Page 24 - Banking Finance May 2022

ARTICLE

to lending operations. Especially, capital adequacy, asset BDT 500 crore refinancing fund to help the country's
quality, and other solvency indicators came under stress. startups. Besides, the commercial banks are instructed to
There are positive indications of recovery and turning around form their own funds with money equivalent to 1.0 percent
following the symptoms of improving the real sector of the of their respective operating profits. Despite the necessity
country mainly following the third quarter of 2020. However, of such funds, this seems to be a deviation from the regular
uncertainty remains, and the strength of the banking sector practices of venture capital financing, and might contribute
would be truly tested when moratoriums and special policy to adding another avenue of bank financing in the context
supports will be completely withdrawn. of Bangladesh. The issuance of the guideline on e-KYC is a
notable initiative by the Bangladesh Financial Intelligence
Covid-19 policy responses covering the government's Unit (BFIU) which might prove to be remarkable in
stimulus packages, central bank's expansionary monetary facilitating the ongoing transformation efforts. This is also
policy, and moratoriums associated with loan classification very much connected with the addressing of money
and provisioning have notable implications for the banking laundering and cyber security concerns.
industry of Bangladesh. The government has distributed its
social safety payments, incentive packages, salary and Like in most other economies, special compliances,
allowances to the garment workers through mobile banking relaxation, warning to handle financial crimes were
accounts. Banks were given the responsibility of evidenced in the context of Bangladesh. BFIU issued
implementing most of the stimulus packages while ensuring instructions for relaxed and smooth delivery of stimulus
credit risks for the credit facilities. The central bank has packages for much-needed quick economic recovery, while
been very active to promote smooth and easy payment on the other hand, it issued warning to the banks to be alert
facilitation by banks and other associated entities from the to the potential risks of financial crime. The declaration of
very first day of the pandemic disruption. the government of Bangladesh regarding 50 percent penalty
reflects the country's concern about falsification of invoicing
The transaction limit and cost of different payment channels during the period. During the period, BFIU issued specific
were relaxed, and payment system facilities were expanded guidelines on trade-based money laundering (TBML) to be
and speeded up for smoother transactions. Bangladesh Bank enforced by the banks. The guideline is expected to have
advised banks and financial institutions to operate limited notable implications to reshape the compliance framework
business activities resorting to online banking while handling and would require reasonably high investment on the part
cyber security. Banks and MFS providers were instructed to of banks.
open MFS accounts to support garment workers and other
customers. The central bank also permitted some non-bank Enhancement of green and sustainable banking is desired
entities to operate ATMs across the country for spreading to be one of the most crucial automatic responses of the
banking networks at an affordable cost. Online and mobile Covid-19 which is associated with the cause of the ongoing
transactions received a remarkable boost during the
pandemic that has given customers the experience of easy,
smooth, and instant payment.

The central bank came up strongly to promoting digital
venturesin the context of the Covid-19. Bangladesh Bank
(BB) approved Digital Nano Loan in 2021 which has huge
potential to pull credit delivery to the SMEs. Technology
adoption and inclination to the new technology and
innovation received impetus as part of Covid-19 response
activities and startups came up with numerous ventures and
initiatives. To support these, BB formulated a policy relating
to the disbursement of collateral-free loans by creating a

24 | 2022 | MAY | BANKING FINANCE