January - March 2013

How much is Enough?

Bank Audit
BANK AUDIT: HOW MUCH IS ENOUGH! January - March 2013
CONTENTS
EDITORIAL BOARD Editorial
ISSN 1993-3649

2
President’s Desk 3

ARTICLES
Green Banking and Sustainable Development: 5
the Case of Bangladesh
- Atiur Rahman Ph.D
Md. Abdus Salam FCA
Bank Audit – How Much should it be enough; 9
Gopal Chandra Ghosh FCA
in light of relevant Auditing Standards and
Akhtar Sohel Kasem FCA
Masih Malik Chowdhury FCA
Auditing Practice Statements
- Sabbir Ahmed FCA
Nasir Uddin Ahmed FCA
Sabbir Ahmed FCA Audit of Local and International 15
Md. Sayeed Ahmed FCA Commercial Banks:
Mahmudul Hasan Khusru FCA an overview of Practices and Procedures
Md. Abu Bakar FCA - M Jalal Hussain FCA
Md. Mahamud Hosain FCA
Mohammed Jashim Uddin FCA Profitability Trend in the Banking Sector of 22
Snehasish Barua FCA Bangladesh- a Comparative Study of
Ajit Kumar Paul FCA Islamic and Conventional Banks
Md. Abid Hossain Khan FCA - Ishter Mahal1
Muhammmad Aminul Hoque ACA - Benazir Rahman2
Zareen Hosein ACA Laws and regulations for accounting system 36
Md. Shahidul Islam ACA - Md Shahadat Hossain FCA
Dipok Kumar Roy ACA
Chairman DRC-ICAB Recent Monetary Policy & Economic Trends 41
Chairman CRC-ICAB - Ahmad Dawood FCA, FCMA

National Finance Performance & Stability 49

- an Analysis to Reform & Retreat with Integrated Policy
S M Abu Nayem Ahmed, psc - Dipok Kumar Roy ACA
Sqn Ldr (Retd.)
Senior Deputy Secretary-ICAB A Tribute to Late Mufazzal Hossain 71
Chowdhury FCA
- Parveen Mahmud FCA

Preparing Accountants for Future Challenges 77

- ICAB President’s interview with the Daily Star

Proposals from ICAB on National Budget 79

2013-14

DISCLAIMER
"The opinions expressed in this publication are those of the
respective authors themselves and do not necessarily reflect the
views of the Editorial Board of the Institute of Chartered Accoun-
tants of Bangladesh (ICAB) or the ICAB itself."
 EDIT ORIAL
Companies; the issue has come arena more than that of past.
forefront. It is surprising that Bangladesh has a mixed
how a company banking system. Different types
misappropriated more than Tk of audits have been carried out
2,500 crore from a Bank. The in the banks considering
bank’s internal audit department auditing rules. Every country
could not spot any irregularity. has specific laws, rules and
This could have been otherwise, regulations on Banking
if the Banks would appoint the Company. Generally, the
As the technological right professional in their Auditors follow the local and
improvements and competitive branches. On the other hand, international standards and
environment changes, so is the many thought that it is not guide lines while conducting
risk of financial markets and possible to audit all the offices an audit of a bank.
economic fraud all around the or branches of an office,
world. As an answer to these company or bank. The audit is Recently, the Cabinet approved
new threats, the need to ensure done randomly, on a in principle the draft of the
transparent accounting and risk-weighted basis. So, one is Bank Company (Amendment)
reporting standards cannot be ikely to ponder about the Bill, 2013. I believe, it will
overstated for the overall process of bank audit; what and strengthen the country's
economic success of a country. how much is feasible? banking system. It is true that
To cope up, auditors need to the Banks are facing
adapt with the rapidly changing It is imperative to think about unprecedented change in
banking industry and the ‘Bank’s Audit in the present technology and regulation,
present concerns including: context as it is experiencing Social networking, eBanking
continuous auditing, regulatory rising trend of financial frauds. and regulatory reform are just a
changes, fraud, Enterprise Risk The depositors are likely to lose few of the current challenges
Management, social media and their confidence in the banks as bank auditors must tackle.
internet risks. Inview of this, some major of irregularities in Critical to the auditor’s ability
the issue would offer an the banking sector has recently to deal with these changes is
opportunity to gain insights into been surfaced by the probably a flexible audit plan
the current hidden and newspapers’ and electronic and right input from
unknown facts and anomalies media reports. New banks are in management. Failure to deal
centering Bank that is haunting the line. In this context, the with the malpractices can be
public perception with a sense banks’ audit reports are fatal for the financial health of
of insecurity. The issues are not considered very important to the country.
unknown to the world history. seal the possibility of recurrence
The best recognized bank of such misappropriation and to
offered best report even gave bring back people’s confidence. In fine, I would, as usual, look
rise to corporate fraud shaking forward to feedbacks from our
the country's financial sector. As we know, in the present free esteemed readers, the valuable
For our country, the dimension trade market economy, the suggestions and opinions
may vary compared to other banking sector is the backbone would greatly help to add the
modern economy. We tend to of economy. Bank is the media quality of our journal.
forget once it is over. The real to accelerate the trade and
perpetrator sometimes remains commerce including export and
beyond touch. import of the country. In the
global context, the role of banks M. Farhad Hussain FCA
On the recent financial is far-reaching and more Chairman, Editorial Board
irregularities of some penetrating in the economic

2 January - March 2013 The Bangladesh Accountant

 PRESIDENT’S DESK
Instilling more Trust
and Confidence

As I take over the presidency, I Wilson Vargheso, Senior Training on ‘IFRS and IAS for
consider it to be a sacred duty to Economist, Monetary and Capital Bangladesh Bank officials’ in the
uphold the interests of the Markets Development, Technical month of February and March
Profession and contribute to the Assistance Division, International 2013. ICAB, first time of its kind,
Accounting and private sector Monetary Fund (IMF), ICAB is organized this training and a
Auditing. We cannot stop till we working closely with Bangladesh total of 35 mid level Bangladesh
get the result, we expect. To Bank for the sake of Bank Officials Comprising Joint
hold the continuity of our strengthening the internal control Directors, Deputy Directors and
progress and advancement, I will of the central bank to arrange at Assistant Directors participate in
not leave any dearth of my effort least 6-months training for newly the training. Topics ranging from
to discharge my function as the qualified CAs in Bangladesh Financial Reporting, Financial
President of the Institute. I must Bank and other commercial Statements, Accounting Policy,
be able to do justice to the trust banks to attract more CAs in the Statement of Cash Flow and
and confidence bestowed upon banking profession, encourage Adaptation of International
me by the members. Bangladesh Bank to prefer Financial Reporting Standards
accounting background are interacted on the 25-days
In this quarter, I raised different professionals during their new training programme. ICAEW
pending issues with the recruitment etc. We truly believe ACA Advanced Stage Classes,
Minister/Secretary/Officials of that CA firms can play a first time in Bangladesh held in
Regulatory Bodies and convey significant role in thorough the first quarter of 2013. We
different contentious issues to auditing the functions of the were encouraged that 32 ICAB
them like utilization/ branches of the banks. It will Members registered to undergo
engagement of more Chartered undoubtedly, bring good result, these classes.
Accountants in different if we could involve the adequate
Division/Bodies/Projects under number of Chartered As we hold our ties with the
the Ministries, allocation of land Accountants, aiming towards ICAEW, a learning partner of
for ICAB Academic Campus, minimizing ICAB, we met ICAEW high
approval of the ICAB submitted embezzlement/fraudulence. officials and sought ICAEW’s
Project proposal lying in the support for strengthening our ties
Planning Commission, engaging As part of their expression of under World Bank financed
more Chartered Accountants in trust and confidence on ICAB, Twinning Project on a range of
the banking sector etc. We the NBR officials in this year also issues like Updating the
pointed out contradiction continued to take training on Curriculum of ICAB and Study
between IFRSs & IASs and Bank “Tax Audit for Tax Officials” for Materials, ICAB Case Study
Company Act, 1991 & some 5th batch and 6th batch in the Exam, arrangement of
BRPD circulars of Bangladesh month of January 2013 under the Workshop, updates of
Bank which is required to be TACTS project in collaboration ICAB-ICAEW, joint Online IFRS
amended for the sake of with DFID, a UK based Training and Certificate
exercising sound accounting development assistant partner. Programme, arrangement of
practices in Bangladesh. As we keep extending our good tuition facilities for ICAB
wishes and expertise Members registered with
According to the proposal of Mr. cooperation, ICAB conducted ICAEW, publication of ICAEW

The Bangladesh Accountant January - March 2013 3

 February, 2013. ICAB organized
a Members’ Conference titled
‘Harnessing Technology in CA
Firms’ in February . Mr. Guru
Parasad, Partner, Guru and Jana,
Chartered Accountants, India, in
his presentation described how
to use the new information
technology in CA Firms and
projected some common
delivery models for many
business applications like
customer Relation Management
Advanced Stage Study Manuals Institute, took the opportunity to (CRM), Management Information
etc. speak on the country perspective Systems (MIS), Enterprise
of the theme 'Professionalism as Resource Planning (ERP),
It is a matter of great pride that in a Tool to Economic Growth' in
the prestigious recent SAFA BPA Invoicing, Human Resource
the ICAI International Management (HRM), Content
Awards, beside other prizes, Conference titled “Accountancy
IDLC Finance Ltd and Prime Management (CM) and Service
Profession: Enablers of Economic Desk Management. A CPD
Bank Ltd of Bangladesh won the Growth' hosted by Indian
first and second prize Seminar on ‘Recent Monetary
Institute. Policy & Economic Trends’ was
respectively on 'overall
categories', while, Rupali Bank ICAB is well aware of its true held in March 2013 by ICAB
Ltd and Islami Bank Bangladesh responsibility; the Institute Chittagong Regional Office.
Ltd have been adjudged as the submitted its primary Now, let me be frank with all to
winners in the category of observation on ‘Draft Company acknowledge that the unrest and
'Public Sector Banking Bill 2013’ to the Ministry of political impasse is harnessing us
Institutions' and 'SAARC Commerce of the Govt. of to take our activities in full
Anniversary Awards for Bangladesh on 25 March 2013. swing. However, I re-assure that
Corporate Governance', ICAB Experts Team reviewed the path of progress and
respectively. IDLC Finance new ‘Draft Company Bill 2013’ advancement; building more
Limited and Prime Bank Limited prepared in Bengali and trust and confidence will not
were adjudged as an ‘Overall identified some clauses which stop till we achieve our
Winner’ along with Sri Lanka would create complexity and purpose.In fine, I hope that this
Telecom. A total of 85 awards broaden cost of business. ICAB issue of the journal addressed
were given out, while also was critical that this might much needed issue, though
Bangladesh won 19 awards and leave negative impact on the sensitive one, to the readers and
the remaining awards were overall economic activities of the anyone reading it would be
shared between companies from country, if enforced. ICAB team tremendously benefitted,
India, Pakistan, Sri Lanka and also identified some clauses of undoubtedly.
Nepal. This is a manifestation of the new Act to be in
ICAB's sincere commitment duplication/contradictory to the I thank everyone associated with
which is paying dividend for existing laws/laws. this publication.
holding the Best Annual Report,
which is scrutinising and thereby ICAB holds Continuation of
best of the best receiving the training of its members on the
SAFA Awards. urgent issues like
‘Harmonization of Financial Md Abdus Salam FCA
To heighten the professional Reporting and Audit Practices: President, ICAB
image, I, as President of the Bangladesh Perspective’ in

4 January - March 2013 The Bangladesh Accountant

Green Banking and Sustainable Development:
the Case of Bangladesh
Atiur Rahman Ph.D

The development strategies of Bangladesh has made notable contribution

towards establishing 'Green Climate Fund'
Bangladesh Government, as laid down in alongside documenting the Renewable
the Perspective Plan and the Sixth Five Energy Policy in 2008 & Environmental
Year Plan, clearly spell 'out the preservation Act in 1997. Accordingly, the
commitment of pursuing sustainable government of Bangladesh has decided to
growth. The country's vulnerability to produce 5 percent of total power
floods, cyclones and to the threat of generation from renewable energy sources
inundation of large coastal areas from like solar energy, air & waste by 2015 &
global warming driven sea level rise 10 percent by 2020 with the above Policy
makes sustainability a prime development & Act. To protect our environment from
concern. industrial pollution a guideline is
formulated under this act, which requires
Over the past 4 decades since liberation, Effluent Treatment Plant mandatory for
national income of Bangladesh has those Industries that emit liquid effluent.
increased more than eighteen-fold, while Around 60 percent people in Bangladesh
the population has increased a little over are outside of the electricity facility while
two-fold. Real GDP growth averaged at around 90 percent are outside of the
around 6.0 percent annually over the last natural gas network. Renewable energy,
10 years. Trade openness has integrated especially solar energy and biogas can
Bangladesh with global economy with provide a sustainable and environment
trade/GDP ratio rising from around 20.0 friendly solution to reduce the
percent during the 1970s and 1980s to demand-supply gap of energy in the
more than 60 percent in FY12. Poverty country.
has come down to around 30 percent of
the population now, from around 57.0 BB has issued guidelines for
percent in the 1990s. environmental risk management and
green banking in 2011 and is probably the
As you all are aware that Bangladesh falls only central bank, which has issued such
into the group of most climate change an indicative guideline for green banking.
vulnerable countries in the world despite The guidelines aim to ensure environment
her insignificant share of global friendly business practices by banks and
greenhouse gas (GHG) emission in financial institutions, to incorporate
comparison with other developing and environmental risks into Core Risk
developed countries. However, Management (CRM) and to promote

The Bangladesh Accountant January - March 2013 05

 BB FORMULATED
GREEN BANKING POLICY
GUIDELINE IMPLEMENTED
IN 3 PHASES FROM 2011 TO
2013. BY FOLLOWING THESE
GUIDELINES, BANKS WILL
BENEFIT IN TERMS OF
IMPROVED CAMELS
RATING. BESIDES, BB WILL
DECLARE THE NAMES OF
THE TOP 10 BANKS
REGARDING THEIR
OVERALL PERFORMANCE IN
GREEN BANKING
ACTIVITIES AND WILL
sustainable financial and economic place. Banks will also receive
growth. Bangladesh Bank has also separate treatment in existing ACTIVELY CONSIDER
issued a common format to all the guidelines for Environmental Risks in
commercial banks to report green computation of Adequate Capital by GREEN BANKING
banking activities including the extent BB. To promote green energy, BB
of carbon footprint in a structured advised banks to facilitate clients to ACTIVITIES OF BANKS
way. Banks and financial institutions open L/Cs for installation of ETP in
enthusiastically responded to this industrial units, to finance Solar WHILE ACCORDING
'Green Banking' drive. Now they Energy, Biogas and ETP projects, to
PERMISSION FOR OPENING
regularly submit a quarterly report to comply with CSR guidelines for
Bangladesh Bank on their ingraining environmentally and NEW BRANCH.
performance of green banking socially responsible practices with the
activities. instructions stipulated in Green
Banking Policy.
BB formulated green banking policy
guideline implemented in 3 phases Besides these, BB introduced a
from 2011 to 2013. By following Refinance Scheme (revolving) for
these guidelines, banks will benefit in Solar Energy, Biogas, and Effluent
terms of improved CAMELS rating. Treatment Plant (ETP) of Taka 200
Besides, BB will declare the names of Crore in August 2009. From this
the top 10 banks regarding their revolving fund, refinance facilities are
overall performance in green banking allowed for banks/FIs against lending
activities and will actively consider in the Solar Energy, Biogas Treatment
green banking activities of banks Plant sectors on terms and conditions
while according permission for set forth in a BB's ACSPD Circular. By
opening new branch. BB has decided now, 27 banks & 1 Financial
to accord permission for SME branch Institution have signed the
subject to installation of solar panel in participation agreement with BB to

06 January - March 2013 The Bangladesh Accountant

avail the refinance facility for Solar beneficiary farmers are 618 and ways. With a move towards
Energy, Biogas & Effluent bringing 920 bighas of land encouraging green banking in
Treatment Plant. As per another under cultivation with Bangladesh, BB installed a
ACD Circular, refinances were uninterrupted water flow 8-kilowatt solar power system on
allowed at limited scale up to Taka enhancing the productivity and its rooftop in March 2010, which
300 million from this fund to cropping intensity. Besides, an has been providing necessary
establish Hybrid Hoffman Kiln amount of Tk. 248.80 million energy supply for the executive
(HHK)/equivalent technology in disbursed for establishing Solar floor along with emergency
brick manufacturing industry with PV Module Assembly Plant. In security lights in the BB premises.
a view to reduce carbon & the sub sector of Integrated This is now being extended to
suspended particulate matter in the Cow Rearing and Biogas Plant, cover more areas. A recent
atmosphere. an amount of Tk. 262.13 initiative has been taken to convert
million refinanced in 820 the 30-storied building of the bank
Notwithstanding the insignificant numbers of Integrated Cow into a 'Green Building' with the
amount relative to the overall Rearing and Biogas plant. modern facilities of rain water
country's demand, the harvesting, waste water recycling
achievements of green banking in • An amount of Tk 90.36 million and motion sensor energy efficient
the renewable energy sector are disbursed for establishing 8 ETP bulbs supported by window based
worth mentioning. with effluent treatment capacity solar panels. Besides, BB is
of 18000 cubic meter per day arranging an international
As of December 2012: contributing significantly in conference on 'Green Banking'
limiting environmental jointly with IFC in March 2013 in
• An amount of Tk. 103.72 pollutions, while an amount of line with the outcome document of
million has been disbursed Tk. 124.47 million disbursed Rio+20 called 'The Future We
under the refinance program of for establishing Hybrid Hoffman Want," and COP meetings of the
Solar Home System (SHS) to Kiln (HHK) technology in 3 UNFCCC, especially COP 18
establish 3763 units SHS. These brick manufacturing industries including the 'Kyoto Protocol' in
solar home systems are situated which reduces carbon emission combating various vulnerabilities
at off-grid areas of the country in the brick manufacturing due to climate change.
benefiting at least 3763 families plants.
with the production capacity is Bangladesh Bank has been
164100 KW/day. I would like to take this working for last four years to
opportunity to share the green establish a completely IT based
• An amount of Tk. 23.9 million initiatives taken by BB. The central banking system in the country.
disbursed for 8 solar energy bank of Bangladesh is responding Various IT based initiatives of BB
driven irrigation pumps. No. of to climate change in a diverse of have been helping to move

