BB asks SCBs to go for effective steps to check fraud at banks

FE Team | Published: September 25, 2012 00:00:00 | Updated: February 01, 2018 00:00:00

Siddique Islam
The central bank has asked four state-owned commercial banks (SCBs) for taking effective measures to improve internal control for checking fraud and forgeries, officials said Monday.
The instruction came at a meeting held at the Bangladesh Bank (BB) to review the memoranda of understanding (MoUs) of the four SCBs --- Sonali Bank, Janata Bank, Agrani Bank and Rupali Bank --- with BB Governor Atiur Rahman in the chair.
Excepting the Sonali Bank Limited, all other three SCBs' chief executive officers (CEOs)-cum-managing directors (MDs) were present at the meeting, while a deputy managing director of the largest state-owned commercial bank (Sonali Bank) attended the meeting.
The central bank earlier signed the MoUs with the managements of the SCBs to improve their financial performance by providing policy support.
"We've asked the CEOs of all the SCBs to improve internal control through strengthening their own monitoring and supervisions to check fraud and forgeries," a top central banker told the FE after the meeting.
He also said the CEOs will have to report to the central bank immediately if any irregularities are found in their banks.
"We've also asked the CEO's for taking necessary measures to properly implement the existing core risk guidelines to minimise their financial risks," the central bank official noted.
The BB earlier identified six core risk areas in the country's banking sector. The risk factors are: credit, asset and liability, foreign exchange, information technology, internal control and compliance, and money laundering.
The BB's latest directives came against the backdrop of rising trend of large-scale irregularities in the commercial banks, particularly in the SCBs in the recent months.
During the meeting, the SCBs have been asked for taking measures to settle all overdue accepted bills within the stipulated timeframe to ensure stability in the country's banking sector.
Earlier on September 13 last, the central bank asked the commercial banks to settle all overdue accepted bills amicably within the next 15 days to ensure discipline in the banking sector.
The meeting also reviewed various issues, including the position of non-performing loans (NPLs), liquidity position, credit growth, operating expenses, and cost of funds.
The BB also asked the SCBs at the meeting to gear up their drive for default loan recovery through strengthening their recovery cells.
The percentage of default loan of the SCBs reached 13.54 per cent in June 30 this year, whereas that of the country's banking sector average is 7.17 per cent, according to the central bank statistics.
The SCBs have been asked to take effective measures concerning NPLs, particularly against the top 20 defaulters, to improve their financial health, according to the central bank officials.