August, 2014

ANTI-VIRUS FOR BANK VIVA VOCE

(VERSION 1.0)

Hemal Jamiul Hasan

Dedicated To:

All Of My Friends & Enemies

 Anti-Virus For Bank Viva Voce- Version 1.0

Hemal Jamiul Hasan

BANGLADESH BANK
Governor

Dr. Atiur Rahman took the helm of the Central Bank of Bangladesh for four year tenure on
May 1, 2009 as the 10th Governor of Bangladesh Bank, the country's monetary policy
authority, financial sector regulator and supervisor. His tenure has been extended for
another term for three years and three months up to 2nd August, 2016 by which time he
will be 65.

Deputy Governor

MD. Abul Quasem, Abu Hena Mohd, Razee Hassan, Shitangshu Kumar Sur Chowdhury,
Nazneen Sultana

Establishment

Bangladesh Bank, the central bank and apex regulatory body for the country's monetary
and financial system, was established in Dhaka as a body corporate vide the Bangladesh
Bank Order, 1972 (P.O. No. 127 of 1972) with effect from 16th December, 1971. At
present it has ten offices located at Motijheel, Sadarghat, Chittagong, Khulna, Bogra,
Rajshahi, Sylhet, Barisal, Rangpur and Mymensingh in Bangladesh; total manpower stood
at 4951 (officials 3961, subordinate staff 990) as on November 30, 2012.

Functions

BB performs all the core functions of a typical monetary and financial sector regulator, and
a number of other non core functions. The major functional areas include :
Formulation and implementation of monetary and credit policies.

Regulation and supervision of banks and non-bank financial institutions, promotion and
development of domestic financial markets.

Management of the country's international reserves.

Issuance of currency notes.

Regulation and supervision of the payment system.

Acting as banker to the government.

Money Laundering Prevention.

1|Page

Copyright @ https://www.facebook.com/groups/bankingcareerbd/
 Anti-Virus For Bank Viva Voce- Version 1.0

Hemal Jamiul Hasan

Collection and furnishing of credit information.

Implementation of the Foreign exchange regulation Act.

Managing a Deposit Insurance Scheme

BUDGET
Budget 2014-15 (= Tk. 2, 50,506 crore (12.6% growth)

GDP growth target=7.3%

Inflation Target=7%

Annual Development Plan (ADP) = Tk. 80,315 crore (21.9% growth)

Revenue target= Tk. 1, 82,954 (9.3% growth)

Total deficit=Tk. 67,552

Borrowings from the banking sector=Tk. 31,221 crore

Highest Allocation= Public Services (Tk. 82,042 crore, 32.75% of total budget)

BANKING INDUSTRY
Total Schedule bank= 56 (State owned commercial bank 4 + State owned Specialized bank 4
+ Foreign bank 9 + Islamic shariah based commercial bank 8 + Private conventional
commercial bank 31)

Bank rate=5%

Repo rate=7.25%

Reverse repo rate=5.25%

Special repo rate=10.25%

Statutory reserve=20% of Profit before taxes

Capital Adequacy Ratio (CAR) =10% of total risk-weighted assets or Tk. 400 crore whichever
is higher.

CRR=6.5% (fortnightly basis) and 6% (daily basis) of net demand and time deposit

SLR=13% for conventional banks and 5.5% for Islamic shariah based banks
2|Page

Copyright @ https://www.facebook.com/groups/bankingcareerbd/
 Anti-Virus For Bank Viva Voce- Version 1.0

Hemal Jamiul Hasan

Call money rate=7.32% as on 05.08.14

Total Deposit=Tk. 668,358 crore as on 30.06.2014

Total Credit disbursed=Tk. 491,210 crore

Total classified loan=Tk. 51,345 crore (10.75% of total outstanding loan)

The average Spread of banks=5.22% (difference between weighted average lending rates
and deposit rates)

