh on June 17.
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