The Bangladesh Accountant January - March 2013 07

towards the paperless green Despite all these achievements, the leading Asian nations in terms of
banking. In view of ensuring prospect of achieving sustainable financial prosperity as well as
low-carbon green development development is not free of social and environmental
without compromising the challenges. Future challenges responsibility.
imperative of faster economic include formulation of sector
growth and social development, IT specific environment polices, To conclude, I would like to thank
infrastructure of the financial sector coordination among concerned the organizer for initiating the
has undergone vast improvements authorities to build up a green discussion on such an important
in recent years. It has been economy, speeding up proper issue like green banking. I hope
facilitating countrywide automated awareness and effective capacity you all will have very productive
online connectivity of banks with building, application of deliberations and find this seminar
the BB for supervisory reporting, quantitative approach for more very useful.
National Payments Switch and justified ratings of banks. We
fully automated inter bank clearing envision Bangladesh as a mature (The Article was presented in a
and settlement platforms for paper advanced economy in 2050, with seminar on 02 February 2013)
based and electronic fund transfers, levels of human development and
and a credit information bureau technological advancement The Author is the Governor,
accessible online by users. sufficient to place her among Bangladesh Bank

08 January - March 2013 The Bangladesh Accountant

Bank Audit – How Much should it be enough;
in light of relevant Auditing Standards and
Auditing Practice Statements
Sabbir Ahmed FCA

Introduction public interest is reflected in the way

banks in almost all countries, unlike most
other commercial enterprises, are subject
I would like to start this article with a very to multiple prudential supervisions by
famous quote that came to my attention central banks and/or other specific official
many years ago while reading an regulators/agencies.
interview of a Global Bank’s CEO. The
quote I am referring here is “Banking is As part of this confidence building
such a unique industry where you do not measure on Banks, its financial statements
want your competitor to fail”. Honestly are subject to audit by multiple auditors
speaking it did not make much sense at including external or statutory auditors.
that time. However, after working as a The external auditor conduct the audit in
professional accountant for many years the accordance with applicable ethical and
perspective of the comment is quite vivid. auditing standards, including those calling
Why it is so that a Bank would not like to for independence, objectivity, professional
see his fellow competitor Bank to fail? The competence and due care, and adequate
simplest and shortest answer is “Banking planning and supervision. The auditor’s
business is based on Trust” and failure of a opinion lends credibility to the financial
Bank severely dents that Trust and it statements and promotes confidence in
affects not only other Banks but the whole the banking system.
economic systems bears the brunt.
However, what is also very important to
It is an undeniable fact that Banks play a note is the fact that the quality of the
central role in the economy. They hold external auditor’s opinion would also be
the savings of the public, provide a means influenced by multiple elements, notable
of payment for goods and services and amongst those are the proper observance
finance the development of business and of various roles and responsibilities of not
trade. To perform these functions securely only external auditors but the following
and efficiently, individual banks must parties as well:
command the confidence of the public
and those with whom they do business. - the Bank’s Board of Directors (those
The stability of the banking system, both charged with Governance);
nationally and internationally, has - the Bank’s Management; and
therefore come to be recognized as a - the supervisor (i.e. Central Bank) and
matter of general public interest. This other regulators.

The Bangladesh Accountant January - March 2013 09

 THEY HOLD THE
SAVINGS OF THE PUBLIC,
PROVIDE A MEANS OF
PAYMENT FOR GOODS
AND SERVICES AND
FINANCE THE
DEVELOPMENT OF
BUSINESS AND TRADE. TO
PERFORM THESE
FUNCTIONS SECURELY
AND EFFICIENTLY,
INDIVIDUAL BANKS MUST
COMMAND THE
CONFIDENCE OF THE
PUBLIC AND THOSE WITH
WHOM THEY DO
The roles and responsibilities of the aim to analyze those roles and BUSINESS. THE STABILITY
above parties could be different in responsibilities before focusing in
various countries based on applicable detail on what need to be considered OF THE BANKING SYSTEM,
law, regulation and custom, however by an external auditor at the time of
it is true that proper observance of doing the audit of a bank. BOTH NATIONALLY AND
these roles and responsibilities by INTERNATIONALLY, HAS
those parties would eventually The Responsibility of the
support/complement fulfilment of Bank’s Board of Directors and THEREFORE COME TO BE
each other’s duties and obligations.
the Management RECOGNIZED AS A
Various auditing standards and audit MATTER OF GENERAL
practice statements provided The primary responsibility for the
guidance on respective roles and conduct of the business of a bank is PUBLIC INTEREST.
responsibilities of bank’s board of vested on the board of directors and
directors, management, banking the management appointed by it. This
supervisors and external auditors to responsibility includes, among other
avoid misconception about such roles things, ensuring that:
that could lead to inappropriate
reliance being placed by one party on • Those entrusted with banking
the work of another. Those standards tasks have sufficient expertise and
and statements also sets out integrity and that there are
responsibilities of the board of experienced staff in key positions;
directors and management, essential
features of the role of banking • Adequate policies, practices and
supervisors and external auditors and procedures related to the different
what should be the relationship activities of the bank are
between the banking supervisor and established and complied with,
the bank’s external auditors. We shall including the following:

10 January - March 2013 The Bangladesh Accountant

 responsibility to provide all
information to the supervisory
agencies that such agencies are
entitled by law or regulation to
obtain.

Management is also responsible for

the establishment and the effective
operation of a permanent,
continuous and adequate internal
audit function that should also be
independent of the organizational
activities it audits or reviews and
every day internal control process.
Every activity and every division,
subsidiary or other component of
the banking organization should
fall within the scope of the internal
audit function’s review and the
internal audit function should be
adequately staffed with persons of
the appropriate skills and technical
- The promotion of high ethical • The bank has appropriate risk competence who are free from
and professional standards. management policies and operating responsibilities.
- Systems that accurately identify procedures;
and measure all material risks
and adequately monitor and • Statutory and regulatory The Role of the Banking
control these risks. directives, including directives Supervisor (i.e. Central
- Adequate internal controls, regarding solvency and
Bank)
organizational structures and liquidity, are observed; and
accounting procedures.
The key objective of prudential
- The evaluation of the quality of • The interests not only of the
supervision is to maintain stability
assets and their proper shareholders but also of the
and confidence in the financial
recognition and measurement. depositors, employees and
system, thereby reducing the risk
- “Know your customer” rules other creditors are adequately
of loss to depositors and other
that prevent the bank being protected.
creditors. In addition, supervision
used, intentionally or
also is often directed toward
unintentionally, by criminal Management is responsible for
verifying compliance with laws
elements. preparing financial statements in
and regulations governing banks
- The adoption of a suitable accordance with the appropriate
and their activities. Although these
control environment, aimed at financial reporting framework and
compliance requirements may
meeting the bank’s prescribed for establishing accounting
differ from country to country but
performance, information and procedures that provide for the
the following basic requirements
compliance objectives. maintenance of documentation
are ordinarily found in most
- The testing of compliance and sufficient to support the financial
systems of supervision:
the evaluation of the statements. This responsibility
effectiveness of internal includes ensuring that the external
• The bank must have suitable
controls by the internal audit auditor who examines and reports
shareholders and members of
function. on the financial statements has
the board (this notion includes
complete and unhindered access
integrity and standing in the
• Appropriate management to, and is provided with, all
business community as well as
information and information necessary information that can
the financial strength of all
technology systems are materially affect them and,
major shareholders).
established; consequently, the auditor’s report
on them. Management also has the

The Bangladesh Accountant January - March 2013 11

• The bank’s management must may not be the banking by regulators in that country (i.e.
be honest and trustworthy and supervisor’s role to direct the Bank Company Act 1991).
must possess appropriate skills banks’ lending policies, but it is
and experience to operate the essential for the supervisor to As stated earlier, the auditor’s
bank in a sound and prudent be confident that the bank has opinion helps to establish the
manner. adopted a sound system for credibility of the financial
managing credit risk. statements. The auditor’s opinion,
• The bank’s organization and however, should not be interpreted
internal control must be • The development of as providing assurance on the
consistent with its business sophisticated real-time future viability of the bank or an
plans and strategies. computerized information opinion as to the efficiency or
systems has greatly improved effectiveness with which the
• The bank should have a legal the potential for control, but in management has conducted the
structure in line with its turn has brought with it affairs of the bank, since these are
operational structure. additional risks arising from the not objectives of the audit.
possibility of computer failure
• The bank must have adequate or fraud. The introduction of The auditor designs audit
capital to withstand the risks electronic commerce has also procedures to reduce to an
inherent in the nature and size introduced significant new risks acceptably low level the risk of
of its business. and requires, in turn, additional giving an inappropriate audit
controls. From supervisory opinion when the financial
• The bank must have sufficient point of view these are very statements are materially misstated.
liquidity to meet outflows of critical element. The auditor assesses the inherent
funds. risk of material misstatements
• Supervisors are concerned to occurring (inherent risk) and the
• The bank must have a robust ensure that the quality of risk that the entity’s accounting and
risk management framework to management is adequate for internal control systems will not
cover various banking risks, the nature and scope of the prevent or detect and correct
such as credit risk, market risk business and try to understand material misstatements on a timely
(including interest and foreign management’s business plans basis (control risk). Based on the
exchange risk), liquidity and and strategies and how it assessment of inherent and control
funding risk, operational risk, expects to achieve them. risk, the auditor carries out
legal risk and reputational risk Similarly, the supervisor seeks substantive procedures to reduce
and regularly monitor, measure to discover whether the bank is the overall audit risk to an
and limit its risk exposures to properly equipped to carry out acceptably low level.
the prescribed internal and its functions in terms of the
external limits. skills and competence of its The auditor considers how the
staff and the equipment and financial statements might be
• The bank is applying right facilities at its disposal. materially misstated and considers
methods and fair judgments to whether fraud risk factors are
calculate specific and general The Role of the Bank’s present that indicate the possibility
allowances that are adequate to External Auditor of fraudulent financial reporting or
absorb estimated credit losses, misappropriation of assets. The
on a timely basis, in The objective of an audit of a auditor designs audit procedures to
accordance with appropriate bank’s financial statements by an reduce to an acceptably low level
policies and procedures. In external auditor is to enable an the risk that misstatements arising
addition, the supervisor also independent auditor to express an from fraud and error that are
seeks to ensure that credit risk opinion as to whether the bank’s material to the financial statements
is adequately diversified by financial statements are prepared, taken as a whole are not detected.
means of rules to limit in all material respects, in
exposures, whether in terms of accordance with the applicable What are the additional
individual borrowers, industrial financial reporting framework (i.e. audit risk factors
or commercial sectors or Bangladesh Financial Reporting
particular countries or Standards) and in accordance with As all we know, Banks have the
economic regions. Although it any relevant regulations laid down following characteristics that

12 January - March 2013 The Bangladesh Accountant

generally distinguish them from capital to total assets is low), which were transferred to the bank.
most other commercial enterprises increases banks’ vulnerability
and hence external auditors need to adverse economic events • They engage in a large volume
to consider appropriate additional and increases the risk of failure. and variety of transactions
audit procedures: whose value may be
• They have assets that can significant. This ordinarily
• They have custody of large rapidly change in value and requires complex accounting
amounts of monetary items, whose value is often difficult to and internal control systems
including cash and negotiable determine. Consequentially a and widespread use of
instruments, whose physical relatively small decrease in information technology (IT).
security has to be safeguarded asset values may have a
during transfer and while being significant effect on their capital • They ordinarily operate
stored. They also have custody and potentially on their through networks of branches
and control of negotiable regulatory solvency. and departments that are
instruments and other assets geographically dispersed. This
that are readily transferable in • They generally derive a necessarily involves a greater
electronic form. The liquidity significant amount of their decentralization of authority
characteristics of these items funding from short term and dispersal of accounting and
make banks vulnerable to deposits (either insured or control functions, with
misappropriation and fraud. uninsured). A loss of consequential difficulties in
Banks therefore need to confidence by depositors in a maintaining uniform operating
establish formal operating bank’s solvency may quickly practices and accounting
procedures, well-defined limits result in a liquidity crisis. systems, particularly when the
for individual discretion and branch network transcends
rigorous systems of internal • They have fiduciary duties in national boundaries.
control. respect of the assets they hold
that belong to other persons. • Transactions can often be
• They often engage in This may give rise to liabilities directly initiated and completed
transactions that are initiated in for breach of trust. They by the customer without any
one jurisdiction, recorded in a therefore need to establish intervention by the bank’s
different jurisdiction and operating procedures and employees, for example over
managed in yet another internal controls designed to the Internet or through
jurisdiction. ensure that they deal with such automatic teller machines
assets only in accordance with (ATMs).
• They operate with very high the terms on which the assets • They often assume significant
leverage (that is, the ratio of commitments without any

The Bangladesh Accountant January - March 2013 13

initial transfer of funds other than, methodologies and mathematical When I was discussing the draft of
in some cases, the payment of models selected, access to this article with a very senior
fees/margins. These reliable current and historical chartered accountant with few
commitments may involve only market information, and the decades of experience in bank
memorandum accounting maintenance of data integrity. audit, he jokingly told me that
entries. Consequently their some people may interpret this
existence may be difficult to In view of the above, it is article as my effort to defend
detect. agreeable that in addition to the auditors or dilute auditor’s
usual competency of auditing and responsibilities by highlighting
• They are regulated by accounting standards, statutory or roles of other stakeholders.
governmental authorities, external audit of a Bank also Although his comment was a
whose regulatory requirements require additional knowledge and lighthearted one without much
often influence the accounting understanding on areas like seriousness attached to it, but
principles that banks follow. banking products/services, various taking the hint, for the purpose of
Non-compliance with macro and micro economic this article, I have extensively used
regulatory requirements, for indicators, applicable regulations relevant auditing standards and
example, capital adequacy etc. audit practice statements in its
requirements, could have original form without much
implications for the bank’s Also equally important to note that alteration. This way I have
financial statements or the an auditor can only effectively attempted to eliminate subjectivity
disclosures therein. discharge their responsibilities and reflected what requires as per
when other functionaries like standards for a bank audit that can
• Customer relationships (i.e. board, management and be termed as sufficient and
loans, deposits) that the auditor, regulator/supervisors are also appropriate. As this article has
assistants, or the audit firm may properly and diligently following already highlighted, fulfilling of all
have with the bank might affect their own roles and responsibilities. requisite roles and responsibilities
the auditor’s independence in a If any one party is falling behind in by only the auditor would not
way that customer relationships following its roles and result in sufficient and appropriate
with other organizations would responsibilities the work of other audit if all other stakeholders are
not. would suffer. not fulfilling their mutual
responsibilities.
• They generally have exclusive Conclusion
access to clearing and No doubt time has come for self
settlement systems for checks, The key theme of this issue of the assessment by auditors as to
fund transfers, foreign Bangladesh Accountant is very whether they are performing Bank
exchange transactions, etc. topical, as hardly any single day audits as required by standards or
has been passed during the last few this has become just a routine
• They are an integral part of, or months where not only business matter. At the same time it also
are linked to, national and and finance section, but even needs to be ensured that all other
international settlement systems headlines of local dailies were not stakeholders are also fulfilling their
and consequently could pose a free from news about banking respective responsibilities as
systemic risk to the countries in sector in Bangladesh. Many of without which an audit would not
which they operate. those articles also touched upon be adequate (i.e. sufficient and
the performance of external appropriate).
• They may issue and trade in auditors in their audit of banks.
complex financial instruments, Therefore, an attempt has been
some of which may need to be made through this article to reflect
recorded at fair values in the The Author is a Fellow Chartered
respective roles and responsibilities
financial statements. They Accountant and Director,
of auditors as well as other
therefore need to establish Hoda Vasi Chowdhury & Co.
stakeholders like board,
appropriate valuation and risk management and supervisors for
management procedures. The the conduct of a successful audit as
effectiveness of these all are quite interrelated.
procedures depends on the
appropriateness of the

14 January - March 2013 The Bangladesh Accountant

 Audit of Local and International
Commercial Banks:
an overview of Practices and Procedures
M Jalal Hussain FCA