Registered Mobile Banking User=1.5 crore

Transactions through Mobile Banking=Tk. Over 6,500 crore per month

ECONOMIC INDICATORS
GDP=Tk. 13, 39,000 crore or 173.8 billion USD

Per Capita Income=1,190 USD

Point to point inflation rate=7.04% as on 31.07.14 that was 6.97% as on 30.06.14

Annual average inflation rate= 7.35% as on 30.06.14 that was 6.78% as on 30.06.13

New base year=2005-06

GDP growth=6.12% for 2013-14 fiscal year

Contribution of Sector to GDP= agriculture 19%, industry 30% and services 51% (2013)

Foreign Exchange reserve=22.11 billion USD as on 18.08.14

Export (July 13-June 14) =30.18 billion USD (11.65% growth)

Import (July 13-May 14) =36.78 billion USD (18.12 % growth)

Broad Money=Tk. 6, 82,160.80 crore as on May, 2014

Reserve Money=Tk. 83,366.80 crore as May, 2014

Reserve Money Multiplier=5.51 as on May, 2014

Current Account Balance= 1.543 billion USD as on May, 2014

3|Page

Copyright @ https://www.facebook.com/groups/bankingcareerbd/
 Anti-Virus For Bank Viva Voce- Version 1.0

Hemal Jamiul Hasan

CORE RISK MANAGEMENT

Bangladesh Bank has identified 6 core risks for management of the banks and has provided
the necessary guidelines for their implementation. The risks are:

1. Credit risk
2. Foreign exchange risk
3. Asset liability/balance sheet
4. Money laundering risk
5. Internal control and compliance risk
6. ICT risk

The prime objective of the risk management is that the bank takes well calculated business
risk to safeguard its capital, financial resources and growth of sustainable profitability.

CREDIT RISK can be described as potential loss arising from the failure of a counter party to
perform with agreed terms with the bank.

FOREIGN EXCHANGE RISK is defined as the potential change in earnings arising due to
unfavorable change in exchange rates.

BALANCE SHEET RISK is defined as potential changes in earnings due to changes in rate of
interest and exchange rates which are not trading nature.

MONEY LAUNDERING RISK is defined as the loss of reputation and expenses incurred as
penalty for being negligent in prevention of money laundering.

INTERNAL CONTROL AND COMPLIANCE RISK arises from error and fraud in operating
activities due to lack of standard internal processes, people and systems.

ICT RISK arises from unauthorized access to internal server, illegal tempering and malicious
actions in information systems.

HEAD OF HEADS
***Jim Yong Kim- 12th President of the World Bank

***Christine Lagarde-11th Managing Director of the IMF

*** Takehiko Nakao-ninth president of the Asian Development Bank

***Raghuram Rajan- 23rd Governor of Reserve Bank of India

***Mark Carney- Governor of the Bank of England

4|Page

Copyright @ https://www.facebook.com/groups/bankingcareerbd/
 Anti-Virus For Bank Viva Voce- Version 1.0

Hemal Jamiul Hasan

***Janet Yellen- 15th Chair of the Federal Reserve

***Mario Draghi- President of the European Central Bank

***Roberto Azevêdo- Director-General of the World Trade Organization (WTO)

***Ahmed Mohammed Ali Al-Madani- President of the Islamic Development Bank.

BASEL II
Three Pillars:

1. Minimum capital requirement

2. Supervisory review process
3. Market discipline

RISKS UNDER MINIMUM CAPITAL REQUIREMENT

1. Credit risk
2. Market risk
3. Operational risk

RISKS UNDER SUPERVISORY REVIEW PROCESS

1. Residual Risk: arises mainly out of error in documentation and error in valuation of
collateral.

2. Concentration risk: arises due to lacking of diversification of loan and investment

portfolios.

3. Interest rate risk: arises out of adverse and volatile movements in market interest rate.

4. Liquidity risk:

Funding liquidity risk: inability to meet its current and future cash flow and collateral needs.

Market liquidity risk: inability to offset or sell a position easily.

5|Page

Copyright @ https://www.facebook.com/groups/bankingcareerbd/
 Anti-Virus For Bank Viva Voce- Version 1.0

Hemal Jamiul Hasan

5. Reputation risk: arises from decline in the customer base, costly litigation due to adverse
perception of the stakeholders. It can originate from the lack of compliance, failure to meet
commitments, inefficient and poor quality customer service, lack of fair market practices,
unreasonably high costs and inappropriate business conduct.

