BB allows IFIC to invest more in Nepal bank bowing down to pressure

AKM Zamir Uddin | Published: 22:15, Feb 12,2017

 
 

Bangladesh Bank has approved an application of IFIC Bank Ltd for transferring capital worth $12.29 million or around Tk 98 crore to make further investment in Nepal-based Nepal Bangladesh Bank Ltd, although it (BB) had earlier rejected the plea.
A BB official told New Age on Sunday that the central bank had given the approval to IFIC Bank amid pressure from different influential corners.
The central bank issued a letter to IFIC Bank on February 7 asking it to take permission from investment board to transfer the capital and also inform it that the BB had no objection in this regard.
IFIC Bank, which has already invested around $16.52 million or around Tk 132.22 crore in NB Bank by transferring capital from Bangladesh, applied in November last year to the BB for making the fresh investment in NB Bank by purchasing rights shares offered by the Nepalese bank.
The BB follows strict rules in allowing any entity to take capital out of the country and gives permission to take out fund on ‘case-to-case’ basis only.
The central bank on January 5 sent a letter to IFIC Bank rejecting its proposal to repatriate more capital from Bangladesh. Then the bank again applied to the BB to allow it to investment in the NB Bank.
‘It is a bad example for the central bank that it has to bow down to a private bank accepting its application to transfer capital abroad. This type of permission puts an adverse impact on the central bank’s stance of policy making,’ a BB official said.
Salman F Rahman, private sector adviser to Awami League president Sheikh Hasina, who is also prime minister, is the chairman of IFIC Bank and finance ministry additional secretary Jalal Ahmed is the chairman of NB Bank.
Bangladesh government holds 32.75pc shares in IFIC Bank.
In its November letter to BB, the bank said that it now owned 40.91 per cent share of NB Bank and IFIC Bank would have to purchase the rights shares of the foreign bank by transferring capital to maintain its existing control over the bank.
It said that the central bank of Nepal had recently issued a circular saying that every scheduled bank would have to raise its paid-up capital to Nepalese rupee (NPR) 8,000 million within the financial year 2016-17 to be enlisted as an ‘A’ category bank.
Against the backdrop, NB Bank at its annual general meeting on October 24, 2016 decided that the bank would issue 32 per cent stock dividend and rights shares at a ratio of 10:8 to its shareholders to increase its paid-up capital.
Despite repeated attempts, IFIC Bank managing director M Shah Alam Sarwar could not be reached for his comment in this regard. 

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