Special Correspondent :
Banks operating in Bangladesh often provide false and fabricated reports intentionally to Bangladesh Bank (BB) only to ‘show up in papers’ in compliance to the regulatory directives, a new study finds.
This frequent practice of banks aimed at concealing the real scenario of fragility of financial health, bad investment planned or at the final stage of approval or disbursement, and default loan and client-related sensitive information.
A new study titled “Cost of compliance with regard to regulations in Banks” carried out by Bangladesh Institute of Bank Management (BIBM) finds that a bank has to send a total of 263 reports to the central bank every month against various compliance necessities.
“In many cases, a report sent to the central bank has no similarity with the genuine status,” said the BIBM report, adding that, “bank is sending report in its favour.”
“This malpractice must be stopped,” the report observed. “Necessity of reports from bank-end also need to be justified,” it said. The report was discussed at a seminar held at BIBM auditorium in the city on Thursday.
BIBM Associate Professor Dr Mohammad Tajul Islam led the study.
Others of the study team included Rup Ratan Pine, Deputy General Manager of the Department of Banking Regulations and Policy of the central bank, BIBM’s Associate Professor Atul Chandra Pandit and BIBM Faculty Member Md. Abdul Kayum. In his speech, former Executive Director of the central bank Md. Yasin Ali said this cannot be taken into consideration that maintaining compliance has become difficult due to low rate of interest return against banks’ investments.
“Rather, look into the lowest rate of interest on lending to banks’ own directors,” he said.
BIBM Director General Toufic Ahmad Choudhury said compliance must be followed by banks for stability of the banking sector.
Helal Uddin Ahmed Choudhury, former managing director of Pubali Bank Ltd, said preparing report is not a problem nowadays because of improvement of technology.
“But, the number of reports seeking by central bank may be reduced. Because, central bank’s several departments look for same information which may be avoided,” he said.
Former economics Professor at University of Dhaka Barkat-E-Khuda said the number of compliance related reports needs to be justified to rationalise costs of banks.
“Compliance protects interests of all the parties (stakeholders),” he said.