6. Strategic risk: means the current or prospective risk to earnings and capital arising from
imperfection in business strategy formulation, inefficiencies in implementing business
strategy, non/less adaptability with the change in the business environment and adverse
business decisions.

7. Settlement risk: arises when an executed transaction is not settled as the standard
settlement system suggests or within predetermined method.

8. Environmental and climate change risk: the uncertainty or probability of losses that
originates from any adverse environmental or climate change events and/or the non-
compliance of the prevailing national environmental regulations.

9. Appraisal of core risk management practice.

10. Other material risk.

BANK'S REGULATORY CAPITAL

Bank's Regulatory Capital are categorized into three tiers:

TIER 1 CAPITAL called 'core capital' comprises of highest quality of capital elements that
consists of: a) paid up capital b) non-repayable share premium account c) statutory reserve
d) general reserve e) retained earnings f) minority interest in subsidiaries g) non-cumulative
irredeemable preference share h) dividend equalization account

TIER 2 CAPITAL called 'supplementary capital' represents other elements which fall short of
some of the characteristics of the core capital but contribute to the overall strength of a
bank and consists of: a) general provision b) revaluation reserves (for fixed assets, securities,
equity instrument etc) c) all other preference share d) subordinated debt

TIER 3 CAPITAL called 'additional supplementary capital' consists of short term subordinated
debt (original maturity less than or equal to five years but grater than or equal to two years)
would be solely for the purpose of meeting a proportion of the capital requirements for
market risk

***According to Bangladesh Bank's instruction, all banks have to maintain regulatory

CAPITAL ADEQUACY RATIO (CAR) at minimum 10% from July, 2011.

6|Page

Copyright @ https://www.facebook.com/groups/bankingcareerbd/
 Anti-Virus For Bank Viva Voce- Version 1.0

Hemal Jamiul Hasan

CENTRAL BANK
Country - Central Bank - Established in - Currency:

1. Nepal - Nepal Rastra Bank - 1956 - Nepalese Rupee

2. Bhutan - The Royal Monetary Authority - 1982 - Ngultrum

3. China - People's Bank of China - 1948 - Renminbi (yuan)

4. Pakistan - State Bank of Pakistan - 1948 - Pakistani Rupee

5. Sri Lanka - Central Bank of Sri Lanka - 1950 - Srilankan Rupee

6. Maldives - Maldives Monetary Authority - 1981 - Maldives Rufiyaa

7. Myanmar - Central Bank of Myanmar - 1998 - Myanmar Kyat

8. Afghanistan - Da Afghanistan Bank - 1939 - Afghani

9. India - Reserve Bank of India - 1935 - Indian Rupee

10. Malaysia - Bank Negara Malaysia - 1959 - Malaysia – Ringgit

TOP 8 MOST TRADABLE CURRENCIES

1. U.S. Dollar (USD)
Central Bank: Federal Reserve (Fed)

2. European Euro (EUR)

Central Bank: European Central Bank (ECB)

3. Japanese Yen (JPY)

Central Bank: Bank of Japan (BoJ)

4. British Pound (GBP)

Central Bank: Bank of England (BoE)

5. Swiss Franc (CHF)

Central Bank: Swiss National Bank (SNB)

6. Canadian Dollar (CAD)

Central Bank: Bank of Canada (BoC)

7|Page

Copyright @ https://www.facebook.com/groups/bankingcareerbd/
 Anti-Virus For Bank Viva Voce- Version 1.0

Hemal Jamiul Hasan

7. Australian/New Zealand Dollar (AUD/NZD)

Central Bank: Reserve Bank of Australia / Reserve Bank of New Zealand (RBA/RBNZ)

8. South African Rand (ZAR)

Central Bank: South African Reserve Bank (SARB)