Introduction exposure of Sonali Bank’s (a local state

owned commercial bank) loan scandal
with Hall Mark Group of Industries and
Commercial Bank (Bank), either local or Destiny Group of industries.
international, is required to be
incorporated under the laws of the land
Why Bank audit is different from
where they are incorporated as “Banking
Companies”. Every country has its specific other business entities?
laws, rules and regulations on how to
incorporate Banking Company, how it will Commercial banks have the following
be run, what are the requirements for distinctiveness which generally
audit, who will conduct the audit, what distinguishes them from most other
guidelines are to be followed and so on. commercial enterprises:
Generally the Auditors follow the local
and international standards and guide • Commercial banks of any country
lines while conducting an audit of a need special license from the Central
commercial bank. There are different Bank to run the operations of the
types of audit of banks: internal, external, bank and strictly follow the rules,
statutory, special and compliance audit. regulations and guidelines of the
External audit may be from the Central Central bank.
Bank, from the government auditors, from
the management on specific purposes, • They are the custodian of large
from the parliamentary audit committee. volumes of monetary items, including
Bank audit is completely different and cash and negotiable instruments,
unique in itself because banking whose physical security has to be
businesses are different from other assured. This applies both to the
ordinary businesses. The importance of storage and the transfer of monetary
banks’ audit has been increased items and makes banks vulnerable to
tremendously after the Global Financial misappropriation and fraud. Banks
and Economic Crisis started from the giant therefore need to establish and
economy of the United States since 2007. upgrade formal operating procedures,
In Bangladesh, special audit consideration well defined limits for individual
has been provided by various authorities discretion and effective systems of
including the stakeholders, the central internal control.
bank and the government, after the

The Bangladesh Accountant January - March 2013 15

• Banks engage in a large volume enterprises; special considerations are IN MANY CASES OF
and variety of transactions both required for the following reasons:
in terms of quantity and value. AUDIT: INTERNAL,
This necessarily requires strong • Since Banks operate the EXTERNAL, STATUTORY
internal control and in particular, businesses where risks are
the Bank’s management involved in many ways, special AND OTHER TYPES, FAIL
information system and related concentration of auditors have TO DETECT AND CONTROL
business processes relevant to become material;
financial reporting and FRAUD, ERRORS,
widespread use of electronic data • the particular nature of the NEGLIGENCE,
processing. business risks associated with the
transactions undertaken by MISAPPROPRIATION OF
• Banks normally operate through banks; FUND, LOAN SCAMS, ETC.
a wide network of branches and
departments which are • the scale of banking operations IN LARGE BANKS. IN
geographically located in and the resultant significant BANGLADESH, AUDIT
different parts of the country. exposures which can arise within
This necessarily involves a short periods of time; JOBS ARE CONDUCTED BY
greater decentralization of VARIOUS AUDITORS AND
authority and dispersal of • the extensive dependence on
financial reporting and internal computerized systems to process THERE ARE INTERNAL
control functions, with transactions; CONTROL SYSTEMS IN
consequent difficulties in
maintaining uniform operating • the outcome of the regulations in EXISTENCE BUT THE LOAN
practices and information the various jurisdictions in which SCAMS OF HALL MARK
systems, particularly when the they operate; and
branch network covers national AND DESTINY GROUPS
and international boundaries. • the ongoing development of new PROVE THAT BOTH
products and banking practices
• Banks often times assume which may not be matched by INTERNAL CONTROL AND
significant commitments without the concomitant development of VARIOUS AUDITS FAIL TO
any transfer of funds. These accounting principles and
items, normally called auditing practices. CONTROL AND PREVENT
“off-balance-sheet” items, may THE EMBEZZLEMENT OF
not involve accounting entries International and Local
and consequently the failure to HUGE FUND. FROM THE
Standards for conducting audit
record such items may be VARIOUS ANALYSIS AND
difficult to detect. of Banks:
INVESTIGATION IT IS
The International Auditing Practices
• They are regulated by EVIDENCED THAT THERE
governmental authorities and the Committee (IAPC) of the International
resultant regulatory requirements Federation of Accountants (IFAC) ARE MANY LAPSES AND
issues standards (ISAs) on generally
often influence generally WEAKNESSES IN THE
accepted accounting principles accepted auditing practices and on
and auditing practices within the related services and on the form and INTERNAL CONTROL
content of the auditor’s reports. These
Banking sector. SYSTEMS OF BANKS
standards are intended to improve the
degree of uniformity of auditing WHICH ARE NOT
Why special audit practices and related services
considerations arise in the DETECTED WHILE
throughout the world. In addition to
audits of banks? the international standards, there are CONDUCTING AUDITS BY
various standards framed by the local
THE AUDITORS.
As mentioned earlier, Banks do authorities, need to be followed by
business transactions which are the auditors. In addition, Banks are
different from other commercial required to follow the local standards,

16 January - March 2013 The Bangladesh Accountant

procedures and programs as as well as policies, plans, internal consider the assessment of control
embodied by the local authorities rules and procedures, and decrease risk to determine the appropriate
and the central banks. the risk of unexpected losses or detection risk to accept for the
damage to the bank’s reputation financial statement assertions and
Why reliance on the Internal due to corruption, baloney and to determine the nature, timing and
Control System of banks is malpractices by the employees of extent of substantive procedures
the bank. for such assertions. Where the
so important? auditor assesses control risk at a
Establishing degree of lower level, substantive procedures
Effective internal control system in would normally be less extensive
banking sector is a must. A system Reliance on Internal control:
than would otherwise be required
of effective control is a choleric and may also differ as to their
and diagnostic component of bank Management’s responsibilities
include the maintenance of nature and timing. Identifying,
management and a foundation for documenting and testing the
the safe and sound operation of adequate internal control, the
selection and application of operating effectiveness of control
banking organizations. A system of procedures
strong internal controls can help accounting policies, and the
ensure that the goals and safeguarding of the assets of the
entity. Who is responsible to introduce
objectives of a banking effective and strong internal
organization will be met, that the control system in banking
bank will achieve long-term The auditor is required to obtain a
sufficient understanding of the industries? The answer is simply
profitability targets, and maintain the Board of Directors of the bank.
reliable financial and managerial internal control to plan the audit
and develop an effective audit The Board of Directors of a bank
reporting. Such a system can also provides governance, guidance
help ensure that the bank will approach. After obtaining the
understanding, the auditor should and oversight to senior
comply with laws and regulations management. Board members

The Bangladesh Accountant January - March 2013 17

 the bank. Such procedures may be
operated hourly, daily,
weekly, or monthly,
depending on the volume,
nature of the transaction, level
of risk, and transaction
settlement time-frame.

• Many of the transactions

entered into by banks are
subject to particular
accounting rules. It will
therefore be necessary to have
control procedures in place to
ensure those rules are applied
in a manner and in a
time-frame which results in the
generation of accounting
entries that may be required
for the preparation of
appropriate financial
information for management
and external reporting.
Examples of such control
procedures are those which
result in the market
should be professional, objective, investing it. Additionally, bank revaluation of foreign
capable, and inquisitive, with a internal controls are necessary to exchange and security
knowledge or expertise of the ensure that the bank employees purchase and sale
activities of and risks run by the comply with the laws of the land commitments so as to ensure
bank. The Board should consist of and the rules, regulations issued by that all unrealized profits and
some members who are banks and the central bank. losses are recorded.
independent from the daily
management of the bank. A strong, In assessing the appropriateness of • Many transactions entered
active board, particularly when the individual internal controls into by banks are not
coupled with effective upward used to ensure that all transactions disclosed in the balance sheet
communication channels and are properly recorded, the auditor or even in the notes to the
capable financial, legal, and will need to take into account a financial statements.
internal audit functions, provides number of factors which are Accordingly, control
an important mechanism to ensure especially important in a banking procedures must be in place to
the correction of problems that environment. These are as follows: ensure that such transactions
may diminish the effectiveness of are recorded and monitored in
the internal control system. The • Banks deal in large volumes of a manner which provides
Board of Director should realize transactions, which can management with the required
the importance of effective internal individually and cumulatively degree of control over them
control system as banks handle involve large amounts of and which allows for the
billions of Taka of money that money. Accordingly, the bank prompt determination of any
belongs to individual depositors, will need to have balancing change in their status which
businesses and other entities. and reconciliation procedures needs to result in the
Internal bank controls ensure that which are operated within a recording of a profit or loss.
account holders can safely deposit time-frame that provides the
money into banks without having ability to detect errors and • New financial products and
to contend with the risk that a bank discrepancies so that they can services are constantly being
employee might misuse the money be investigated and corrected developed by banks. The
or put it in jeopardy by recklessly with a minimal risk of loss to auditor needs to obtain

18 January - March 2013 The Bangladesh Accountant

reasonable assurance that transactions must be recorded in a Why audit is not enough to
necessary revisions are made manner which is capable of detect and control fraud in
in accounting procedures and being verified both internally
related internal controls. and by the bank’s customers
banks?
and counterparties. The level
Although the audit of banks are
• End of day balances may not of detail to be recorded and
conducted by the professionals,
be indicative of the volume of maintained on individual
experts with due consideration to
transactions processed through transactions must allow for
internal control systems in banking
the systems or of the bank management,
businesses, there are lots of frauds,
maximum exposure to loss transaction. Counter parties,
misappropriation and misuse of
during the course of a business and the bank’s customers to
fund, loans scam and on and on
day. This is particularly verify the accuracy of the
remain unearthed and uncovered
relevant in executing and amounts. An example of such
around the modern world. In many
controls in these areas must a control is the continuous
cases of audit: internal, external,
take into account the ability to verification of foreign
statutory and other types, fail to
maintain control during the exchange trade tickets by
detect and control fraud, errors,
period of maximum volumes having an independent
negligence, misappropriation of
or maximum financial employee match them to
fund, loan scams, etc. in large
exposure. incoming confirmations from
banks. In Bangladesh, audit jobs
counterparties.
are conducted by various auditors
• The majority of banking
and there are internal control

The Bangladesh Accountant January - March 2013 19

 example, the auditors identified
TierOne’s Asset Classification
Committee as a key ALLL control.
But there was no reference in the
audit work papers to whether or
how the committee assessed the
value of the collateral underlying
individual loans evaluated for
impairment, and the committee did
not generate or review written
documentation to support
management’s assumptions. Given
the complete lack of
documentation, the auditors had
insufficient evidence from which to
conclude that the bank’s internal
controls for valuation of collateral
were effective. The SEC’s order
alleges that the auditors engaged in
improper professional conduct as
defined in the securities laws. A
hearing will be scheduled before
an administrative law judge to
systems in existence but the loan investigation found that the determine whether the allegations
scams of Hall Mark and Destiny auditors failed to appropriately contained in the order are true and
Groups prove that both internal scrutinize management’s estimates what, if any, remedial sanctions are
control and various audits fail to of TierOne’s allowance for loan appropriate. The judge is expected
control and prevent the and lease losses (known as ALLL). to issue an initial decision within
embezzlement of huge fund. From Due to the financial crisis and 300 days from the date of service
the various analysis and problems in the real estate market, of the order (Topbeancounter |
investigation it is evidenced that this was one of the highest risk January 10, 2013).
there are many lapses and areas of the audit, yet the auditors
weaknesses in the internal control failed to obtain sufficient evidence Conclusion:
systems of banks which are not supporting management’s
detected while conducting audits estimates of fair value of the It has become conspicuously
by the auditors. Loopholes in the collateral underlying the bank’s evident that the banks are in no
existing legal system help the loan troubled loans. Instead, they relied way obviated of corrupt and
defaulters and the criminals to on stale information and fraudulent practices after all.
escape punishment. Banks, in most management’s representations, and Abundant facts in the recent
of the cases, fail to realize loan they failed to heed numerous red studies attest to this claim. The
from the defaulting borrowers as flags when issuing unqualified banking sector in particular has
the borrowers come out by using opinions on TierOne’s 2008 become a terrain for various
the legal network without paying financial statements and the bank’s appalling corrupt and fraudulent
back the loan amount. As a result internal controls over its financial practices. In addition, the recent
the amount of classified loans reporting. studies noted that the internal
increases every year. mechanisms in the banks are not
According to the SEC’s order, the sufficient to guarantee transparent
In USA the SEC has recently internal controls identified and and accountable service in the
charged three former executives of tested by the auditing engagement conduct of official business in the
a bank, Tier OneBank, responsible team did not effectively test sector. Mere conventional audit is
for a fraudulent scheme. management’s use of stale and not enough to protect the banking
inadequate appraisals to value the industries from entwine of
New charges were also brought collateral underlying the bank’s corruption and fraud. The audit
against its auditors. The SEC’s troubled loan portfolio. For procedures, plans and programs of

20 January - March 2013 The Bangladesh Accountant

the auditors need to be considered to be the most enable the banks to realize the
reorganized to cope with modern important contraptions for default loans and the defaulters get
complicated and electronic protecting banks from punishment and cannot escape
banking system. Auditors should irregularities, frauds and punishment by using the laws of
give more emphasis on the internal mismanagement. It is copacetic the land.
control system and evaluate the from the present world economic
effectiveness of the system. The scenarios that the more
stakeholders and the management economically developed countries
The Author is the Group Financial
of the bank must establish and have track record of strong and
Controller of a private Group of
upgrade the transparency and effectual transparency and
Industries and Fellow Chartered
accountability in the banking accountability in banking sector
Accountant of ICAB
operation and management economy. The legal systems of the
system. Accountability and developing economies like
transparency are celestially Bangladesh need to be amended to

The Bangladesh Accountant January - March 2013 21

 Profitability Trend in the Banking Sector of
Bangladesh- a Comparative Study of
Islamic and Conventional Banks 1
Ishter Mahal | 2Benazir Rahman

Abstract in the economic and fiscal discipline,

trade, commerce, industry, export and
import. Banks are the only media through
Profitability is the ultimate test of which both national and international
managements’ operating effectiveness and trade and commerce emanated.
success of a financial institution. Bangladesh has a mixed banking system
However, profit is one of the quantitative comprising nationalized, private and
elements which reflect the bank foreign commercial banks. Bangladesh
performance story. Baking industry of Bank is the central bank of the country
Bangladesh has developed tremendously. and is in charge of monetary policies of
Among contributory financial the Government and all commercial
organizations both conventional and banks.
Islamic banks of Bangladesh are making
significant contribution in economic Now-a-days Commercial banks play a key
development of Bangladesh. But both role in the economic development of a
types of bank need to ensure sustainability nation through mobilization of savings
along with the profitability by maintaining and allocation of credit to productive
adequate liquidity. In the recent years sectors. Nevertheless, directed and
banks are developing at a high growth inefficient credit allocation by the
rate. Both of these banks are concentrated commercial banks of Bangladesh in
in their profitability trend for better various economic sectors without
sustainability. Profitability depends on the adequate credit appraisal and monitoring,
overall performance efficiency of the ultimately led to the widespread loan
bank. The study shows a comparative delinquency, and deteriorating health of
study between conventional and Islamic the entire financial system. The
banking system of Bangladesh and reveals commercial banking system dominates
the competitive scenario for both sectors. Bangladesh's financial sector. There are 54
banks performing their functions in
Introduction Bangladesh excluding Bangladesh Bank.
Out of these, 4 are nationalized
Banking is the backbone of national commercial banks, 29 are private
economy. All sorts of economic and commercial banks (conventional), 7
financial activities revolve round the axis Islamic banks, 9 are foreign commercial
of banks. In the global context, the role of banks and 5 are specialized development
banks is far-reaching and more penetrating banks. These banks are offering a variety

