Corporate
National Bank under provision deficit and intense financial crisis
Private Commercial National Bank has been suffering from severe financial crisis for two years. The bank is now planning to raise 100 million dollars or 1000 crores of funds from foreign sources through foreign bond issue to fulfill the regulatory capital requirements.
Meanwhile, Bangladesh Bank is planning to appoint an administrator to the bank, which is facing a provision deficit and financial crisis.
According to the data of Bangladesh Bank, the bank’s capital deficit at the end of June this year stood at Tk 300 crore and due to high non-performing loans, the bank also faced a huge provision deficit of Tk 7,115 crore in June. Provisions are funds set aside by banks to compensate for future losses.
According to information published on the Dhaka Stock Exchange (DSE) website on Sunday, the board of directors of the bank has decided to issue seven-year bonds worth $100 million in foreign currency subject to the approval of regulatory authorities.
National Bank will be the first private bank to issue foreign currency bonds to raise funds from foreign investors.
Managing Director of the bank. Mehmood Husain, when contacted, said the fund had to be raised due to high non-performing loans eroding the bank’s capital.
Mehmood Husain said that they are trying to collect funds from US and UK-based investors. Foreign funds are not just banks; He commented that it will be good for the country.
The board of directors of the bank has approved the foreign currency bond as we have received preliminary assurances from the foreign investors after informing them about the high non-performing loans and the current financial situation, he said. The main reason behind the investment by foreign investors is that the bank’s asset base is quite strong.
He said that he wants to reorganize the bank’s business strategy by focusing on the SME sector to get out of the dependence on corporate loans.
As part of this, the bank plans to strengthen its capital by raising funds from domestic and foreign sources. Earlier in May, the bank announced to raise Tk 500 crore from domestic sources by issuing subordinated bonds to meet regulatory capital requirements.
National Bank’s capital adequacy ratio (CAR) for risk-weighted credit exposure stood at 9.38pc in June, which is required to be at least 10pc as per the regulatory body’s conditions.
According to Bangladesh Bank, the bank’s capital deficit at the end of June this year stood at Tk 300 crore. Increasing defaults due to huge loan non-conformities squeeze the bank’s capital.
The bank’s non-performing loan ratio stood at 23.24pc in June, the second highest among private sector banks. The bank also faced a huge provision deficit of Tk 7,115 crore in June as a result of high non-performing loans.
Provisions are funds set aside by banks to compensate for future losses. High NPLs require banks to maintain higher provisioning, which is collected from profits.
A growing provisioning deficit erodes banks’ capital which constricts banks’ ability to lend, putting public money at risk.
The bank posted a loss of Tk 190 crore in the first six months of this year under the pressure of growing provision deficit and capital loss.
Even after Bangladesh Bank appointed an observer to the board of directors of the bank in 2014, the financial condition of the National Bank has been deteriorating for the past two years. The bank’s share price on DSE has remained below the face value of Tk 10 for the last two years due to deteriorating financial indicators.
Bangladesh Bank identified the bank as one of the 10 weakest banks after new governor Abdur Rauf Talukder took charge. In a recent press conference, the governor said about identifying 10 weak banks, the central bank will sit with them one-on-one to improve the condition of the banks.
Banks are classified on the basis of their capital shortfall, NPL ratio, provisioning and loan-deposit ratio.
The governor has already held a meeting with the owners and top management on the financial performance of the National Bank. The central bank is now planning to appoint an administrator to the bank, a Bangladesh Bank source said.
Bangladesh Bank suspended the loan operations of the bank in May last year in the context of liquidity crisis caused by huge loan irregularities.
The moratorium was later lifted in December when liquidity conditions improved. But even after the long moratorium, the central bank was forced to go into moratorium again in May this year due to the continued irregularities in the bank loans. However, this time Bangladesh Bank limited the credit sector by giving a partial suspension.
Bangladesh has taken a significant step towards enhancing its digital financial services as NAGAD Limited and Huawei Technologies signed a landmark agreement. The deal aims to revolutionize the country’s digital transaction experience by integrating world-class smart transaction technologies through NAGAD’s digital banking and mobile financial services.
The agreement, signed on Tuesday (July 9) at Beijing’s Shangri-La Hotel in the presence of Prime Minister Sheikh Hasina, marks a pivotal moment for Bangladesh’s digital economy. It underscores the commitment to bolstering digital banking capabilities, ensuring that customers of NAGAD can enjoy seamless international transactions anytime, anywhere.
Representing NAGAD, the agreement was endorsed by its founder and CEO, Tanvir A. Mishuk. Among the dignitaries present were Finance Minister Abul Hassan Mahmood Ali, Foreign Minister Dr. A.K. Abdul Momen, Adviser to the Prime Minister on Industry and Investment Affairs Salman F Rahman, State Minister for Posts, Telecommunications, and Information Technology Junaid Ahmed Palak, and NAGAD’s Chairman Farid Khan.
