ADR FOR ISLAMIC BANKING
Most of banks not maintaining ratio set by BBStaff Correspondent
Most of the commercial banks are not maintaining the advance-deposit ratio set by the Bangladesh Bank for Islamic banking, said BB officials.
A senior BB official told New Age on Sunday that the commercial banks were not allowed to invest more than 85 per cent of their deposits in traditional banking, while they could invest upto 90 per cent of their deposits in Islamic banking.
‘But, most of the Islamic banks and the Islamic banking wings of the commercial banks are not maintaining the ADR policy. The ADR of some of them remain above 100 per cent due to aggressive banking,’ he said.
He said seven Islamic banks were operating the banking activities in the country and 16 traditional commercial banks out of 40 had Islamic banking wings.
According to BB data, the Islamic banking wing of Agrani Bank invested 208.77 per cent against its deposits as on April 12, 2012.
BB data showed the bank’s wing invested 163.67 per cent against its deposits as on December 31, 2011.
The Islamic banking wing of Pubali Bank invested 165.72 per cent against its deposits as on April 12, 2012, up from 99.44 per cent as on December 31, 2012, that of City Bank 164.23 per cent up from 106.24 per cent, that of Dhaka Bank 100.17 per cent up from 92.81 per cent, that of Bank Asia 154.75 per cent down from 156.87 per cent, HSBC 234.63 per cent down from 283.94 per cent.
Most of the Islamic banks also did not maintain the ADR, as Islami Bank disbursed 90.33 per cent of its deposits in loans as on April 12, 2012, while its was 88.71 per cent as on December 31, 2011, BB data showed.
ICB Islamic Bank increased its investment to 120.40 per cent against its deposits, up from 118.77 per cent, EXIM Bank 97.08 per cent up from 95.35 per cent, Shahjalal Islami Bank 93.54 per cent up from 92.90 per cent, Al-Arafah Islami Bank 91.67 per cent from 91.67 per cent, and First Security Islami Bank 93.17 per cent up from 88.99 per cent.
BB data, however, showed that Islamic banking wings of Sonali Bank, AB Bank, Prime Bank, Southeast Bank, Standard Bank, Premier Bank, Trust Bank, Jamuna Bank, Al Falah and Social Islami Bank had maintained the ADR in the period.
As these banks maintained the ratio, the overall ADR in the Islamic banking wings of the commercial banks and Islamic banks was 91.59 per cent as on April 12, 2012.
Another BB official said the central bank had frequently asked the Islamic banks to maintain the ADR policy, but they did not do so.
He said the banks had gone for risky banking to make high profits overnight.
He said, ‘The BB recently has taken punitive action against some banks which failed to maintain the ADR.’
He said the banks which failed to bring down the ratio were not permitted to open new branches.
Moreover, the CAMELS (capital adequacy, asset quality, management, earning, liquidity and sensitivity.) rating of the banks will be downgraded, he said.
The BB discourages the banks any risky investment in an effort to cut credit growth, he said.
The central bank has taken steps to bring down credit growth to control soaring inflation, the BB official said.
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