22 January - March 2013 The Bangladesh Accountant

of products to their clients. In doing  To focus on factors influencing AFTER ANALYZING
their business most crucial part is to the growth as well as profitability
manage their credit efficiently as their of these two sectors of banking. THE AVERAGE
profit mostly depends on the proper PROFITABILITY RATIOS IT
management of credit. The next Limitation of the study
session will focus on literature IS FOUND THAT BOTH THE
review, third session focuses on  Privacy of Information: All the 10 SECTORS ARE DOING WELL
company analysis, fourth session will banks selected as a sample are
include the analysis part and fifth BUT THEIR CLASSIFIED
prominent banks of Bangladesh.
session will focus on conclusion. For maintaining privacy, only LOANS/INVESTMENTS
limited information was available AMOUNT SHOULD BE
Objective to use in the project. Another
limitation of this study is bank’s MAINTAINED AT A
Broad Objective policy of not disclosing some TOLERABLE LEVEL. AFTER
data and information for obvious
The main objective is to focus on the reason, which could be very THE COMPARATIVE STUDY
profitability trend of both much useful. IT IS FOUND THAT
Conventional and Islamic banking
system in Bangladesh taking 5 banks  Time Limitation: Such short time PROFITABILITY TREND OF
from each category and comparing period of 3-months is not enough SELECTED ISLAMIC BANKS
them by applying appropriate tools. to learn everything about
banking sector. Time limitation ARE HIGHER BUT AVERAGE
Specific Objectives will also hinder the study. PROFITABILITY RATIOS OF
The specific objectives of this paper  Data Collection: collecting data CONVENTIONAL BANKS
are the following: through all the filtering and SHOWS BETTER POSITION.
getting approval to use these data
 To study the Overall profitability was difficult. The main constraint THOUGH ISLAMIC
trend of both Islamic banks and of the study is limited access to BANKS’GROWTH RATE IS
Conventional banks in information, which has
Bangladesh based on their 5 hampered the scope of analysis BETTER BUT
years‘ performance of selected required for the study. CONVENTIONAL BANKS’
banks.
 Sampling Problem: We have just RATIOS ARE IN BETTER
 To find out the impact of worked with 10 banks amongst POSITION. IT MAY
profitability of these banks to the all the commercial banks which
overall banking sector in last 5 is so small as a sample. BECAUSE OF THESE
years. BANKS HAVE BETTER RISK
Literature Review
 To show the impact of deposits MANAGEMENT
and Loans/investments on Bader et al (2008) measured and TECHNIQUES AND ALSO
profitability of banks selected compared the cost, revenue and
from two sectors through profit efficiency of 43 Islamic and 37 DIVERSIFIED RANGE OF
regression analysis for 5 banks conventional banks over the period INVESTMENTS. IN SHORT,
from each sector. 1990-2005 in 21 countries using Data
Envelopment Analysis. They assessed IT CAN BE SAID THAT
 To show a comparative analysis the average and overtime efficiency BOTH SYSTEMS HAVE
of two sectors of banking in the of those banks based on their size,
light of selected 10 banks. age, and region using static and DIFFERENT COMPETITIVE
dynamic panels and suggested that ADVANTAGES IN THEIR
 To point out the lacking that there are no significant differences
reflects in different banks’ between the overall efficiency results FIELD WHICH INFLUENCE
performance. of conventional versus Islamic banks. THEIR PROFITABILITY.
Abdul & Azmi (2011) found in their

The Bangladesh Accountant January - March 2013 23

 any differences of profit rate on
investments of Islamic Bank against
fixed lending rate of local
conventional banks, foreign
conventional banks and state
owned commercial banks in
Bangladesh. Analysis revealed that
the foreign commercial banks
charged the highest rate on the
borrowers during the selected
periods. It has also been found that
there is a significant difference in
mean return among Islamic banks,
local conventional banks, foreign
conventional banks and state
owned commercial banks.

study that while there are no addresses the large number of

Selection of Banks / Samples
significant difference in business requirements successfully
profitability during these two hence perceiving Islamic banking
In this study the focal point is to
periods, Bank Islam Malaysia as totally foreign to business world
make a comparative analysis
Berhad (BIMB) is relatively more is not correct. Islamic banking is
between conventional and Islamic
liquid and less risky as compared not a mere copy of conventional
banking sector. For the study
to conventional banks. On top of practices rather major differences
purpose we have selected 10
that, basic modes of Islamic exist in the operations of Islamic
banks of Bangladesh as our
banking, i.e. mudharabah and Financial Institutions (IFIs) in
sample; 5 banks from each sector.
musyarakah, are not of significant comparison with conventional
This study will focus on the
financing portfolio for Bank Islam banking. IFIs have succeeded in
profitability trend of these two
Malaysia Berhad (BIMB). Usman & creating trust in the eyes of
sectors in the light of recent
Khan (2012) have done a research depositors and receive deposits on
(2006-2011) 5 year’s performance
on Financial Performance of profit and loss sharing basis
of selected 10 banks. For the
Islamic and Conventional Banks of however investment and financing
research selected banks are as
Pakistan and concluded that options available to Islamic banks
follows-
Islamic banks have high growth are limited in comparison of
rate and profitability over the conventional banks.
conventional banks. Moreover the
Islamic banks have high liquidity Shamsher, Taufiq & Khaled
power over conventional banks. measured and compared the cost
Alani, Yaacob & Hamdan (2013) and profit efficiency of 80 banks in
mentioned in their research 21 of Organization of Islamic
perhaps the most important of the Conference (OIC) countries:
current analysis used in traditional comprising of 37 conventional
banks are irrelevant in assessing banks and 43 Islamic banks, using Conventional Banks
the efficiency of the financial the Stochastic Frontier Approach
performance of Islamic banks (SFA). The findings suggest that
because of their privacy. They there are no significant differences
urged researchers to focus on between the overall efficiency
formulation of new analysis tools results of conventional versus
with focusing on Islamic banks. Islamic banks. However, there is
substantial room for improvement
Hanif (2011) depicted based on his in cost minimization and profit
research Islamic banking is very maximization in both banking
much practiced like modern systems. Kabir, Hafiz and Musa Islamic Banks
conventional banking with certain (2012) did a study which was an
restrictions imposed by Sharia and attempt to find whether there are

24 January - March 2013 The Bangladesh Accountant

Comparison between Conventional & Islamic Banking in Bangladesh
After ananlyzing the recent 5 year’s senario of selected 10 banks we have got following result;

General Distinctions

Conventional Banks Islamic Banks

Distinction of Product /Service :
Principles of Deals with man-made principles or principles Deals with Shariah based principles o n the
business provided by BB . basis of Islamic Shariah under the
supervision of BB.
Variation in Conventional goals are almost similar as Islamic banks mainly providing
goals Islamic ones in case of profitability & concentration on improving profit margin as
improving shareholder’s earnings. But now well as increasing shareholder’s equity. But
these banks are also concentrated in CSR now these banks also improving their
such as environment consciousness and technology and concentrated in CSR
developing advanced technology as well. activities but these are left behind than
conventional ones.
Variation in Conventional banks maintains following Islamic banks receive deposits under two
Deposit schemes generally but used different names principles:
for the schemes to distinguish from each  Al-Wadeeah principle
other’s products  Mudaraba prin ciple
 Fixed Deposit (FDR)
 Savings or Short notice Deposit(SND)
 Current Deposit(CD)
Other Conventional banks believe in Letter of Islamic banks issues letter of guarantee most.
Facilities Credit ( L/C) most .
Business Efficiency:
Profitability Profitability of conventional banks depends Profitability of Islamic banks depends on
on Loans and investments both. only investments sectors.
Liquidity & These banks have to maintain more SLR that These banks have to maintain SLR 10.5%
Solvency is 19% now. which is lower than conventional ones.
Sources of Conventional banks use deposits as a core Islamic banks also collect funds through
Funds source of banks in exchange of fixed deposit deposits on the basis of profit & loss
interest. Sharing (PLS).
Uses of Funds These banks mainly invest in loans & These banks mainly invest as per Islamic
advances as a core function of the banks & Shariah.
also invest in many sectors on term basis.
Business The growth profile of selected conventional Growth rate of selected Islamic banks are
development banks indiates better positon. higher than the conventional ones.
Efficiency The selected conventional banks shows The selected Islamic banks also shows better
&Productivity efficiency and productivity in the recent efficiency & productivity in the recent years.
years. But the growth of these banks are higher
than conventional ones.
Commitment These banks are in better situation as they Islamic banks are not an exeption.
to Economy have handsome amount that is invested in
&Community long-term investments.

The Bangladesh Accountant January - March 2013 25

Comparative Financial Analysis(Statistical Calculation & its Interpretation)

Multiple Regression-1 (For Conventional banks): For the regression analysis we have selected following
variables;

Net Profit After Tax- Dependent Variable (Y)

Deposits- Independent variable (X1)
Loans & Advances- Independent variable (X2)
Descriptive Statistics
Mean Std. N Correlations
Deviation PROFIT DEPOSIT LOANS
PROFIT 1174.9340 882.2125 5 Pearson PROFIT 1.000 .928 .951
DEPOSIT 48719.0000 16612.7650 5 Correlation
LOANS 41720.5640 15484.9360 5 DEPOSIT .928 1.000 .994
LOANS .951 .994 1.000
Variables Entered/Removed Sig. (1-tailed) PROFIT . .012 .007
Model Variables Variables Method DEPOSIT .012 . .000
Entered Removed LOANS .007 .000 .
1 LOANS, . Enter N PROFIT 5 5 5
DEPOSIT DEPOSIT 5 5 5
a. All requested variables entered. LOANS 5 5 5
b. Dependent Variable: PROFIT

Model Summary
R R
2
Adjusted R
2
Std. Error of Change Statistics
the Estimate
Model 2
R Change F Change df1 df2 Sig. F Change
1 .964
a .929 .859 331.6207 .929 13.154 2 2 .071
a. Predictors: (Constant), LOANS, DEPOSIT

Coefficient of correlation (R): Adjusted R2: after the analysis that the
proportion is 0.859 or 85.90%.
It measures the degree of Here Adj. R2= 0.859. R square
relationship between the shows the proportion of variability Standard Error of Estimate:
dependent and independent in the dependent variable that can
variables. Here, R = 0.964 be explained by multiple Standard error of estimate denotes
indicates that there is a positive regressions. Adjusted R Square is the error of overall estimation of
correlation between the variables.If the actual variability which is the multiple correlations. Here the
the independent variable increases adjusted for both the independent error is 331.6207 which indicate
then this will result the dependent variables. It is actual R2 needed the variability between the
variable increase accordingly. when we add the second expected and actual value.
independent variable. It is found
Coefficient of Determination(R2):
ANOVA
R2 shows the proportion of the
variability in the dependent Model Sum of Squares df Mean Square F Sig.
variable that can be explained by 1 Regression 2893250.743 2 1446625.372 13.154 .071
the estimated multiple regression Residual 219944.545 2 109972.273
equation.Here R2 is equal to 0.929 Total 3113195.288 4
(92.9% expressed in percentage) a. Predictors: (Constant), LOANS, DEPOSIT
indicates 92.9% of the variability b. Dependent Variable: PROFIT
in Profit after tax is explained by
the input variables.

26 January - March 2013 The Bangladesh Accountant

Here t-Test:
t- Test is used to determine
Sum of squares due to regression, (SSR) = 2893250.743
whether each of the independent
Sum of square due to error, (SSE) = 219944.545
variable is significant. We refer to
Total sum of square (SST) = 3113195.288
each of the separate T Test for each
of the independent variable as a
F-Test:
test for individual significance.
The F Test is used to determine whether a significant relationship
All the t values of our variables are
prevails between the dependent variable and independent variables. It is
(-1.239), (-0.850) and 1.396 and
considered as the test for overall significance. Here the hypothesis for
using
the F test is deemed as there is no significant relationship between
α =.50, t0.25 = 0.816
dependent and independent variables. The alternative hypothesis is vice
versa. Since 1.239>0.816 we reject H0:
ß1=0
Therefore the null hypothesis is:
Since 0.850>0.816 we reject H0:
Ho: ß1 = ß2 = 0 ß2=0
Similarly 1.396>0.816 we reject
Ha: one of the parameters is not equal to zero H0: ß3=0
Hence there is a significant
If null hypothesis is rejected we can conclude that the overall
relationship between PAT and
relationship between Y(PAT) and independent variables X1(Deposits) &
deposits & Loans at significance
X2 (Loans) is significant.
level of 0.50.
Test Statistic, F= MSR/MSE
Regression Analysis:
13.154
And the given table value is 9.00 with the level of significance, Here,
Dependable Variable-
α= 0.10 Profit after Tax (PAT)
As 13.154 is higher than table value so we certainly derive that the null
hypothesis is rejected. So, the overall relationship is significant. Independent Variables-
Deposits (X2)
Calculation of Coefficient –Annexure I Loans & Advances (X3)

Coefficient Correlations Findings:

From the output above we can
Model LOANS DEPOSIT
bring out an equation that is like:
1 Correlations LOANS 1.000 -.994
DEPOSIT -.994 1.000 Y= a+β2X2+β3X3
Co variances LOANS 9.679E-03 -8.968E-03 PAT =-755.208-7.799 Deposits
DEPOSIT -8.968E-03 8.409E-03 +0.137Loans & Advances
a. Dependent Variable: PROFIT
Here (-7.799) represent an
Collinearity Diagnostics estimate of the changes
Eigen value Condition Variance corresponding to single quantity
Index Proportion changes in deposit volume which
s is in inverse relation that for 1
Model Dimensio (Constant) DEPOSIT LOANS increasing or decreasing
n arrangement with deposit volume
1 1 2.937 1.000 .01 .00 .00 results 7.799 decrease or increase
2 6.280E-02 6.838 .63 .00 .00 the PAT.Similarly 1 increasing or
3 5.426E-04 73.565 .36 1.00 1.00 decreasing arrangement with loans
a. Dependent Variable: PROFIT

The Bangladesh Accountant January - March 2013 27

& advances results 0.137 likelihood to increase or decrease the PAT which is in positive relationship.
(-0.755.208) represent the value of β1 which is constant coefficient that shows the reduction of PAT when two
independent variables are zero (0).

If we calculate regression from different samples we can get the following standard errors of Y intercept β1, β2
and β3for deposits & loans are 609.691, 0.092 & 0.098.

Multiple Regression-2 (For Islamic banks) :

For the regression analysis we have selected following variables;

Net Profit After Tax- Dependent Variable (Y)

Deposits- Independent variable (X1)

Investments- Independent variable (X2)

Descriptive Statistics
Mean Std. N Correlations
Deviation PROFIT DEPOSIT LOANS
PROFIT 1253.6780 769.4472 5 Pearson PROFIT 1.000 .978 .981
DEPOSIT 74078.9240 27057.356 5 Correlation
3 DEPOSIT .978 1.000 .998
LOANS 68401.7600 28159.013 5 LOANS .981 .998 1.000
2 Sig. (1- PROFIT . .002 .002
tailed)
Variables Entered/Removed DEPOSIT .002 . .000
Model Variables Variables Method LOANS .002 .000 .
Entered Removed N PROFIT 5 5 5
1 LOANS, . Enter DEPOSIT 5 5 5
DEPOSIT LOANS 5 5 5
a. All requested variables entered.
b. Dependent Variable: PROFIT

Model Summary
R R2 Adjusted R2 Std. Error of Change Statistics
the Estimate
Model R2Change F Change df1 df2 Sig. F Change
1 .98 .963 .927 207.9287 .963 26.388 2 2 .037
2
a. Predictors: (Constant), LOANS, DEPOSIT

28 January - March 2013 The Bangladesh Accountant

Coefficient of correlation (R):
It measures the degree of relationship between the dependent and independent variables. Here R= 0.982
indicates that there is a positive correlation between the variables. If the independent variable increases then
this will result the dependent variable increase accordingly.

Coefficient of Determination (R2):

Here R2 is equal to0.963 (96.30% expressed in percentage) indicates 96.30% of the variability in Profit after
tax is explained by the input variables.

Adjusted R2:
Here Adj. R Square= 0.927
It is found after the analysis that the proportion is 0.927or 92.70%.

Standard Error of Estimate:

Standard error of estimate denotes the error of overall estimation of the multiple correlations. Here the error
is 207.9287 indicates the variability between the expected and actual value.

Here,
Sum of squares due to regression, (SSR) = 2281727.338
Sum of square due to error, (SSE) =86468.688

Total sum of square (SST) = 2368196.025

ANOVA
Model Sum of Squares df Mean Square F Sig.
1 Regression 2281727.338 2 1140863.669 26.388 .037
Residual 86468.688 2 43234.344
Total 2368196.025 4
a. Predictors: (Constant), LOANS, DEPOSIT
b. Dependent Variable: PROFIT

F-Test:
The F Test is used to determine whether a significant relationship prevails between the dependent variable
and independent variables. It is considered as the test for overall significance. Here the hypothesis for the F
test shows significant relationship between dependent and independent variables. The alternative hypothesis
is vice versa.

Therefore the null hypothesis is:

H o: ß 2 = ß 3 = 0
Ha: one of the parameters is not equal to zero
If null hypothesis is rejected we can conclude that the overall relationship between Y (PAT) and independent
variables X1 (Deposits) & X2 (Investments) is significant.

Test Statistic, F= MSR/MSE

= 26.388
And the given table value is 9.00 with the level of significance,
α= 0.10
As 26.388 is higher than table value so we certainly derive that the null hypothesis is rejected. So, the overall
relationship is significant.