INTERNATIONAL FINANCIAL INSTITUTES

1. The World Bank (Breton Woods Conference in 1944) differs from the World Bank Group,
in that the World Bank comprises only two institutions: the International Bank for
Reconstruction and Development (IBRD- 188 members) and the International Development
Association (IDA- 172 members), whereas the latter incorporates these two in addition to
three more: International Finance Corporation (IFC), Multilateral Investment Guarantee
Agency (MIGA), and International Centre for Settlement of Investment Disputes (ICSID). The
IBRD aims to reduce poverty in middle-income and creditworthy poorer countries, while IDA
focuses exclusively on the world’s poorest countries. Its headquarters are in Washington,
D.C., United States.

2. The International Monetary Fund (IMF) is an international organization that was initiated
in 1944 at the Breton Woods Conference and formally created in 1945 by 29 member
countries. The IMF describes itself as “an organization of 188 countries, working to foster
global monetary cooperation, secure financial stability, facilitate international trade,
promote high employment and sustainable economic growth, and reduce poverty around
the world.” The organization's stated objectives are to promote international economic
cooperation, international trade, employment, and exchange rate stability, including by
making financial resources available to member countries to meet balance of payments
needs. Its headquarters are in Washington, D.C., United States.

3. The Asian Development Bank (ADB) is a regional development bank established on 22

August 1966 to facilitate economic development of countries in Asia. From 31 members at
its establishment, ADB now has 67 members - of which 48 are from within Asia and the
Pacific and 19 outside. Its Headquarter is in Manila, Philippines, with 27 resident missions
and 3 representative offices in Tokyo, Frankfurt, and Washington, DC.

4. The New Development Bank (NDB), formerly referred to as the BRICS Development
Bank, is multilateral development bank operated by the BRICS states (Brazil, Russia, India,
China and South Africa) as an alternative to the existing US-dominated World Bank and
International Monetary Fund. The Bank is set up to foster greater financial and development
cooperation among the five emerging markets. Together, the four original BRIC countries
comprise in 2014 more than 2.8 billion people or 40 percent of the world’s population,
cover more than a quarter of the world’s land area over three continents, and account for
more than 25 percent of global GDP. It will be headquartered in Shanghai, China. Unlike the
World Bank, which assigns votes based on capital share, in the New Development Bank each
participant country will be assigned one vote, and no countries will have veto power.

5. The Asian Infrastructure Investment Bank (AIIB) is an international financial institution

proposed by China. AIIB is regarded as a rival for the IMF, the World Bank and the Asian
8|Page

Copyright @ https://www.facebook.com/groups/bankingcareerbd/
 Anti-Virus For Bank Viva Voce- Version 1.0

Hemal Jamiul Hasan

Development Bank (ADB) which the AIIB says are dominated by developed countries like the
USA and Japan. The bank, with US$100 billion as its start-up capital, is scheduled to make its
debut by the end of this year with the aim of financing key infrastructure projects in Asian
countries.

DIFFERENT LAWS
Banks have to comply with the requirements of following regulatory and legal authorities:

1. The Bank Companies Act, 1991 (amended up to 2013);

2. The Companies Act, 1994;

3. Rules and regulations issued by BB.

4. The Bangladesh Securities and Exchange Rules 1987, The Bangladesh Securities and
Exchange Ordinance 1969, The Securities and Exchange Commission Act 1993, The
Bangladesh Securities and Exchange Commission Rules 2006;

5. The Income Tax Ordinance 1984;

6. The VAT Act 1991;

7. The Negotiable Instruments Act 1881

8. Other laws and regulations as applicable...

NON BANK FINANCIAL INSTITUTE

No. of NBFIs=31 (Govt.-owned 3 + Joint Venture 10 + Private 18) and additional 2 NBFIS are
under process to get license

Regulated by= ‘Financial Institution Act 1993’ followed by the ‘Financial Institute Regulation
1994’

Minimum paid up capital=Tk. 1 billion

Sources of fund=Issuance of IPO, term deposit, credit facility from banks and other NBFIs,
call money, bond, securitization etc.

