Nine banks lagging behind in global trade

Nine commercial banks which started their functionalities in 2012 are not being able to enter affiliations with the prominent banks of foreign countries. These nine banks were licensed directly under political consideration. Besides, there are allegations that the directors of these banks interfere with banking activities flouting regulations.

Most of the economists of Bangladesh had suggested the government at that time not to authorize any new banks but Finance Minister AMA Muhith allowed these banks to emerge defying the advice of financial experts.

These nine banks have meanwhile become inflicted with colossal irregularities and corruption as a result of which foreign organizations are not showing eagerness to set up any commercial ties with these banks. 

Reports about the inefficiency and graft of these nine banks have become exposed in the international arena which has discouraged foreign banks, relevant sources have informed. 

Thus these nine banks are not being able to expand their business with overseas partners. However, these banks have opened 95 nostro accounts with just a few banks in some other countries. 

Out of these 95 nostro accounts, 27 accounts have been opened with Mashreq Bank of United Arab Emirates (UAE). These nine banks have opened accounts with some banks of India, Pakistan and South Korea too.

But these nine politically allied banks could not set up business relations with any banks which play major roles in international commerce such as Standard Chartered Bank, HSTC, JP Morgan etc. 


Senior bankers have said that banks cannot conduct business in the global market without having sufficient numbers of nostro accounts with renowned foreign counterparts. 

As these nine banks do not have business attachments with front-ranking foreign partners, these banks cannot contribute to the expansion of Bangladesh's international trade. Doing international business is difficult and expensive without having strong commercial partnerships with famed banks in foreign countries.

International banks always judge the level of good governance, capability to halt money laundering, capital strength, defaulted loans, transparency and compliance standard of banks from other countries before signing business contracts. 

Since most of the state-owned and private banks of Bangladesh including these nine banks are heavily bogged down with defaulted loans, financial scams and uncontrolled corruption, it has become very tough to convince foreign banks to pack hands with these nine banks for business purposes.  

Dr Taufiq Ahmed Chowdhury, Director General of Bangladesh Institute of Bank Management (BIBM) has said that the foreign banks are not coming up to work with the new banks of Bangladesh because there is much business risk. 

Banks in this country are not at all free of corruption which is known to all international banks, he remarked. In this way the magnitude of losses of these nine banks is most likely to further multiply, according to Dr Taufiq Ahmed Chowdhury's views.

South Bangla Agriculture and Commerce Bank (SBAC) has so far opened 15 nostro accounts with foreign counterparts including Mashreq Bank of UAE, United Bank of India, National Bank of Pakistan, Habib Bank of Pakistan, Axis Bank of India and State Bank of India.

The lowest number of nostro accounts has been opened by NRB Global Bank. Its foreign accounts are with Mashreq Bank of UAE, United Bank of India, Kookmin Bank of South Korea and NIB Bank of Pakistan.

Accounts according to banking sources, NRB Commercial Bank has 10 nostro accounts with Mashreq Bank of UAE, Habib Bank of Pakistan, United Bank of India, National Bank of Pakistan and Kookmin Bank of South Korea.

Reportedly Modhumoti Bank, Meghna Bank and Midland Bank have 13 nostro accounts each. Union Bank has 8 nostro accounts while NRB Bank has 9 nostro accounts. NRB Bank has nostro accounts with National Commercial Bank of Saudi Arabia. 

Meghna Bank has nostro accounts with Al Jazira Bank of Kuwait and Bank of New Zealand. Midland Bank has nostro accounts with National Australian Bank and Commerce Bank of Frankfurt.

On the other hand, Farmers Bank which is deeply immersed in perils due to its top management's irregularities, reportedly has 10 nostro accounts most of which are with Mashreq Bank of UAE and Habib Bank of Pakistan.

Former finance adviser to caretaker government Dr. Mirza Azizul Islam told The Asian Age, "The first job of all banks is to ensure the safety of depositors. 

However, banks have to work for the country's business enhancement in global trade as well. The authorities concerned need to find out through proper scrutiny for what reasons the new banks are lagging behind in international business."

Dr Ahsan H Mansur, Executive Director, Policy Research Institute (PRI) said to The Asian Age, "The regulatory authorities like Finance Ministry and Bangladesh Bank should look into the drawbacks of the new banks. 

It is known to all that the banking administration in Bangladesh is not in good shape. Political influence is harmful for all banks irrespective of new or old ones. The government should try its best to keep banks free of intervention from political leaders."

Professor Anu Muhammad, Jahangirnagar University told The Asian Age, "New banks have been approved to enable the corrupted people to plunder more and more money from the banking system. 

Corrupted people always exercise high influence on banks in alliance with immoral politicians. Finance Ministry, Bangladesh Bank and all other government agencies clearly know who are destroying banks but unfortunately there is no remarkable action."

Source: https://dailyasianage.com

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