12 banks asked to spend profit on agri dev

Twelve banks made an unusual profit of Tk 500 crore by taking advantage of the forex market instability in May-June this year, and the Bangladesh Bank has asked them to spend the money on agricultural development.

The banks are AB Bank, City Bank, Dutch-Bangla Bank, Prime Bank, Southeast Bank, Standard Chartered Bank, Bank Asia, Mercantile Bank, UCB, Dhaka Bank, NCC Bank, and HSBC.

The central bank has asked the banks to spend the money on four areas of agricultural development within the next one year. The areas are increasing agricultural production, buying agricultural machinery, discovering new methods for developing the agricultural product processing industry, and increasing quality production.

The Bangladesh Bank has also asked them to submit quarterly progress reports on the matter. It gave the directive in a letter to the banks’ managing directors on October 25.

Its Spokesperson GM Abul Kalam Azad told The Business Post the central bank was working according to the government’s policy to ensure food security and the banks were given the directive as part of that.

A central bank investigation revealed the 12 banks had made unusual profits by cashing in on the forex market volatility. After that, the banking regulator took various initiatives.

For example, the heads of treasuries of Standard Chartered Bank, BRAC Bank, City Bank, Southeast Bank, Dutch-Bangla Bank, and Prime Bank were removed on August 8. Later on August 18, the central bank issued show-cause notices to the managing directors of those banks.

On September 7, the remaining six banks were served show-cause notices.

When the central bank later moved back from its strict stance on the matter, the heads of treasuries of the six banks returned to their jobs.

The Bangladesh Bank later directed all 12 banks to spend half of the unusual profit on corporate social responsibility (CSR) programmes. But the latest directive said the money should be spent on four areas of agricultural development.