Dhaka, Bangladesh (BBN)- Four state-owned commercial banks (SoCBs) have been asked to implement the new credit policy by September 30, 2014 to improve their financial health through mitigating the risks of fraud and forgeries in the country's banking sector.
The central bank has also asked the SoCBs to introduce human resources development (HRD) and internal control and compliance polices by December 31 this year as per revised memoranda of understanding (MoUs) with them.
"We've revised the MoUs aiming to improve the overall financial health of the SoCBs by way of strengthening supervision and monitoring of the state-owned banks," Abu Hena Mohammad Razee Hassan, deputy governor of Bangladesh Bank (BB), was quoted by the Financial Express (FE), a local newspaper, as saying.
He also said those were target-oriented revised MoUs, which would come into immediate effect.
Talking to the FE, another BB official said the SoCBs have been asked to submit the revised MoUs to the central bank within September 30 after completing all types of official formalities.
The central bank was yet to receive any MoUs from the SoCBs until Sunday afternoon, he said. "We expect that the MoUs will be submitted to the department concerned of BB by today (Monday)," he added.
The BB earlier sent the copies of revised MoUs to four SoCBs and asked them to submit the revised MoUs after signing by both the chief executive officer (CEO) and the chairman of the board of directors of each bank.
The central bank has taken the latest measure against the backdrop of the rise in large-scale irregularities at the commercial banks, particularly at the state-run ones in the recent months.
Under the revised MoUs, the SoCBs will have to introduce credit policy and credit risk management guidelines by November 30, 2013 aiming to ensure credit discipline in the country's banking sector.
The SoCBs will have to take various steps to improve the level of efficiency of their officials concerned through arranging different training programmes.
"We've tried to specify responsibilities of both the officials and the boards of directors of the SoCBs in the revised MoUs to ensure good governance through strengthening supervision and monitoring in the banking sector," the BB official noted.
He also said the revised MoUs will come into effect from October this year.
"Quality of asset, liquidity position, credit growth, efficiency of the management and internal control and compliance have been considered as key areas of the revised MoUs," the central banker explained.
He also said the BB has prepared the revised MoUs in line with the findings of the diagnostic report on the four SoCBs.
The SoCBs - Sonali, Janata, Agarni and Rupali - have already been asked to strictly abide by the existing core risk management guidelines for improving their efficiency.
The central bank earlier identified six core risk areas in the country's banking sector - credit, asset and liability, foreign exchange, information technology, internal control and compliance, and money laundering.
BBN/SSR/AD-30Sept13-9:11 am (BST)