The Bangladesh Accountant January - March 2013 29

Here t-Test:

Sum of squares due to regression, (SSR) = 2893250.743 t- Test is used to determine

Sum of square due to error, (SSE) = 219944.545 whether each of the independent
Total sum of square (SST) = 3113195.288 variable is significant. We refer to
each of the separate T Test for each
F-Test: of the independent variable as a
test for individual significance.
The F Test is used to determine whether a significant relationship
Allthe t values of our variables are
prevails between the dependent variable and independent variables. It is
(-0.857), (-0.168) & 0.632 and
considered as the test for overall significance. Here the hypothesis for
using
the F test is deemed as there is no significant relationship between
dependent and independent variables. The alternative hypothesis is vice α =.50, t0.25 = 0.816
versa. Since 0.857>0.816 we reject H0:
ß1 = 0
Therefore the null hypothesis is:
Since 0.968<0.816 we reject H0:
Ho: ß1 = ß2 = 0 ß2 = 0
Similarly 1.632<0.816 we reject
Ha: one of the parameters is not equal to zero H 0: ß 3 = 0
Hence there is significant
If null hypothesis is rejected we can conclude that the overall
relationship between PAT and
relationship between Y(PAT) and independent variables X1 (Deposits) &
deposits & Investments.
X2 (Loans) is significant.
Regression analysis:
Test Statistic, F= MSR/MSE
13.154 Here,
And the given table value is 9.00 with the level of significance, Dependable Variable - Profit after
Tax (PAT)
α= 0.10
Independent Variable- Deposits
As 13.154 is higher than table value so we certainly derive that the null
(X2)
hypothesis is rejected. So, the overall relationship is significant.
Investments(X3)

Calculation of Coefficient – Annexure II Finding:

From the output above we can
Coefficient Correlations bring out an equation that is like:
Model LOANS DEPOSIT
Y= a+β2X2+β3X3
1 Correlations LOANS 1.000 -.998
DEPOSIT -.998 1.000 PAT = -494.547-1.012 Deposits
Covariances LOANS 3.340E-03 -3.469E-03 +3.652 Investments
DEPOSIT -3.469E-03 3.618E-03
a. Dependent Variable: PROFIT Here (-1.012) represent an estimate
of the changes corresponding to
Collinearity Diagnostics single quantity changes in deposit
Eigenvalue Condition Variance volume which is in inverse relation
Index Proportions that for 1 increasing or decreasing
Model Dimension (Constant) DEPOSIT LOANS arrangement with deposit volume
results 7.799 decrease or increase
1 1 2.926 1.000 .00 .00 .00
the PAT.Similarly 1 increasing or
2 7.417E-02 6.281 .23 .00 .00
decreasing arrangement with loans
3 2.165E-04 116.234 .76 1.00 1.00
& advances results 3.652
a. Dependent Variable: PROFIT
likelihood to increase or decrease

30 January - March 2013 The Bangladesh Accountant

the PAT which is in positive relationship. (-494.547) represent the value of β1 which is constant coefficient that
shows the reduction of PAT when two independent variables are zero (0).

If we calculate regression from different samples we can get the following standard errors of Y intercept β1, β2
and β3 for deposits & loans are 577.084, 0.060 & 0.058.

Comparative position of both regression analysis

Both the systems are in almost similar situation as per the analysis. Wehave used only the average of selected
banks &found that profit of both banking systems are influenced by deposits and Loans/Investments.

SWOT Analysis
For Conventional Banks

Strengths Weaknesses
 Huge product line  Strict regulations provided by BB than Islamic
 Fixed rate of return ones
 Have various management skills to be utilized  Greater rate of loan default

Opportunities Threats
 Diversed loan facilities or options can be created  Huge credit risk
 Easy access in money market/ interbank borrowing  Demand of clients change frequently
 Strong customer background  May more restrictions imposed by BB
 Can invest in those sectors which are prohibited by
Islamic Shariah

For Islamic Banks

Strength Weakness
 Strong Shariah based product lines  Lack of Shariah manual or guidelines
 Less credit risk than conventional ones  Lack of linkages with training institutes and
 Flexible rules & regulations provided by BB Shariah supervisory bodies
 Lack of management’s commitment in strictly
following the Shariah guidelines

Opportunities Threats
 Huge investment opportunities  Insufficient legal protection
 Strong religious influence  Market demand may change
 Lack of unified Shariah rulings
 Shortage of supportive and link institutions; and
 Shortage of skilled and trained manpower in
Islamic Shariah banking.
 Lack of linkages with other Islamic banks and
Islamic NGOs for extending micro credit.

The Bangladesh Accountant January - March 2013 31

PEST Analysis
This analysis mainly deals with macro environment that affect banks.
Factors Conventional Banks Islamic banks
Political As our economy greatly influenced by political Islamic banks are not exceptions.
instability, our commercial banks are also
affected by this issue.
Economic Commercial banks are highly affected by Same goes for Islamic banks.
monetary and fiscal policies. Tax rate for banks
are 42.50%. Any change in these policies will
affect banks significantly.
Socio-cultural Many people avoid commercial banking Islamic banks have strong cultural &
products due to presence of interest. religious background in Muslim country like
But conventional banks have strong reputation Bangladesh as many people avoid interest
in corporate world than Islamic banks as most due to religious issue. So Bangladesh are
of them are old and experienced players. getting Islamic banking facilities.
But except IBBL most of them are new
players in the market.
Technological Conventional banks are now providing Islamic banks are also trying to cope with
e-services frequently to capture the market the change by providing e-services to their
especially the corporate clients and the clientele.
youth. Now-a-days these banks also providing
debit card facilities which facilitate instant
cash needs such as in time of shopping.

Concluding Remarks banking facilities due to religious  Need to take necessary steps
influence. Many of us don’t to balance between Liquidity
Statutory Liquidity Reserve(SLR) is appreciate interest as Islam & solvency and profitability.
the reserve that every scheduled prohibits interest.
bank in Bangladesh must maintain  Must prepare for sudden
with Bangladesh Bank (BB). For concluding the study some shocks so that no crisis arises
Conventional banks have to recommendations have been listed in time of uncertain situations
maintain more reserve than Islamic as follows; like seasonal demand.
ones. So they face more difficuty to
balance between liquidity & For Conventional Banks  Must ensure easy access in
profitability. money market & ability to
 Conventional banks have meet up problems by avoiding
For Conventional Banks lucrative ratio. They must try short-term inter-bank
SLR-19.0% For Islamic Banks to maintain this in future. borrowing arrangement when
SLR-10% money rate is too high.
(Banglapedia: Bangladesh Bank,  These banks have huge credit
accessed 2011) risks as Loans are their main  Should try to make their
product. So they need to schemes’ terms & conditions
Islamic banks have flexible maintain risk management flexible.
regulations than conventional ones process so that they could
in case of SLR. So these banks can avoid high risky situations.  Should concentarte on CSR
invest more funds in market. activities to create public
Islamic banks have to follow  They have vast invetment awareness.
Shariah principles according to opportunity so they should try
Islamic Shariah. So these banks to utilize such opportunity. For Islamic Banks
need to improve their efficiency by
maintaining such laws. As  Must concentrate in risk  Islamic banks have good
Bangladesh is a Muslim country, so management system more potential in Bangladesh as it is
many people like to get Islamic efficiently. a Muslim Country. They must

32 January - March 2013 The Bangladesh Accountant

 banks due to their glorious history
of business since liberation.
Throughout the study it is found
that both the sectors are
developing & profitability trends
are in increasing mode. As in this
study we have worked on only 10
banks, 5 banks from each sector.
The performance study concludes
that Islamic banks are superior to
conventional banks. But it is not
likely that solely Islamic banks are
better performing organizations
rather conventional banks have
also noteworthy performance and
significant contribution in different
economic segments. After
analyzing the average profitability
ratios it is found that both the
sectors are doing well but their
try to improve more and more their  Should try to improve classified loans/investments
services to retain the market as business efficiency as well for amount should be maintained at a
well as create new demand. the future betterment. tolerable level. After the
comparative study it is found that
 As Islamic banks need to  Should concentarte on CSR profitability trend of selected
invest according to Islamic activities to create public Islamic banks are higher but
Shariah. They need to awareness. average profitability ratios of
concentrate more on those conventional banks show better
sectors where they have huge  As these face difficulty to position. Though Islamic banks’
opportunity. access short-term borrowing growth rate is better, conventional
sources these need to prepare banks’ ratios are in better position.
 These must concentrate to for such uncertain situations. It may be because these banks
enrich their product line. have better risk management
Among all the contributory techniques and also diversified
 Must improve their risk organizations in financial system range of investments. In short, it
management process as per commercial banks both can be said that both systems have
BB guidelines. conventional & Islamic banks are different competitive advantages in
making significant contribution in their field which influence their
 Must concentrate on the economic development of profitability.
promotional activities to Bangladesh. Profitability of
attract new customers. banking industry has significant Bibliography
contribution in our Country’s
 As these need to maintain Gross Domestic Product (GDP).  DAMODAR N.
lower reserve than Banks are developing rapidly GUJARATI(2006) Essentials of
conventional ones, they must now-a-days. Both the banking Econometrics, 3rd ed., USA:
invest the excess amount systems are improving in their own Mc Graw-Hill Irwin.
efficiently to increase field. Our traditional/cultural as
profitability. well as religious values allow us to  JAMES C. VAN HORNE,
accept & depend on Islamic JOHN M. WACHOWICZ, JR.
 Need to improve customer banking gradually as our religion (2006-07) Fundamentals of
care services to enhance more Islam prohibits “Riba” or interest. Financial Management, 12th
and more customer On the other hand, corporate ed.,England: Financial Times
confidence. world generally maintain Prentice Hall.
relationship with conventional
banks & also people trust these

The Bangladesh Accountant January - March 2013 33

 Vol. 8, No. 4; 2013, ISSN
1833-3850 E-ISSN 1833-8119,
Published by Canadian Center
of Science and Education,
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 Shamsher Mohamad, Taufiq

Hassan & Mohamed Khaled I.
Bader, Efficiency of
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Banks: International Evidence
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Approach (SFA), Journal of
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and Finance,
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_n2_article5.pdf

 Kabir Mohammad Rokibul ,

Ullah Md. Hafiz and Khan
Md. Musa, Comparative
Analysis of Profit Rate of
Islamic Banks on Investment
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Conventional Banks in
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Bangladesh, World Journal of
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Profit Efficiency of Islamic Banks of Pakistan: A
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Versus Conventional Banks: Comparative Analysis,
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International Evidence Using International Journal of
Data Envelopment Analysis, Business and Social Science
 Hamid Mohamad Abdul,
Islamic Economic Studies, Vol. Vol. 3 No. 7; April 2012.
Azmi Shaza Marina, The
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Performance of Banking
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Malaysia, International Journal
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34 January - March 2013 The Bangladesh Accountant

 Annexure - I

Coefficients
Unstandardized Standardized t Sig. 95% Correlations Collinearity
Coefficients Coefficients Confidence Statistics
Interval for B
Model B Std. Error Beta Lower Bound Upper Zero-order Part Tolerance ),9
Bound
1 (Constant) 755.208 609.691 -1.239 .341 -3378.526 1868.109

The Bangladesh Accountant

DEPOSIT 7.799 E-02 .092 -1.469 -.850 .485 -.473 .317 .928 -.160 .012 84.412
LOANS 137 .098 2.411 1.396 .297 -.286 .561 .951 .262 .012 84.412

a. Dependent Variable: PROFIT

Annexure - II

Coefficients

January - March 2013

Unstandardized Standardized t Sig. 95% Correlations Collinearity
Coefficients Coefficients Confidence Statistics
Interval for B
Model B Std. Error Beta Lower Bound Upper Zero-order Partial Part Tolerance VIF
Bound
1 (Constant) -494.547 577.084 -.857 .482 -2977.565 1988.471

DEPOSIT -1.012E-02 .060 -.356 -.968 .882 -.269 .249 .978 -.118 -.023 .004 245.031

71(076(91 3.652E-02 .058 1.337 1.632 .592 -.212 .285 .981 .408 .085 .004 245.031

a. Dependent Variable: PROFIT

The Author are

1
Lecturer, Department of Accounting and Information System, University of Dhaka
2
Lecturer, Faculty of Business Administration, Northern University Bangladesh

35
 Laws and Regulations for
Accounting System
Md Shahadat Hossain FCA

According to the law, each and every financial statements suffer for loss. Now a
day, in the name of protection of the
company is to prepare its financial investors and other users of financial
statements at the end of a particular statements, regulators are establishing
period. The objective to prepare such barrier in the way of accounting theory
financial statements is to provide financial and standards. Some examples are
information about the company that is presented below; Firstly, in the draft
useful to existing and potential investors, companies act net worth has been defined
lenders and other creditors in making as the aggregate value of the paid-up share
decisions about providing resources to the capital and all reserves created out of the
company. These decisions involve buying, profits and securities premium account,
selling or holding equity and debt after deducting the aggregate value of the
instruments, and providing or settling accumulated losses, deferred expenditure
loans and other forms of credit. and miscellaneous expenditure are not
written off, as per the audited balance
The financial statements are prepared sheet, but do not include reserves created
following some norms, rules and out of revaluation of assets, write-back of
regulations such as Companies Act, depreciation and amalgamation.Net worth
Banking Companies Act, other different is an important determinant of the value of
Acts, accounting principles and standards a company and it is used to determine
etc. Preparation of financial statements creditworthiness because it gives snapshot
also depends on some basis, assumptions of the companies investment history.
and estimates. Since there is a scope of
applying assumptions and estimate for Considering the use and importance of
preparing financial statements, the term net worth, it should be defined in
preparer as well as the auditor of financial such a manner so that no confusion or
statements will have to apply utmost skill, ambiguity may arise. But in the draft
competence, professionalism and integrity companies act the definition of net worth
to save the users of these financial which has been proposed is not in line
statements from any loss or damage. with the definition of accounting standards
because one of the important elements i.e
But there is no scope to deny that due to surplus on assets revaluation has been
not performing the professional duties, in excluded. Basically, as per accounting
some cases, with sufficient skill, standard, net worth means total assets
competence and integrity the users of minus total liabilities. Along with this it

36 January - March 2013 The Bangladesh Accountant

may be mentioned that according to July 1911, £ 20,542 was added to THE FINANCIAL
International Financial Reporting the value of the land and this sum
Standards (IFRS), an entity shall was credited to a reserve account. STATEMENTS OF PUBLIC
choose either the cost model or the The appreciation in the value of land
revaluation model as its accounting was then used to cancel the debit BUT NOT LISTED AND
policy and shall apply that policy to balance of profit and loss account to PRIVATE LIMITED
an entire class of property, plant and the tune of £16,451, thereby leaving
equipment. a balance of £ 4,091 to the credit of COMPANIES ARE
reserve account.
After recognition as an asset, an item PREPARED ON THE BASIS
of property, plant and equipment In a subsequent year, a dividend was
whose fair value can be measured paid in respect of preference shares OF THE GUIDELINE GIVEN
reliably, shall be carried at a revalued out of the current profits, yielded by IN THE COMPANIES ACT.
amount, being its fair value at the the company. The plaintiffs alleged
date of the revaluation less any that the dividends was improperly IN ONE HAND, THIS
subsequent accumulated depreciation paid and made them (the directors)
and subsequent accumulated liable for paying dividends out of GUIDELINE IS NOT IN
impairment losses. As caution in IFRS capital. They argued that the amount
it has also been mentioned that £2,577 standing to the debit of profit LINE WITH THE
revaluations shall be made with and loss should have been wiped out BANGLADESH FINANCIAL
sufficient regularity to ensure that the before dividends were paid. The
carrying amount does not differ court rejected the plea holding that REPORTING STANDARDS;
materially from that which would be revaluation of the property was
determined using fair value at the end genuine and the directors had ON THE OTHER HAND,
of the reporting period. If an asset's concealed no material fact. Judgment
carrying amount is increased as a held that a company may write up its THIS GUIDELINE IS NOT
result of a revaluation, the increase assets as the result of a bonafide COMPLETE AND
shall be recognized in other revaluation and may divide current
comprehensive income and profits without first writing off prior COMPREHENSIVE. DUE
accumulated in equity under the losses. It is pertinent to mention that
heading of revaluation surplus. So, from revaluation surplus declaring TO HAVING NO
from the contents of IFRS it is clear cash dividend may not be logical but
that revaluation reserve is dividend in the form of bonus share COMPLETE AND
undoubtedly a part of net worth. will not be harmful. For example, COMPREHENSIVE
suppose, five years back company P
Legal base of revaluation surplus was formed with paid up capital Tk GUIDELINE, THE
raised due to revaluation of fixed 100,000 (1000 ordinary share of Tk
assets from one of the important case 100 each) and land was purchased by FINANCIAL STATEMENTS
reference named Ammonia Soda Co Tk 100,000 for the company. After
Ltd vs Arthur Chamberlain and five years same industry company Q OF THOSE NON LISTED
Others (1918) may be observed.In was established by purchasing a land AND PRIVATE LIMITED
this case reference, the profit and loss of Tk 500,000 which was funded by
account of the defendant company issuing capital of 5000 ordinary share COMPANIES ARE NOT
showed a debit balance of £ 19,028. of Tk 100 each. In this situation, if
Upon a boring made by the company previous company i.e company P BEING PREPARED IN
to reach water a layer of rock salt was revalues its land and issues bonus
discovered. shares from revaluation surplus that UNIFORM AND
will be logical. From the content of SYSTEMATIC
The directors of the company, Mr above case reference and example it
Chamberlain and Mr Cocking, is clear that revaluation surplus is one MANNER.
consequently appreciated the value of of the elements of net worth.
the land held by the company as, in
their opinion, it was a reasonable Secondly, one of the important issues
ground to write up the value of the of accounting is deferred tax. As per
land, In the Balance Sheet for 31st International Accounting Standards