Some names of NBFIs= Uttara Finance and investment limited, United Leasing Company
limited (ULCL), LankaBangla Finance Ltd, IDLC Finance limited etc.

9|Page

Copyright @ https://www.facebook.com/groups/bankingcareerbd/
 Anti-Virus For Bank Viva Voce- Version 1.0

Hemal Jamiul Hasan

CREDIT RATING COMPANIES

Credit rating Information and Services Ltd (CRISL)

Credit rating Agency of Bangladesh Ltd (CRAB)

National Credit Ratings Ltd

Emerging Credit Rating Ltd

ARGUS Credit Rating Services Ltd

WASO Credit Rating Company (BD) Limited

Alpha Credit Rating Limited

The Bangladesh Rating Agency Limited

CAMELS RATING
An international bank-rating system where bank supervisory authorities rate institutions
according to six factors.

The six factors examined are as follows:

C - Capital adequacy
A - Asset quality
M - Management quality
E - Earnings
L - Liquidity
S - Sensitivity to Market Risk

Bank supervisory authorities assign each bank a score on a scale of one (best) to five (worst)
for each factor. If a bank has an average score less than two it is considered to be a high-
quality institution, while banks with scores greater than three are considered to be less-
than-satisfactory establishments. The system helps the supervisory authority identify banks
that are in need of attention.

10 | P a g e

Copyright @ https://www.facebook.com/groups/bankingcareerbd/
 Anti-Virus For Bank Viva Voce- Version 1.0

Hemal Jamiul Hasan

BANK’S OFF BALANCE SHEET ITEM

Off-balance sheet items including:

Letters of credit,

Inland bill purchase (IBP),

Foreign bill purchases (FBPs),

Loans against trust receipts (LTRs),

Bills for collection,

Payment against documents (PADs) and

Loan against imported merchandise (LIM)

MONETARY POLICY JULY-DEC 2014(18th)

Basic character="The basic character of the MPS is that it is investment-friendly but the
central bank took a cautious stance with a focus on inflation,"

Private sector credit growth target= 16.5% (14% for domestic source + 2.5% for foreign
source)

Public sector credit growth target=12.9% (22.9% in last MPS)

Inflation target=6.5%

GDP growth prediction=6.20% - 6.5%

Rural-urban bank branch ratio=1:1

Reserve Money Growth Target=15.5% (16.2% in last MPS)

Broad Money Growth Target=16% (17% in last MPS)

Export Development Fund=1.5 billion USD (1.2 billion USD in last MPS)

Single Borrower Ceiling=15 million USD (12 million USD in last MPS)

11 | P a g e

Copyright @ https://www.facebook.com/groups/bankingcareerbd/
 Anti-Virus For Bank Viva Voce- Version 1.0

Hemal Jamiul Hasan

INCOME TAX
Tax rates for individual and firm are stated below:

For first Tk. 2, 20,200=Nil, for next Tk. 3, 00,000=10%, for next Tk. 4,00,000=15%, for next
Tk. 5,00,000=20%, for next Tk. 30,00,000=25%, for balance amount=30%.

***Initial exemption limit for women and senior citizens aged 65 or over is Tk. 2,75,000, for
physically challenged persons is Tk. 3,50,000 and for gazette war-wounded freedom fighters
is Tk. 4,00,000.

***As before, non-residents other than Bangladeshi non-residents shall pay tax on the total
income at the maximum rate of 30%.

Minimum Tax Payable:

Within city corporation=Tk. 3,000, Within Pourashava=Tk. 2,000 and other areas=Tk. 1,000.

Surcharge is payable by an individual assessee on total tax payable if the total net worth
exceeds Tk. 20 million as stated below:

Over Tk. 20 million to Tk. 100 million=10%, Over Tk. 100 million to Tk. 200 million=15%, Over
Tk. 200 million to Tk. 300 million=20% and over Tk. 300 million=25%.

Investment tax rebate remains at 15% on 30% of total income or Tk. 15 million or actual
investment whichever is the lowest.