Huawei’s South Asia Region President and CEO Pan Yunfei signed the agreement on behalf of Huawei. Several senior officials from the Chinese government were also in attendance, highlighting China’s support for Bangladesh’s economic growth and digital inclusion efforts.
Chairman of NAGAD Digital Bank, Farid Khan, commented on the significance of the agreement, stating that over the past five years, Bangladesh has seen a profound transformation in its financial landscape. Now, with global collaboration on the horizon, NAGAD and Huawei aim to propel Bangladesh towards a smarter future. NAGAD’s digital banking initiative will play a pivotal role in achieving a Smart Bangladesh, fostering significant advancements in the country’s economic framework.
The Bangladesh Telecommunication Regulatory Commission (BTRC) has issued a show cause notice to Grameenphone due to an excessive number of call drops. The telecom operator could face a fine of up to Tk 300 crore if it fails to provide a satisfactory explanation.
The notice was issued on July 1.
Junaid Ahmed Palak, the State Minister for Posts, Telecommunications and Information Technology, informed journalists of this development after inaugurating the GPT platform ‘G-Brain’ at the ICT Tower in Agargaon, Dhaka, on Wednesday afternoon.
“We have issued an initial show cause notice to Grameenphone. Further analysis is underway. If they can provide a valid explanation, they may be pardoned as they were last time. However, if they fail to justify their actions properly, BTRC can impose fines ranging from Tk 100 crore to Tk 300 crore,” stated Palak.
He added, “We had asked for explanations from four mobile network operators (MNOs) regarding our test drive on July 30.”
The BTRC conducts ‘Quality of Service (QoS) Drive Tests’ to verify the service quality of mobile phone operators, checking voice calls, data, and network coverage.
Engineer Md. Mahiuddin Ahmed, Chairman of BTRC, mentioned that voice and data services on Grameenphone’s network did not meet the expected standards in the drive test. The BTRC is investigating the reasons behind this shortfall.
“If any operator fails to maintain the expected service quality, BTRC will take action. Customers should not suffer any inconvenience,” emphasized the BTRC Chairman.
According to the Quality of Service (QoS) guidelines, there is a provision for up to 2% call drops for voice calls. For call setups, BTRC has set a specific time limit of seven seconds. Additionally, a minimum download speed of 7 Mbps is required for 4G technology.
Inspira Hosts Policy Dialogue on MSME Digital Security and Data Protection
Dhaka, June 9, 2024 – Inspira, in collaboration with USAID, DAI, and DCCP, successfully organized a Policy Dialogue addressing the digital security and data protection challenges faced by MSMEs. The event gathered industry leaders and government officials to deliberate on these critical issues.
Md Ziaul Haque Bhuiyan, Chief of Staff of ShopUp and former President of JCI Bangladesh, shared valuable insights during the dialogue. The event was graced by Md Shamsul Arefin, Secretary of the ICT Division, as the Chief Guest. Other notable attendees included Salahuddin Mahmud from the SME Foundation, Khalilur Rahman, Director General of BTRC, Abu Saed Kamruzzaman, Director General of NCSA, and Samira Zuberi Himika, Chairperson of Inspira.
Key Points Discussed:
Restricting Betting Services:
- Issue: Online betting services are causing financial losses for many individuals.
- Discussion: Implementing stricter regulations to limit access and protect users from financial harm.
Regulation of Grey Channel Devices:
- Issue: Unauthorized smartphones and laptops with unmonitored apps are entering the market.
- Discussion: Enhancing regulatory oversight to ensure visibility and security of imported electronic devices.
Data Storage Concerns with CCTV Cameras and VTS:
- Issue: Sensitive data from CCTV cameras and Vehicle Tracking Systems is being stored overseas.
- Discussion: Expanding BTRC’s regulatory scope to include these devices and ensure data security.
Digital Security Education:
- Issue: There is a lack of awareness and education on digital security and data protection.
- Discussion: Integrating these topics into the national education curriculum and enhancing public awareness through eCAB, BASIS, and media campaigns.
Government Officials Using Insecure Email:
- Issue: The use of Gmail by government officials poses security risks.
- Discussion: Promoting the use of secure, government-approved email services for official communication.
OTP Awareness Challenges:
- Issue: Misunderstandings about OTP security are affecting delivery services.
- Discussion: Educating the public on proper OTP usage to enhance security and service efficiency.
Policy on Digital Page Ownership:
- Issue: There is a lack of clear policies on digital page ownership and management.
- Discussion: Developing policies to protect content creators and regulate digital page ownership.
The Policy Dialogue underscored the necessity for comprehensive strategies and collaborative efforts to bolster digital security and data protection for MSMEs in Bangladesh. By addressing these issues, the event aimed to create a safer and more secure digital environment for businesses and individuals alike.
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