The Bangladesh Accountant January - March 2013 37

one of the elements of deferred tax all the banks and financial of the company which is engaged
is deferred tax assets which are the institutions on recognizing, in some selected activities shall be
amounts of income taxes measuring and utilizing the determined on the basis of the tax
recoverable in future periods in corresponding credit of deferred deducted or collected at source
respect of deductable temporary tax assets. In the circular it has from revenue and the rate or rates
differences, the carry forward of been mentioned that if deferred tax of tax applicable for the assessment
unused tax losses and the carry is calculated and recognized based year. In a nut shell, this provision
forward of unused tax credits. on the provisions against classified of tax law indicates that tax is not
loan, advances the amount of the determined on the basis of profit of
This deferred tax asset is accounted net income after tax increased due the company; rather profit is
for through crediting income, in to recognition of deferred tax assets determined on the basis of tax.
the financial statements. Since on such provisions will not be The tax which is being collected in
deferred tax asset is recognized distributed as dividend and the the name of direct tax is also
through crediting income amount of deferred tax assets contributing a negative impact in
therefore, sufficient amount of recognized on such provisions the society as an indirect tax only
conditions have been given in should be deducted while because of its collection
International Accounting Standards calculating the regulatory eligible procedure. We know that the
before recognizing and measuring capital of the statement of capital main characteristic of direct tax is,
the deferred tax asset. Such as, the adequacy requirement of annual it is progressive and cannot be
carrying amount of a deferred tax financial report and statement shifted on others. But in many
asset shall be reviewed at the end submitted to Bangladesh Bank. If cases the present collection
of each reporting period and the we analyze the contents of this procedures of direct tax are
company shall reduce the carrying circular it can be observed that it facilitating to shift tax payers’ tax
amount of a deferred tax asset to will be all the same to account for liability to others. An example may
the extent that it is no longer or not account for the deferred tax be presented to make it clear.
probable that sufficient taxable asset as per International According to the fundamental
profit will be available to allow the Accounting Standards by the banks principles of tax law, tax payable
benefit of part or all of that and financial institutions. amount of a company will be
deferred tax asset to be utilized. determined based on its net profit
Despite having sufficient amount Thirdly, according to subsection (4) as presented in its annual audited
of conditions central bank of our of section 82 (C) of income tax financial statements. If the
country has issued restrictions for ordinance income for tax purpose company earns a net profit, it will

38 January - March 2013 The Bangladesh Accountant

 It is relevant to raise a question
why the regulators and others are
introducing laws which create
barriers on accounting system. As
answer of this question it may be
mentioned that in first and second
cases the lack of reliability of
measuring revaluation surplus and
deferred tax asset.There is no
scope to deny that in the past in
many cases share price had been
affected due to measuring revalued
amount of fixed assets at much
higher than actual. In third case the
financial statements, specially
financial statements of private
limited companies do not seem to
be reliable. It will not be baseless if
it is assumed that in some cases
financial statements of private
limited companies are prepared
showing weaker result than its
actual operational result. Due to
following this practice it is
have to pay tax at a determined responsibility to deduct tax from mentionable that in our country
rate. On the contrary, if the the sales price of the company X there is a common voice about
company incurs a loss for a which is considered as the final tax non- preparation of financial
particular period of time, it will not irrespective of year-end profit or statements correctly. One of the
have to pay any tax. Suppose a loss. Under this system if the reasons behind such incorrect
company X earned Tk.200 net company X sells goods of Tk.100 financial statements is lack of
profit in the year 2012. In that case to the company Y, tax of Tk.4 proper sufficient legal guidance.
it will not be able to distribute full (assuming rate of tax deduction at The financial statements of public
amount of Tk.200 as dividend source is 4%) will be deducted by but not listed and private limited
among its shareholders. It will have the company Y and Tk.96 will be companies are prepared on the
to pay Tk.75 as tax (assuming tax paid to the company X. The basis of the guideline given in the
rate is 37.5%) to the government company X knows that Tk.4 which companies act. In one hand, this
and the balance Tk.125 may be has been deducted by the guideline is not in line with the
distributed among its shareholders customer will not be refunded Bangladesh Financial Reporting
as dividend. So, according to despite incurring the loss at the Standards; on the other hand, this
principle of direct tax the excess end of the year. Therefore, it will guideline is not complete and
purchasing power will be taken be considered as cost not as tax comprehensive. Due to having no
away by the amount of Tk.75 from payment in advance. Since this tax complete and comprehensive
the shareholders of the company. will be considered as cost, guideline, the financial statements
There is no scope to shift this tax subsequently the company X will of those non listed and private
liability on others by the increase the sale price of the limited companies are not being
shareholders of the company X. product to Tk.104 as against prepared in uniform and systematic
But by dint of tax law as Tk.100 so that after deducting tax it manner. Some instances are given
mentioned above tax of the can get Tk.100 as before. By this below: Firstly, revenue is one of
company X is not collected based manner the company X gets the most important elements for
on net profit, it is collected on opportunity to shift its tax liability the financial statements. Overall
turnover/revenue of the company. to its customers and according to financial performance of a
Suppose the company X is selling principle of indirect tax it is company for a particular period
its goods to the company Y contributing to increase the rate of substantially depends on correct
(customer). Under the tax law, the inflation as well as inequality in recognition, measurement,
company Y is given the the society. presentation and disclosure of

The Bangladesh Accountant January - March 2013 39

 the company, those assets despite
having ownership are not
considered their assets by the
lessee and due to transferring,
substantially all the risks and
rewards are incidental to
ownership to the lessee but the
assets are not also shown in the
books of the lessor company. As a
result, there remains a chance of
assets procured under the lease
finance out of books of accounts.
In this circumstance for ensuring
financial discipline in the private
sector of the country and for the
betterment of the national
economy, all barriers from the way
of accounting need to be removed.
Again, to remove all those barriers,
in one hand during preparation
and audit of the financial
statements by the accountant and
auditor respectively should
perform their duties with utmost
revenue. As regards to presentation of the company which is engaged integrity, on the other hand
and disclosure of necessary in construction business is regulatory authority should also be
information of revenue, necessary complicated and technical. more active instead of imposing
guidelines have been mentioned in Revenue for the construction barrier to make their regulatory
the companies act but nothing has business shall be recognized by the activity easy. Mandatory
been mentioned about recognition reference to the stage of compliance of Bangladesh
and measurement of revenue. For completion of the contract activity Financial Reporting Standards for
example goods are shipped subject at the end of the reporting period all types of companies is also
to installation and the installation is which has been mentioned in the essential and can be ensured only
a significant part of the contract Bangladesh Accounting Standards, by incorporating the necessary
which has not yet been completed but in the companies act no such provisions in the companies act.
by the company. In this case, this guideline has been given. Thirdly,
shipment of goods will not be now a days lots of companies
recognized as revenue as per obtain machinery and other fixed The Author is Council Member and
Bangladesh Accounting Standards assets items on lease from the ex Vice-President, The Institute
because the company retains leasing company. As security of the of Chartered Accountants
significant risks of ownership but financing all assets are registered in of Bangladesh
no guideline in the companies act the name of lease providing
has been given in this regards. company i.e lessor. Due to not
Secondly, recognition of revenue having registration in the name of

40 January - March 2013 The Bangladesh Accountant

 Recent Monetary Policy
& Economic Trends
Ahmad Dawood FCA, FCMA

Monetary Policy in international economic growth. A Neutral Monetary

Policy is intended neither to create growth
landscape nor combat inflation.

Globally monetary policy is adopted to In the recent years, Inflation Targeting

control money supply in the economy. Monetary Policy has been adopted in
Depending on the control exercised over various countries including Bangladesh,
money supply, two types of monetary Australia, Brazil, Canada, Chile, Czech
policy are found. One is Expansionary Republic, Colombia, New Zealand,
Monetary Policy & the other is Norway, South Africa, Switzerland &
Contractionary Monetary Policy. Turkey. On the other hand, Singapore &
Hong Kong adopted Currency Targeting
An Expansionary Monetary Policy Monetary Policy. China’s Monetary Policy
increases the size of money supply more is termed as Monetary & Currency
rapidly than usual, or decreases the Targeting. Sri Lanka adopts Monetary
interest rate. It is used to combat Targeting Policy while India uses Multiple
unemployment by lowering interest rates Indicator Approach. USA adopts Mixed
in the hope that easy credit will entice the Policy dedicated to maximum
business into expanding. employment & stable prices.

In contrast, a Contractionary Monetary European Central Bank adopts monetary

Policy reduces the size of money supply policy for European nations under
or increases it slowly or rises the interest common currency Euro with the main
rate. It is intended to slow inflation to objective of maintaining price stability and
avoid resulting distortions & deterioration lower inflation rate, close to 2%.
of asset values. It is sometimes referred to
as Tight Monetary Policy. The BB mandate
Apart from these two, monetary policies The Bangladesh Bank is legally mandated
are often termed in different names to formulate & implement monetary
because of their varying character. For policy. It is also mandated to advise the
example, in Accommodative Monetary Government on interaction of monetary
Policy, interest rate set by central policy with fiscal & exchange rate policy,
monetary authority is intended to create impact of the policy measures on

The Bangladesh Accountant January - March 2013 41

economy & propose legislative About the 15th MPS of BB THE COUNTRY'S
measures to attain its objectives or
perform its functions. This time, the monetary policy INFLATION, AS MEASURED
statement (MPS) aimed at attaining BY CONSUMERS' PRICE
The core policies formulated by BB maximum economic growth.
include Monetary Policy, Reserve INDEX (CPI), MOVED
Management Strategy, Interest Rate It also sought to ensure sufficient
Policy, Capital Adequacy for Banks & credit flow for productive sectors and SLIGHTLY IN DECEMBER
FIs, Deposit Insurance etc. bring down inflation to 7.5 per cent 2012 ON POINT-TO-POINT
by the on-going fiscal year. The
Main focus of MPS Bangladesh Bank (BB) Governor Atiur BASIS. THIS IS MAINLY
Rahman while declaring the MPS
Generally main focus of our termed it as a balanced monetary BECAUSE OF INCREASE IN
monetary policy is on price stability, policy to minimize excessive PRICES OF FOOD ITEMS.
sustainable growth & development, volatility of the exchange rate. These
high employment, economic & objectives involve trade-offs and the THE INFLATION RATE
efficient use of resources & Stability balance between BB's instruments.
of financial & payment system.
MOVED UP TO 7.69 PER
This monetary programme takes into CENT IN DECEMBER LAST
Tools & instruments in the account various global and domestic
hands of regulator for risks for H2 of FY13 and has built-in FROM 7.41 PER CENT OF
degree of flexibility to take into
implementing monetary policy account changed circumstances. The THE PREVIOUS MONTH ON
main challenge of the central bank in THE POINT-TO-POINT
There are few tools & instruments in future would be how to control
the hand of central bank to inflation and, at the same time, BASIS, ACCORDING TO
implement the monetary policy it ensure higher economic growth. The
adopts. These include Bank Rate, key areas of the MPS have been THE BANGLADESH
Open Market Operations (OMO), discussed below:
Repo & Reverse Repo, Statutory BUREAU OF STATISTICS
reserve (SLR & CRR). OMO allows (BBS). ON THE OTHER
central bank to manage quality of
Growth Strategy
money in circulation through buying HAND, THE INFLATION
The MPS is designed to ensure that
& selling of various financial
instruments, e.g. treasury bills,
the credit flow is sufficient for RATE CAME DOWN TO 8.74
productive investment. It will support
corporate bonds & foreign currencies. PER CENT ON ANNUAL
attainment of the government's FY13
Repo is the rate at which central bank
real gross domestic product (GDP)
lends the commercial bank while AVERAGE BASIS IN
growth target (which is 7.2%).
Reverse Repo is the rate at which
commercial banks park their DECEMBER FROM 8.98 PER
The BB has also revised its monetary
short-term excess liquidity to central CENT IN NOVEMBER 2012.
programme with increased private
bank.
sector credit growth target. The target
BASED ON CURRENT
has been set at 18.50 per cent for the
Backdrop of Monetary Policy second half (H2) of this fiscal year TRENDS, THE AVERAGE
in Bangladesh from 18.0 per cent of the original
programme. On the other hand, INFLATION TARGET OF 7.5
The declaration of monetary policy broad money growth target has been
by the BB started in January, 2006.
PER CENT ANNOUNCED IN
increased. It will rise to 17.7 per cent
They declare the monetary policy during the period under review from THE FY13 BUDGET
twice a year, in January & July. This is 16.5 per cent of the original target.
the 15th Monetary Policy of APPEARS ACHIEVABLE,
Bangladesh. BB vies to alleviate poverty by
THOUGH RISKS REMAIN.
achieving maximum economic
growth. The Central Bank has taken

42 January - March 2013 The Bangladesh Accountant

into consideration the private declining steadily over the past The country's trade balance may
sector credit from overseas sources nine months. The fall was from a come down to the negative level of
while formulating the Monetary peak of 10.96 per cent in February $8.637 billion by the end of FY13
Policy Statement for the ongoing to 8.74 per cent in December and from $9.317 billion (in the
half year. within reach of the FY13 CPI negative) in the previous fiscal.
inflation target of 7.5 per cent. This
Control over Inflation decline has been due both to lower Comments/
food and non-food price inflation. recommendations on few
The BB remains committed to The point-to-point non-food
inflation declined from a peak of specific points
bring inflation down further, and
also to avoid asset price bubbles. 13.96 per cent in March to 8.43
percent in December 2012. (i) Last two MPS
As such, the Bank continues to
encourage banks to use the space The monetary growth targets set in
for private sector growth for Interest Rate January 2012 were met by the end
productive, and not speculative, of FY12 and key outcomes – falling
purposes. The BB will continue to The interest rate spread has marked inflation and easing of external
focus on ensuring that credit is a declining trend in recent months. sector pressures – were achieved.
used for productive purposes The BB predicts that it would
consistent with financial inclusion continue in the near future through The July 2012 MPS had as its core
goals. The BB plans to review the their monitoring and supervision. objectives (i) limiting domestic
monetary policy each month credit growth to levels consistent
considering both the global and Private Sector Credit Flow with the FY13 single digit CPI
national perspectives. inflation target (ii) ensuring that
The expanded monetary base is productive growth-conducive
The country's inflation, as largely due to the activities are not hampered by
measured by consumers' price higher-than-expected remittance access to credit and (iii) preserving
index (CPI), moved slightly in growth this year. The BB has external sector stability including
December 2012 on point-to-point created some additional rooms for building reserves to more
basis. This is mainly because of this liquidity to be used for private comfortable levels. Average
increase in prices of food items. sector credit. This should benefit inflation has been declining
The inflation rate moved up to growth without unduly disrupting steadily over the past nine months,
7.69 per cent in December last the downward inflation trend. from a peak of 10.96% in February
from 7.41 per cent of the previous to 8.74%in December and within
month on the point-to-point basis, Reducing REPO reach of the FY13 CPI inflation
according to the Bangladesh target of 7.5%.
Bureau of Statistics (BBS). On the Falling inflation has created the
other hand, the inflation rate came space for the repo rate reduction. It The above achievements are
down to 8.74 per cent on annual should have an impact on lending appreciable. However, statistics of
average basis in December from rates. It will also stimulate more import of capital machinery and
8.98 per cent in November 2012. growth-enhancing investments. At industrial raw material indicate
Based on current trends, the the same time, the BB is mindful of negative trend which will lead to
average inflation target of 7.5 per inflation risks. This is why it has lower production and hamper
cent announced in the FY13 calibrated the rate cut accordingly. employment generation.
budget appears achievable, though
risks remain. These risks stem from Balance of Payment
(ii) Growth
volatile global commodity prices
and particularly, the food prices. The BB projected that the country's
overall balance of payments (BoP) In 2013, global growth is expected
Any further administered price to be 3.6% with the average for
increases in the energy sector, as would be in surplus to the tune of
$2.226 billion by the end of this developing countries projected at
well as sharp rise in remittance 5.6% and high income countries at
inflows will put upward pressure fiscal from $494 million in FY'12.
The current account balance is 1.5%.
on asset prices and non-food
inflation, it pointed out. likely to rise to $1.075 billion in
FY'13 from $151 million in FY'12. The targeted GDP growth of 7.2%
in FY13 is unlikely to be achieved.
The average inflation has been

The Bangladesh Accountant January - March 2013 43

 This will be helpful in bringing
dynamism. Its effectiveness/
success still to be reviewed.

Recent measures include

tightening loan classification and
provisioning requirements towards
convergence with global best
practices, introducing online
supervisory reporting requirements
on financial transactions and
strengthening onsite and offsite
vigilance. Various measures to
detect fraud have been
implemented; BB has strengthened
its supervision capacity as well as
reiterated the role that bank boards
and management play in this
regard. BB will focus on improving
the quality, timeliness and
transparency of reporting from the
financial sector.

These measures will contribute

towards discipline & stability in
financial sector.
However, BB projects the real developments related to monetary
GDP growth this year to be the policy in H1FY13. First the sharp BB will also commence special
average of last 10 years which is increase in foreign remittances diagnostic examinations at the four
around 5%. (22% in H1FY2013) and lower SOCBs in early 2013 and will
imports contributed to a sharp begin publishing a set of quarterly
(iii) Foreign reserve & value of increase in Net Foreign Assets. The performance indicators on these
Taka second key development relates to banks. BB will continue to focus
the sharp decline in inter-bank on ensuring that credit is used for
Gross foreign reserves were US$ rates which fell from a peak of productive purposes consistent
12.8 billion in end December around 20 percent in January 2012 with financial inclusion goals.
2012 and equivalent to about 4 to around 12% a year later. The
months of import cover. third development centers around These measures will significantly
the healthy growth in private sector contribute to restore confidence on
The Taka: USD exchange rate has credit which grew by 17.4% in SOCBs that had shaken by recent
remained largely stable with the November 2012, while public Hallmark scandal.
Taka appreciating by 2.6% sector credit growth was only 5%.
between July 1st - December 31st. BB’s policies have also contributed
BB is intensifying its focus on to stabilizing the capital market
Foreign currency reserve of the improving the transmission of and BB will continue to collaborate
country has recently crossed $ 14 monetary policy by strengthening with the BSEC.
billion-mark. Continuity of market mechanisms and a key area
remittance flow will be necessary is strengthening secondary market The approach of BB is highly
to maintain it. trading in government securities. appreciable. It is to be ensured that
Measures taken to this end include BB holds dialogue with the
(iv) Key developments related to enhancing the shorter-dated stakeholders of capital market,
monetary policy in H1FY13 & portion of bills/bonds issues, where particularly with the stock
future outlook there is greater investor appetite, exchanges while deciding the
and launching an electronic issues that might have impact on
There were three key trading window on BB’s website. capital market.

