The New Nation - Internet Edition

Staff Reporter

Bangladesh Bank, with a set of regulations, is going to formalise mobile phone banking in the country to speed up money transfer by expatriates.

The central bank already has drafted a guideline to this effect and has asked banks to submit their written opinions on it in two weeks.

"We have invited the banks for their views on a draft guideline within two weeks," Governor Dr Salehuddin Ahmed told reporters, replying to a question on the sideline of a seminar on corporate governance at Hotel Purbani in the city yesterday.

Bangladesh Bank in cooperation with Bangladesh Enterprise Institute (BEI) organised the daylong SAARCFINANCE seminar on "Corporate Governance in Banks and Financial Institutions".

SAARCFINANCE is a network of SAARC central bank governors and finance secretaries to share experiences on macro-economic policy issues among member countries of the region.

The Governor said the central bank invited inputs from the commercial banks on Tuesday at a meeting with the chief executive officers of the commercial banks on mobile payment system.

Replying to another question, Dr Salehuddin said the possibilities of money laundering taking advantage of the mobile banking would be considered while finalising the guideline in this regard.

"An airtight legal framework would be put in place so that the hard-earned money of overseas workers was not lost through the process in any way," the Governor added.

In the novel banking system, the branches or exchange houses of the banks in different countries would inform a local bank or exchange house of the amount being sent by an expatriate worker.

The bank or exchange house concerned will inform the recipient of the remittance through an SMS, and will request the recipient to collect the money from a mobile phone outlets working as payment centres.

This will help increase expatriates' remittances in the formal channel, BB officials expect.

However, the Governor in the seminar expressed frustration that the commercial banks and non-bank financial institutions (NBFIs) have no written code for corporate governance.

He was also worried in this regard as the banks and NBFIs would have to achieve a new global standard of corporate governance under Basel II within a stipulated time frame.

"Unless you (banks and NBFIs) have a guideline, it's difficult to practice corporate governance," the BB Governor said.

BEI director Lopa Rahman presented the findings of a study on corporate governance issues in the banks and NBFIs of Bangladesh. Senior executives of the central banks, commercial banks and financial institutions from the member countries took part at the seminar.

Dr Salehuddin called upon the commercial banks and financial institutions to have "some kind of corporate governance guidelines to protect the interests of the stakeholders."

He criticised that few banks were funding some social causes in the name of carrying out corporate social responsibility (CSR). But CSR, he said, means funding the poor people and able entrepreneurs to help them gain economic benefits.

According to the BEI study, 15 per cent of the banks and 22 per cent of the NBFIs have said they have written corporate governance (CG) code, but such code was available with only 5 per cent of the banks and 22 per cent NBFIs.

Most of the banks and NBFIs responded to the study that the CG was not applicable for them. The BEI study also showed that only 10 per cent of the banks and one-third of the NBFIs have designated CG persons.