Tax rates for corporate:

1. Publically traded companies other than banks, insurance and other financial
institutions, merchant banks, mobile phone operator and cigarette
companies=27.5%
***No rebate is allowed even if dividend at the rate of more than 20% is paid.
2. If such publically traded companies declare/pay dividend at less than 10% of capital
or fail to pay dividend=35%
3. Non listed companies other than banks, insurance and other financial institutions,
merchant banks, mobile phone operator and cigarette companies=35%
4. Banks, insurance and other financial institutions (except merchant banks)=42.5%
5. Merchant banks= 37.5%
6. Cigarette manufacturing companies if not publicly listed=45%
7. Cigarette manufacturing companies if publicly listed=40%
8. Mobile operator companies if not publicly listed=45%
9. Mobile operator companies if publicly listed by transfer of at least 10% shares
through stock exchange of which maximum 5% may be through IPO=40%

[According to Finance Act 2014]

12 | P a g e

Copyright @ https://www.facebook.com/groups/bankingcareerbd/
 Anti-Virus For Bank Viva Voce- Version 1.0

Hemal Jamiul Hasan

WORLD'S LARGEST BANKS 2014 BASED ON TOTAL ASSETS

Total assets Balance

Rank Bank Country
US$b sheet
1 Industrial & Commercial Bank of China (ICBC) China 3,181.88 03.31.2014
2 HSBC Holdings UK 2,758.45 03.31.2014
3 China Construction Bank Corporation China 2,602.54 03.31.2014
4 BNP Paribas France 2,589.19 03.31.2014
5 Mitsubishi UFJ Financial Group Japan 2,508.84 03.31.2014
6 JPMorgan Chase & Co US 2,476.99 03.31.2014
7 Agricultural Bank of China China 2,470.43 03.31.2014
8 Bank of China China 2,435.49 03.31.2014
9 Credit Agricole Group France 2,346.56 12.31.2013
10 Barclays PLC UK 2,266.82 03.31.2014

WORLD'S LARGEST BANKS 2014 BASED ON MARKET

CAPITALIZATION

Rank Rank Bank Country Market cap, US$

April March (March 31, 2014)
2013 2014
4 1 Wells Fargo & Co US 261.72B
5 2 JP Morgan Chase & Co US 229.90B
1 3 Industrial & Commercial Bank of China China 196.21B
3 4 (ICBC) Holdings
HSBC UK 191.43B
8 5 Bank of America US 181.77B
2 6 China Construction Bank China 160.83B
7 7 Citigroup Inc US 144.63B
6 8 Agricultural Bank of China China 126.41B
9 9 Bank of China China 115.92B
10 10 Commonwealth Bank of Australia Australia 115.35B

13 | P a g e

Copyright @ https://www.facebook.com/groups/bankingcareerbd/
 Anti-Virus For Bank Viva Voce- Version 1.0

Hemal Jamiul Hasan

BANK COMPANY ACT AMENDMENT 2013

1. The number of directors at any bank will not exceed 20 including three independent
directors, the amendment says. If the number of directors is less than 20 in any
bank, the number of independent directors will be 2-- earlier there was no limit to
the number of directors.
2. The banks will not be allowed to make investment in stocks more than 25 per cent of
their regulatory capital. Earlier, the permissible exposure limit was equivalent to 10
per cent of a bank's total liabilities.
3. Besides, according to the amendment, if any bank purchases shares of other
companies it will not be more than 5 percent of the bank’s paid-up and reserved
capital.
4. It has empowered the Bangladesh Bank (BB) to remove the errant managing
directors (MDs) of the state-owned banks.
5. It has also lowered the job experience of aspirants for the posts of MDs of banks
from 15 years to 10 years.
6. The central bank is empowered with the authority to visit and inspect the
cooperative societies found collecting funds from people who are not their members
and providing for imposition of hefty amounts of fine on banks failing to meet capital
inadequacy within a specific deadline.
7. It allows a director of a bank to become a director of an insurance company
simultaneously.
8. Bank’s minimum paid up capital is tk. 400 crore.

14 | P a g e

Copyright @ https://www.facebook.com/groups/bankingcareerbd/