44 January - March 2013 The Bangladesh Accountant

 (viii) Stringent supervision

In the backdrop of recent

unearthing of increasing bank
scams, supervision, inspection and
audit of commercial banks by
Bangladesh Bank should be
widened and strengthened. Since
Bangladesh Bank lacks inadequate
number of skilled/trained
manpower to provide such services
widely and effectively, Bangladesh
Bank may take the professional
services from the firms of chartered
accountants in order to widen and
strengthen its supervision,
inspection and audit net in the
banking sector. The above PPP
Recent shift in exposure of banks that fiscal policy and monetary model of audit work will enhance
to capital market from 10% of policy function in the same and strengthen the Supervisory role
liability to 25% of equity will direction and are complementary of Bangladesh Bank who as a
shrink the exposure by Tk 4,654 to each other. A mismatch may, in regulator oversees the entire
crore (Tk 46 billion) over next fact, result in economic disaster. banking mechanism.
three years according to the Bangladesh Bank, NBR and BSEC
exposure statistics of 29 listed should work in a well coordinated (ix) Issuing bond, debenture &
banks. and harmonious way. The various treasury bills to substitute Govt.
policy instruments like fiscal borrowing
The FY13H2 monetary policy policy, monetary policy, industrial
stance is designed to ensure that policy, commercial policy, etc. Government should reduce bank
the credit envelope is sufficient for should be harmonized with each borrowings, and may meet a
productive investments to support other so that our economy can significant part of its deficit budget
the attainment of the government’s achieve the desired growth. financing by issuing government
FY13 real GDP growth target while bonds. Banks may be allowed to
keeping it consistent with the (vi) Easing foreign exchange laws issue bonds to raise fund.
targeted 7.5% average inflation Bangladesh Bank should allow and
rate for FY13. In view of the risks Foreign exchange laws and rules encourage long-term bonds,
to output growth due to the should be critically examined in debentures and treasury bills to be
uncertainties around the global the context of present day global traded in the secondary market.
economy, BB will reduce all repo and local economic scenarios, and
rates by 50 basis points effective the same should be updated to (x) Foreign investment by
immediately. facilitate business and not to Bangladeshi companies
hinder the same. Business should
This is going to be a very effective not be for rules; rather rules should Bangladesh Bank may think of
tool to manage growth risk. be for business. allowing investment by
Reserve Bank of India recently Bangladeshi Companies in certain
reduced repo twice and received (vii) Enforcement of Anti Money projects in foreign countries in a
benefit out of such reduction. Laundering law limited scale. The following
conditions need to be fulfilled for
(v) Cohesiveness of monetary The Anti Money Laundering law such investments:
policy with other policies should be vigorously enforced.
This will ensure accountability and a. The proposed project should
Since some common goals of both help combat financial crimes. In be feasible and should have
fiscal and monetary policies are this regard, training and awareness adequate profit potentials.
price stability, GDP growth and for the people in the real business
full employment, it is important can be very useful. b. There should be an adequate

The Bangladesh Accountant January - March 2013 45

scope for employment of 50% of this loan amount at the Highlights on some of the
professionals and skilled bank rate for eventual lending by significant economic indicators
manpower from Bangladesh in the commercial banks at maximum are provided below:
the project. 4% margin. In this respect
Bangladesh Bank may create a GDP: Our GDP size during
c. Profit should be repatriable Capital Market Development Fund 2011-12 at current price was $112
from the investee country (as and allocate a sizeable amount for bn.
per law/regulation of that the Fund. It may make a regulation
country) and should be whereby any dividend of a listed  Bangladesh GDP grew by
remitted to Bangladesh as company, remaining undisbursed 6.30 % in 2012. It has
soon as possible. for more than 5 years, will be managed to keep the GDP
deposited to Bangladesh Bank growth above 5 % over the
d. The pay back into Bangladesh against the Capital Market last decade through the
of the remitted fund invested Development Fund created for development of micro credit
abroad should be realistically refinancing of loans to Capital and garments industry.
projected to be maximum Market by Commercial banks.
seven years.  IMF projects a robust GDP
It may worth mentioning that growth in coming years, i.e.
e. Any other realistic conditions recently BB issued a circular 6.05 %, 6.10 % and 6.7 % in
as Bangladesh Bank thinks whereby the commercial banks the 2012, 2013 and 2014
proper, considering the may finance a stock dealer for calendar year.
interest of Bangladesh. transacting A & B category shares
upto 70% and 60 % of average  National savings increased
(xi) Financing against listed market value respectively subject from 28.78 % of GDP in
securities to maximum Tk 3 crore. Practically FY2011 to 29.40 % of GDP in
it is not being available due to FY2012 due to increase in
Commercial banks may extend many constraints. remittance. Investment also
loan against listed securities upto increased from 25.15 % of
50% of the face value or market Recent Economic Trends of GDP in FY2011 to 25.45 % of
value, whichever is lower. Bangladesh GDP in FY2012.
Bangladesh Bank should refinance

46 January - March 2013 The Bangladesh Accountant

 GDP Trend of Bangladesh

Inflation: General inflation (annual ten months of FY 2012, export October, September and August of
average) rate reached 10.6 % in earnings increased by only the 2012 year.
FY2012 which was 8.8 % in 1.3% compared to the same
FY2011. Food inflation started to period of FY 2011.  At the end of April, the overall
somewhat slow down since balance was in the negative
January 2012 while non‐food  Imports decreased to 2,640.50 terrain. However, during the
inflation was on the rise since July USD mn in October 2012 last two months of FY2012,
2011 and at the end of the fiscal from 2,976.90 USD mn in trade balance remained under
year, annual average non‐food September 2012. Historically, control due to falling import
inflation reached as high as 11.2%. from 1995 until 2012, payments and the BoP
Bangladesh Imports averaged situation began to see some
Trade: During 2011-12, total 4,628.72 USD mn. positive turn.
export was $ 24.3 bn and import $
35.4 bn  In November 2012, total Reserve: The average rate of
remittance inflow was USD growth in reserves was 13.4%
 Overall export growth stood at 1,098.25 mn. The rates of during FY 2009/10 to FY 2011/12,
5.9% in FY 2012 which was growth in remittance were despite the negative rate of growth
only 86.5% of the target (USD -24.45%, 24.04%, -0.57% and in reserves in FY 2011-12.
26,500 mn). During the last -1.87% in November,

Month-wise comparison
of reserves among the
three fiscal years

The Bangladesh Accountant January - March 2013 47

Capital Market: The daily average Concluding remarks References:
turnover in Bangladesh capital
market reduced to Tk 275 crore in Against the backdrop of the global • Analytical Review of
2013 from Tk 1,783 crore in 2010 economic slowdown, the Bangladesh’s Macroeconomic
(about 85% fall). The capital Bangladesh economy performed Performance in Fiscal Year
market experienced a hard time strongly over the past few years. 2013- Centre for Policy
with DSE market capitalization has Compared to the global average, Dialogue (CPD)
reducing to Tk. 2,40,000 cr in Bangladesh has witnessed higher
2012 from Tk. 2,61,000 cr of GDP growth rates. Despite a fall in • Bangladesh Economic Update
2011. DSE all share price index world output during the immediate Half-Yearly Assessment of the
has also declined and reached to at aftermath of the financial crisis in Economy of Bangladesh
3,577.21 in 2012 from 4,383.94 of 2009, Bangladesh has consistently December 2012 – Unnayan
2011. exceeded growth rates of five Onneshan
percent since 2009. Goldman
In order to ensure transparency Sachs has placed Bangladesh on its • www.tradeeconomics.com
and accountability in the capital "Next-11" list in 2005. The United and Bangladesh Bank website.
market, efforts have been given to Nations has listed Bangladesh as
restructure the capital market. one of the 18 countries in the • Dhaka Stock Exchange and
Initiatives have been taken to world that have made rapid Chittagong Stock Exchange
amend the securities laws. The Act progress in human development in websites
of parliament to demutualize the the last three decades.
stock exchanges of the country has Bangladesh’s per capita income
been passed this year. A ten-year had also increased by about 175 The Author is currently working as
master plan has been approved for percent between 1980 and 2012. CFO, Chittagong Stock Exchange
the capital market. All what Bangladesh needs is
pursuing consistent, balanced and
Apart from these, several other transparent economic policies and
economic reform initiatives have good governance practice in all
been taken by the Government to respects to open up doors of
ensure sustained economic unbound potentials.
development which includes
strengthening the public financial
management through proper
implementation of the ADP,
Ensuring Private Participation in
Infrastructure Sector under PPP,
reforming the financial sector by
amending Banking Companies’
Act.

48 January - March 2013 The Bangladesh Accountant

 National Finance Performance & Stability
-an Analysis to Reform & Retreat with Integrated Policy
Dipok Kumar Roy ACA

The sustainability of economic from 1990. The banking sector has been
well regulated and efficient to some extent
development largely depends on effective compared to other components of
and efficient financial systems of a financial systems. After the debacle of
country. The development without strong capital market in 1996, reforms were
national financial systems could be made substantially like introducing the
development by chance and would not circuit breaker or each share,
last long. National Financial System is a dematerialization of shares, updating of
machine of allocating resources amongst laws and regulation for ensuring control
peoples to turn the wheel of national etc. Nevertheless, some incidents make
economy. The larger flow of funds and questionable the efficiency of the banking
efficient allocation thereof would register systems, cause the financial system and
a healthy economic output. So, it is a fuel economy to tremble and make the
to convert into power of national experts, regulators and government
economy and it needs to be handled distracted from reform and retreat again
carefully with efficient hands so that it for suitability of GDP. Recent incidents of
could generate national economic power Hallmark and some more in banking
without burning the machine, the driver systems, capital market debacle in 2010
and owner of the machine. With the bring the issue ahead to review the
changing scenario of the world business systems again for finding out the way to
and economy, financial systems have resolve & control it prudently. Sometimes,
been shaping globally with reforms & some semiformal sectors like specialized
retreat for moving forward with integrated four banks for providing industrial &
policy encompassing new ideas, thoughts agricultural financing, other specialized
and concepts day by day. In the backdrop banks and corporations like House
of Bangladesh’s weak financial systems, Building Finance Corporation, Samabay
Bangladesh government has sincerely Bank, private cooperative banks have
identified the major problems in the fallen under question of role &
financial systems and finally a number of performance and some informal sectors
reform measures were initiated broadly like destiny and others post threats to the
under the Financial Sector Reform economy for illegal financial operation
Program (FSRP) and subsequently under cheating general peoples. All formal &
Banking Reform Committee (BRC) and semiformal sectors of financial systems
Commercial Bank Restructuring Project could not be stringed together on a thread
(CBRP) in different phases commencing to move the wheel of national economy

The Bangladesh Accountant January - March 2013 49

with a smooth speed towards in India and Sri Lanka it is 5.10% and THE COUNTRY'S
sustainable development. We have 3% of GDP respectively. Cooperative
inducted mutual fund management society could be a strong productive, INFLATION, AS MEASURED
by asset Management Companies to marketing and financing base in rural BY CONSUMERS' PRICE
make the capital market efficient but area or the areas where formal
the role of mutual fund as well is still financial systems do not work well. INDEX (CPI), MOVED
under a question mark & operational The Cooperative societies in our
SLIGHTLY IN DECEMBER
performance is inefficient. In spite of country could not reach a satisfactory
focusing target based SMEs and level and failed to create public 2012 ON POINT-TO-POINT
agriculture investment by banks and movements towards its formation and
financial institutions, we could not successful operation. BASIS. THIS IS MAINLY
serve SMEs to bring them in line with BECAUSE OF THE
large enterprises capable to enter into The Bangladesh Economic Update for
capital market. We could not add the October 2012 issued by the World INCREASE IN PRICES OF
Venture capitalists in the financial Bank projects that GDP will grow at FOOD ITEMS. THE
systems yet with a legal frame, policy around 6% in FY 13 despite an
and fund assistance to serve SMEs unfavorable global economy. The INFLATION RATE MOVED
with financial and technical business noteworthy achievements are (i)
support services for emerging as Bangladesh’s reaching among the top
UP TO 7.69 PER CENT IN
larger industry and services for 35 out of 150 countries in IMF’s DECEMBER LAST FROM
bringing them in capital market. Our October 2012 World Economic
micro finance has extensive role in Outlook and (ii) registering 6% plus 7.41 PER CENT OF THE
access to finance of asset less people consistent growth over most of the PREVIOUS MONTH ON THE
and change their economic last ten years through strong exports
conditions and living standard but its and inward remittance growth. POINT-TO-POINT BASIS,
operation and monitoring are not Service sector’s growth rate is more
ACCORDING TO THE
well regulated as the lender does not than 6% and occupies about 50% of
use the loan fund for economic GDP where financial systems register BANGLADESH BUREAU OF
activities properly and use it for growth rate generally 9% to 11%
otherwise non-income generating over the years and share about 2% of STATISTICS (BBS). ON THE
purpose. As such, same person is GDP. If we review cross country OTHER HAND, THE
availing the credit facility with comparison especially with India, it is
different micro financiers without any observed that financial sector growth INFLATION RATE CAME
financial needs of economic activities in India is more than 10%, almost DOWN TO 8.74 PER CENT
which has made the micro credit close to us, but its share in GDP is
system and its effective and efficient more than 5%. So, the growth rate of ON ANNUAL AVERAGE
operation questionable. The growth financial sector together with the
of both the general insurance sectoral shares of GDP of Bangladesh,
BASIS IN DECEMBER
companies and life insurance it is evident that Bangladesh is less FROM 8.98 PER CENT IN
companies are not strong and efficient to contribute to GDP.
premium is below 1% of GDP where NOVEMBER 2012. BASED

Financial Sector Growth Rate and Share of GDP, Source, Annual Report 2011-12, Bangladesh Bank
ON CURRENT TRENDS, THE
AVERAGE INFLATION
14
12 TARGET OF 7.5 PER CENT
10 9.6
10
8 ANNOUNCED IN THE FY13
6 11.6 BUDGET APPEARS
4
2
1.9 2
ACHIEVABLE, THOUGH
9.5 1.9 2.1
0
RISKS REMAIN.
Financial Sector Growth Financial Sector Share of GDP

2008-09 2009-10 2010-11 2011

-12

50 January - March 2013 The Bangladesh Accountant

If we consider the three aggregate indicators, such as, comparison with other countries in South Asia, it is
domestic credit to the private sector as a ratio of GDP observed in 2011, as per World Bank data source, that
(cr_y), Average annual lending rate on lending by the ratios of Bangladesh are comparably at satisfactory
banks (Ir) and broad money to GDP (m2-y) ratio in level and fairly close to India.

