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Seminar on Sustainability Reporting and Fund Transfer Pricing of Banks held in BIBM

A daylong seminar was held at the Bangladesh Institute of Bank Management (BIBM) on 27 July, 2017 in its auditorium. Paper titled " Sustainability reporting practices in banks of Bangladesh" and Fund transfer pricing of commercial banks: status and measures for implementing in banks of Bangladesh” were presented in the seminar Dr.Prashanta kumar Banerjee,  Professor  & Director (RD&C)  and Md. Alamgir, Associate Professor, BIBM. Other members of the team are Mohammed Sohail Mustafa, Associate Professor, BIBM;Dr.Md.Mahabbat Hossain, Assistant Professor, BIBM; Md.Abdul Halim, Lecturer,BIBM;Nahid Rahman, Joint Director, Bangladesh Bank; Imran Ahmed, FCA,CISA, Chief Operating Officer, NRB Bank Limited. Toufic Ahmad Choudhury, director general of BIBM chaired the seminar. Abu Hena Mohd. Razee Hassan, deputy governor of Bangladesh Bank was also present as a chief guest. 

Razee Hassan said, Bangladesh achieved more than 7.1 growth rate in 2016 which was higher than the average in peer Asian economics, making Bangladesh the 3rd best growth performer in Asia. In this growth trajectory, Bangladesh is facing the twin problems like protecting the environment and promoting economic development in the ethically/ socially responsible manner. A tradeoff between environmental protection covering social interest and development is therefore necessary.

In this changing expectation in Bangladesh, economic units contributing to economic development must account for the way they affect the communities and environment where they operate. At present, climate change; community health, education and development; and business sustainability are some of the most pressing issues. This raises the importance of accurately and transparently accounting for and reporting these activities he added.

Deputy governor also said, Bangladeshi banks are also trying to cope up with this initiative undertaken across the globe.  Bangladesh Bank is playing a vital role to oblige commercial banks for preparing sustainability reporting. In 2011, BB issued BRPD circular no. 02 on ‘Policy Guideline on Green Banking’ and advised commercial banks to publish Sustainability Report in standard format with external verification by December 31, 2013. As progress was not satisfactory, BB has revised the given deadline. Hence, new time line for publishing sustainability report under phase III was fixed on June 30, 2015 (GBCSRD circular number no. 08, 2013, BB).

 Afterwards, only three banks started to publish sustainability Report independently showing past performances, current activities, and future initiatives and the remaining banks are still lagging behind fulfilling regulatory compliance as these banks are loosely publishing information relating to sustainability reporting as part of its annual report he mentioned in the seminar.

According to a research of the Bangladesh Institute of Bank Management. About 58 percent of the bank branches in the country do not have any policy for transferring funds from one branch to another. This is an obstacle to maintaining proper liquidity, said the report styled 'Fund transfer pricing of commercial banks: status and measures for implementing in banks of Bangladesh'.

In the branch banking system, fund transfer from one branch to another is a normal phenomenon, said Helal Ahmed Chowdhury, supernumerary professor of the BIBM.  He said,However, in transferring funds, determining what would be the proper pricing is important. The pricing is also necessary for proper treasury and liquidity management, on which the bank's profitability depends, Chowdhury said.

According to the BIBM report, 62 percent of the banks do the pricing manually in transferring funds, while 85 percent do it through a committee.

In Bangladesh, banks do not follow unit banking but branch banking. In that case, if a branch has excess liquidity it is transferred to another branch or head office.

If proper interest is not given, the branch plunges into loss. If a bank has more loss-making branches, the bank's overall health suffers. Only seven banks do reporting following the global reporting initiatives guideline; 34 banks do not follow it at all, according to another report of the BIBM that was presented at the seminar.

Written by Manager

Wednesday 30th August 2017