Banks charging high fees for issuing certificates to update BO accounts
Kayes M Sohel | Tuesday, 17 June 2008
The commercial banks are doing brisk business by charging high fees for issuing bank certificates to update the existing Beneficiary Owners' (BO) accounts as per mandatory requirement of a Securities and Exchange Commission (SEC) order.
The SEC in its order said the BO accounts, if not regularised by June 30, will be closed.
The commercial banks are charging exorbitant fees at their whims ranging between Tk 250 -Tk 1200 for issuing a bank certificate.
Presently there are 1.5 million BO account holders and as per an SEC directive, all the account holders must submit a bank account certificate in favour of the respective investors within June 30 next.
The fee varied from bank to bank according to their service charge, bank officials said.
The SEC in consultation with the Bangladesh Bank directed all the public and private commercial banks to issue the bank certificate in order to prevent forgery in operation of BO accounts.
But the BB did not fix any fee in this regard which paved the way for indiscriminate charges.
Moksed Ali, an investor told the FE that a state-owned commercial bank's Banani branch demanded Tk 500 for a bank certificate.
When contacted, manager of Gulshan Branch of a private bank, Fazlul Haq admitted, " There is no direction of the central bank regarding fee for providing bank certificate."
"But the banks are taking their standard fee for the service and it varied from bank to bank, " he added.
Farhad Ahmed, executive director of the SEC also said, " There is no regulation of Bangladesh Bank about fixing the fee for issuance of bank certificate."
Economist Abu Ahmed termed taking fee from the clients 'unfair' and 'unjust'.
"The bank should provide bank certificate free of cost to their clients who are supposed to get such service," he added.
He also said, the central bank and securities regulator should look into the matter to stop charging fees at the bank's will immediately.
On October 31 of 2007, the SEC at a meeting decided that people interested in opening BO accounts and also regularise the existing accounts would be required to submit certificates from their banks to prevent forgery in the primary market operation.
The bank certificate would have to mention name of the account holder, the holder's signature, father's or husband's names, mother's name, address and account number.
Earlier in August last year, the SEC tightened the rules of opening and maintaining BO accounts, allowing the commission to forfeit the application money of initial public offerings for using fake BO accounts.
SEC recently set the month of September for paying Tk 300 as annual fee for maintaining a BO account.
Of the annual fee of Tk 300, a depository participant will get Tk 150, the CDBL will receive Tk 100 and the SEC will get Tk 50.
The SEC made the opening of BO account mandatory in late 2004.
The SEC in its order said the BO accounts, if not regularised by June 30, will be closed.
The commercial banks are charging exorbitant fees at their whims ranging between Tk 250 -Tk 1200 for issuing a bank certificate.
Presently there are 1.5 million BO account holders and as per an SEC directive, all the account holders must submit a bank account certificate in favour of the respective investors within June 30 next.
The fee varied from bank to bank according to their service charge, bank officials said.
The SEC in consultation with the Bangladesh Bank directed all the public and private commercial banks to issue the bank certificate in order to prevent forgery in operation of BO accounts.
But the BB did not fix any fee in this regard which paved the way for indiscriminate charges.
Moksed Ali, an investor told the FE that a state-owned commercial bank's Banani branch demanded Tk 500 for a bank certificate.
When contacted, manager of Gulshan Branch of a private bank, Fazlul Haq admitted, " There is no direction of the central bank regarding fee for providing bank certificate."
"But the banks are taking their standard fee for the service and it varied from bank to bank, " he added.
Farhad Ahmed, executive director of the SEC also said, " There is no regulation of Bangladesh Bank about fixing the fee for issuance of bank certificate."
Economist Abu Ahmed termed taking fee from the clients 'unfair' and 'unjust'.
"The bank should provide bank certificate free of cost to their clients who are supposed to get such service," he added.
He also said, the central bank and securities regulator should look into the matter to stop charging fees at the bank's will immediately.
On October 31 of 2007, the SEC at a meeting decided that people interested in opening BO accounts and also regularise the existing accounts would be required to submit certificates from their banks to prevent forgery in the primary market operation.
The bank certificate would have to mention name of the account holder, the holder's signature, father's or husband's names, mother's name, address and account number.
Earlier in August last year, the SEC tightened the rules of opening and maintaining BO accounts, allowing the commission to forfeit the application money of initial public offerings for using fake BO accounts.
SEC recently set the month of September for paying Tk 300 as annual fee for maintaining a BO account.
Of the annual fee of Tk 300, a depository participant will get Tk 150, the CDBL will receive Tk 100 and the SEC will get Tk 50.
The SEC made the opening of BO account mandatory in late 2004.