Financial Development Indicators:

30.6
18.4 cr_y= Domestic credit to
cr_y 50.6
48.8 private sector as percentage
Sri Lanka of GDP
9.4
14.4
Ir 10.2 Pakistan Ir = Average annual lending
13.3
rate on lending by banks
38.01 India
38
m2_y 77.8 m2_y=Board money as a
68.7 Bangladesh
percent of GDP
Source: The World Bank
0 50 100

However, in the year 2013 as well, respectively where as in 2010, banking sector declined to 7.2% in
the financial sectors specially the these growths were 24% and 20% June 2012 from 13.60% on 30
banks and FIs may remain in stress respectively. The growth of December 2005, which increased
due to accommodative liquidity balance sheet size is steady over to 8.75% in September 2012. Due
policy (something seems to be the years. Efficiency and stability of to Capital market debacle at the
balanced between expansionary financial systems would register end of 2010 and non-performing of
and Contractionary monetary satisfactory performance with investors’ loan with merchant
policy), stress of capital market and sustainable development. To banks, experts project that the rate
merchant banks. The understand how the banking sector of NPL may go up unless liquidity
implementation of accommodative is performing over years, we need inflows and capital market turns
Monetary Policy would say how to review the CAMELS rating of the around. Currently, liquidity and
the supply of money could be banking sector as whole. exchange rate in the interbank
accommodative with demand and money and foreign exchange
support its growth and control Capital Adequacy Ratio (CAR): markets are in stable condition. As
inflation. Banking sector of Bangladesh is in per the said report differences in
a healthy state in terms of capital deposit growth and lending growth
Performance adequacy if the Non-performing have been lowering lately,
Loan (NPL) could be controlled loan-deposit ratio is currently
Banking sector: Bangladesh and restricted from moving it up 77.66% (08 November) and
banking sector has shaped with the maintaining good asset quality. weighted average exchange rate is
size of total assets of BDT 5867.6 Capital adequacy ratio related now Tk. 79.60/US dollar. Banks
billion & loan and advances of BASEL-II has been implemented are preparing to adopt and
BDT 3792.5 billion against deposit fully. As per Bangladesh Bank implement the BASEL-III, Capital
of BDT 4509.7 billion as on 31 Report actual risk based capital of Requirement principles in near
December 2011, where loan all banks was 11.31% in 30 June future.
deposit ratio is 84%, as per Annual 2012 and 10.85% in 30 September
Report 2011-12 of Bangladesh 2012 as against required level of
Bank. Growth rates of total assets 10% as described in BASEL-II.
and loan are 27% and 22% Non Performing Loan (NPL) in the

The Bangladesh Accountant January - March 2013 51

Year-wise CAR & Cross Country Comparison:
Banks Capital to risk weighted assets raƟo: Countries Aggregate Capital Adequacy RaƟo (%)
2009 2010 2011 2012(Sept.)
2008 2009 2010 2011 2012 Bangladesh 11.7 9.3 11.4 10.85
(June)
SCB 6.9 9.0 8.9 11.7 11.2 India 14.0 14.6 13.5
Sri Lanka 16.1 16.2 14.3
DFIs -5.3 0.4 -7.3 -4.5 -4.3
Pakistan 14.0 14.0 14.1
PCBs 11.4 12.1 10.1 11.5 11.4
FCBs 24.0 28.1 15.6 21 21.5
Total 10.1 11.6 9.3 11.4 11.3

The chart of the capital to risk Asset Quality: Asset quality is an capital market investment, huge
weighted assets represents that the important indicator of banking force sales placed causing gap of
capital of FCBs and PCBs are performance because of its demand and price fall took place
adequate against the 10% of the profitability and sustainability trending to downward by turns,
risk weighted assets or Tk. 4 billion depends on good quality asset. securities blocked in hands of
whichever is higher with effective Non-performing Loan (NPL) was people and made the market
from July- September 2011 quarter. reduced year to year and it reached disaster on liquidity. Banks and
Subsequently it was lowered to 9% to 7.2% from 10.8 % in 2008. Due NBFIs loans became
of the risk weighted assets or Tk. 2 to capital market crash in 2010 its non-performing due to liquidity
billion whichever is higher. ultimate effects came into banks blocked of its own, different
Excepting SCBs and DFIs, other and NBFIs into two ways, one is organizations and individuals
banks like PCBs and FCBs for direct investment by banks and invested in securities and started to
maintained more than 12% and NBFI and another is for merchant affect repayment of loan or
banking industry as a whole more bank operations, the wholly owned recycling of loan. NPL gradually
than 11% and as on 30 September subsidiary of them, providing loan reduced but in 2012 it again
10.85%. However, considering the to investors. In case of direct started to rise creating concern on
cross country comparison in south investment, both banks and NBFIs the performance stability and
Asia, Bangladesh is far below than invested beyond their legal limit, development of banking sector.
India, Sri Lanka and Pakistan. We for banks 10% of liabilities and for
should develop our asset quality NBFIs 25% of equity. Once the
and increase profitability to make instructions came from Bangladesh
the capital adequacy ratio stable. bank to maintain the legal limit of

RaƟo of NPL and Statement of Provision

Banks NPLs (%) to total loans Banks Required provisions and provision maintained (BDT Million)

2008 2009 2010 2011 2012 2008 2009 2010 2011 2012
(June) (June)
SCB 25.4 21.4 15.7 11.3 13.5 NPL 224 8 224.8 227.1 226.4 290

DFIs 25.5 25.9 24.2 24.6 23.8 Req. Prov. 136.1 134.8 149.2 148 2 178.4

PCBs 4.4 3.9 3.2 2.9 3.8 Prov. Made 126 2 137.9 142.3 152.7 167.5

FCBs 19 2.3 3.0 2.9 3.2 Excess/(shor all) -9.9 3.1 -6.9 4.6 -10.9

Total 10.8 9.2 7.3 6.1 7.2 Prov. Maint. ra o 92.7 102.3 95.4 103 93.9

Amongst all, DFIs and PCBs are Management Soundness and the management is associate of
main concern for bad asset quality Efficiency: It is very difficult to leader and follower of them to
and they pose threat to banking measure management soundness implement. No desired output
sector as a whole. Based on bank’s and efficiency but is most essential would come unless the
own assessment of NPL and for banking sector’s strength and management is efficient.
required provisions, the shortfall of growth. If the Board is leader, then
on provision was BDT 10.9 billion
as on 30 June 2012.

52 January - March 2013 The Bangladesh Accountant

 Income earned to expenses made i.e, income expense ratio could be the
measurement of management efficiency. The total expenditure to total income, Banks Expenses-income RaƟo
operating expenses to total expenses, earnings and operating expenses per 2008 2009 2010 2011
employee, and interest rate spread are generally used to expose management SCB 89.6 75.6 80.7 62.7
soundness and efficiency. Technical competence & leadership of mid and senior DFIs 103.7 112.1 87.8 88.6
level management, compliance with banking laws and regulations and PCBs 88 8 72.6 67.6 71.7
compliance of all policies including sound internal policies with adequately and FCBs 72 9 59.0 64.7 47.3
appropriately, ability to plan and respond to changing circumstances etc. are also Total 90.4 72.6 70.8 68.6
taken into consideration to demonstrate the quality of management.

Management of DFIs and PCBs efficiency of the banks. The less ROA and ROE in 2011 reduced to
represents less efficient to generate compliant of corporate governance 1.5% and 17.0% from 1.81% and
income compared to expenses. the less efficient is the 21.0% respectively in 2010. So it
Management efficiency of PCBs management. We don’t need to is evident that earning efficiency
was improving and reached to analyze, the norms and style of was not proportionate to increase
67% level in 2010 near to level of corporate governance and its of assets and equity. Within the
FCBs, but in 2011 it again reached efficiency is visible. industry and even over the years
to 71.70% whereas FCBs improved within same category of banks it
to 47% from 64.7% of 2010. Earning Performance: ROA, ROE significantly differs & does not
Surprisingly in 2011 the efficiency and net interest income are provide a consistent growth of
of SCBs increased compared to that showing rising trend up to 2010. In earnings.
in 2010. Corporate governance is spite of increasing interest income
the main issue to register less in 2011 to BDT 146.70 billion,

Banks Return on Assets (ROA) Return on Equity (ROE) Net Interest Income (BDT Million ROA and ROE of India in
2008 2009 2010 2011 2008 2009 2010 2011 2008 2009 2010 2011 2012 was below 1.5% and
SCB 0.76 0 96 1.14 1.3 22.55 26.15 18.43 19.7 7.9 12.11 19.8 34.3 15% respectively that
DFIs -0.63 0 37 0 23 0.1 -6.95 -171.68 -3.23 -0.9 1.9 1.92 6.2 4.9 represent that
PCBs 1.49 1 55 2.11 1.6 16.4 20.95 20.9 15.7 48.5 56.71 82.8 91.4 comparatively Bangladesh
FCBs 2 92 3.18 2 93 3.2 17.8 22.38 17.0 16.6 12.6 10.71 13.0 16.1 banking sector earning
Total 1 27 1 37 1 81 1.5 15.6 21.72 21.0 17.0 70.90 81.46 121.9 146.7 performance is better.

Liquidity: FCBs hold highest and time liabilities including 6% exempted from SLR. Lower surplus
liquidity followed by SCBs. DFIs Cash Reserve Requirement (CRR) created pressure the money market
and PCBs suffered huge liquidity (at present 5.5%), Islamic banks in 2011 that led to higher call
crisis. All conventional banks had had to maintain these 11.5% money rate in 2011 and jumped to
to maintain Statutory Liquidity where as all specialized banks more than 40% sometimes.
Reserve (SLR) 19% of total demand excepting Basic Bank Ltd. are

Banks Liquid Assets/Deposits (%) Excess Liquidity/Deposit (%)

All banks suffered liquidity constraints from 2008 to
2011. Amongst them, DFIs and PCBs suffered 2008 2009 2010 2011 2008 2009 2010 2011
extremely. The figures give us the liquidity picture SCBs 32.93 25.13 27.22 34.7 14.9 17.6 8.2 15.7
that led the money market to raise higher lending DFIs 13.73 9.68 21.33 12.3 4.9 7.1 2.3 2.5
rate of banks more than even 18%. PCBs 20.77 18.28 21.54 23.9 4.7 5.3 4.6 7.0
FCBs 31.36 31.85 32.18 30.5 13.3 21.8 13.2 11.8
Total 24.83 20.66 23.09 26.5 8.4 9.00 6.0 9.3

Over the years CAMELS rating of 3) picture instead of strong (rank category in CAMELS of 2011. So
most of the banks assessed by 1). The rating should be developed performance as a whole was
Bangladesh Bank shows from satisfactory to Strong whereas stagnant or stable as whole, not
satisfactory (rank 2) and fair (rank 3 banks dropped from strong remarkably improved.

The Bangladesh Accountant January - March 2013 53

 No. of Banks
1 or strong 2 or SaƟsfactory 3 or Fair 4 or Marginal 5 or UnsaƟsfactory
CAMELS Total Banks
2008 2 28 10 4 4 48
2009 3 32 8 4 1 48
2010 5 32 7 2 1 47
2011 2 33 9 2 1 47

If we review the above unexpected incident does not Bangla Securities Ltd. published in
performance indicators, we shake the banking sector as whole. April 2012, “Operating
observe that performance of PCBs performance of the leading NBFIs
and FCBs as a whole provide Non-Banking Financial were robust until 2011. After the
sound and healthy pictures where Institutions: Non banking financial capital market debacle profit of
SCBs and DFIs do not. The institutions are specialized in these NBFIs also declined
substandard performance of them leasing and hire purchase financing significantly. According to data
reduced the performance of the in addition to restricted loan from the third quarter 2011
banking sector as a whole. It could facilities regulated under the combined profit of major 6 NBFIs
be said in other way, the banking Financial Institutions Act 1993. At declined by 56% compared to
sector could be more vibrant, present 29 NBFIs are in operation 98% growth in 2010.”
strong and stable if SCBs and DFIs holding BDT 309 billion total
could register good performance. assets aggregately as on 30 June, If we review CAMELS rating of
Amongst PCBs, some of them may 2012. The investment and assets NBFIs, we observe that maximum
not be sound and strong on the growth of this sector show companies of this sector had
CAMELS rating assessment and moderately upper trends but the deteriorated asset quality, earning
Bangladesh Bank should identify performance of those investments capability and management
those to regulate and nourish them and assets deteriorated. As per efficiency and faced liquidity crisis.
with SCBs and DFIs so that any sector Report on NBFI of Lanka

Performance Indicator Total No. of NBFI obtained raƟng points

NBFI 1 (strong) 2 (saƟsfactory) 3 (fair) 4 (Marginal) 5 (unsaƟsfactory)
Capital Adequacy 29 18 2 6 0 3
Asset Quality 29 6 9 13 1 0
Management Efficiency 29 2 15 11 1 0
Earnings & Profitability 29 4 16 7 2 0
Liquidity 29 4 7 16 2 0

Virtually, the liquidity in NBFIs borrowed money from banks at a given to lessee as allowable
was always constraint because of higher rate covering cost of fund expenses for finance lease to
not allowing to collect money and profit. As a result, Banks and determine the taxable income
through saving or current accounts NBFIs are in uneven competition where in India, Sri Lanka and
excepting term deposits. NBFIs with the same projects. By Pakistan and maximum countries
face dilemma to attract term borrowing with a very high rate over the world such allowances
deposit from mass people. In from NBFIs, the project might not are provided to lessor, the leasing
addition to that, NBFIs use banking be profitable and has always a risk company or NBFI, considering the
sector as source of funds and due of deteriorated asset quality. legal owner of the assets
to high cost of fund, cost of lending Taxation system for NBFIs in irrespective of accounting
is high as well. Banking lending Bangladesh is not in accordance treatment as assets in lessee’s
rate to NBFIs and other with international practice in case book.
commercial projects are almost of finance lease. As per income tax
same where NBFIs lend the law, the depreciation allowance is

54 January - March 2013 The Bangladesh Accountant

Capital Market: Let’s review of the market structure and its price volatility in 2013:

Indicators As on 28 Indicators Highest Records Recent records Recent records

March-13 20/3/2013 27/03/2013
No. of listed securi es 516 DGEN index 8918 3939 3794.29
Equi es 243 DSEX Index 4305 3857 3681.66
Mutual Fund 41 Market Cap. (BDT bn) 36807 2310.27 2242.37
Treasury Bonds 221 Market turnover (BDT mn) 32450 1.45 1.16
Corporate Bonds 3 Annualized P/E 12.85 12.40
Debenture 8

As to sector performance, there are no

Market Cap as on 20 March 2013 significant reasons or fundamentals of
Trave & performances. Although it is said, the
Leisure, 2.11 IT Sector, 0.52 Jute, 0.02 prin Paper & Miscellaneous, 2.57 market is truly priced now ; the price is
ng, 0.02 not affected based on sector based real
Service & Real
Estate, 0.52 performance. At the week end of 27
Tannery, 0.63 March 2013, gaining sectors were
Ceramic, 1.16 telecommunication 0.58%,
Mutual Fund, 1.84
Pharmaceuticals -1.73%, Mutual Fund
Tex le, 4.67 Cement, 4.56 -3.25%, Bank -4.41% and top losing
Bank, 26.02
were travel & Leisure -8.69%, BFI
Food & Allied, 3.96Engineering, 3.78 -6.25%, Cement -5.30 and
Insurances, 5.29 Engineering- 5.19% where at the week
Telecommunica on, 12.11 end on 19 March 2013, top gainer
sectors were cement, bank,
Pharmaceu cals, 8 94 engineering and tannery. So the market
performance is not consistently stable
NBFI, 7 88 Fuel and Power, 13.6 and based on fundamentals.

Capital market is always unless they can be educated at concerned about the bubble of the
speculative and risk driven. Hence, least on simple evaluation of market and experts whispered
volatility of the market is also a shares or professionally managed about collapse a sudden.
very common feature even in the mutual funds is to on the driving Bangladesh Bank had taken
efficient vibrant market. Such seats of the investors. The measures to control the market
speculation driven volatility could philosophy of making short term pulling down the inflation horse by
not be avoided in a developing profit makes them speculative and putting a leash on the liquidity.
country like Bangladesh by any decisive to move up the market Banks and financial institutions
means because of individual rumor irrespective of real value of shares were instructed to withdraw
based syndicated investment in the turning it into gambling with investment and keep the
open market transaction instead of bubble. The expert say, the investment within the scope of
active role of professionally expansionary monetary policy upto legal directions. The conservative
managed mutual fund. In such a 2010 led to create the bubble more monetary policy and directions to
market like Bangladesh, very few due to availability of money where banks adversely affected the capital
investors consider business banks, financial institutions and market and day by day DGEN
fundamentals and invest analyzing merchant banks was open for index started to fall making
the financials intending to earn investing or providing greater size investors frustrated, aggrieved &
expected rate of return even in the of marginal loan to investors. As protesting. Index jumped up to
worst scenario. When market such, the people unemployed or 8918 points in December 2010
efficiency comes up in discussion, employed or even the rural people and then collapsed back to 3500
it is said the financial reporting entered capital market to pocket so points in 2012. The regulators and
transparency. True. Financial easy income with all the cash, government worked together to
Reporting transparency is must to bank balances or converting cash make the market bullish with the
provide the reliable information to from selling out the assets acquired policy and funds but failed to go
the investors to consider while by inheritance. Merchant banks back. That did not restore the trust
investing. The reporting provided loan to them in addition of the investors and the bearish
transparency would not work for to their own investment. At the end behavior of the market has not yet
good investments of investors of 2010, regulators were been removed. At present, it is said

The Bangladesh Accountant January - March 2013 55

the market is corrected and entrepreneurs. The functions of (Amendment) Ordinance 1984 (LI
balanced priced based on ICB have been limited at present of 1984) was introduced to allow
valuation of shares. However, the and should be further reviewed in private sectors to conduct
market is extreme volatile. The this crucial time to make the insurance business in addition to
confidence of investors is not being market better performed and the above SBC and JBC (iv) The
restored due to losing money day controlled. Insurance Act, 1938 and the Rules
by day investing even in good made there under were
securities. Panic and the volatile Insurance Companies: Insurance promulgated and administered by
decision of investors both from companies deal with risk and Department of Insurance (DOI)
individual and institutions specially possibilities. Both for individual under Ministry of Commerce upto
banks and financial institutions, and business, the insurance 2010 and finally (v) The Insurance
merchant banks, policy makers & company has pivotal role in Act 2010 was enacted in 2010
regulators wounded the market protecting them (individuals and with the suggested amendments by
and made more bearish and as on business) from unforeseen financial consultant & study committee and
02 April, 2013 total transaction loss. As such, the insurance is a Insurance Development and
was only BDT 1060 million. substance of indemnity excepting Regulating Authority (IRDA) started
the life insurance as the life cannot operation to regulate insurance
Stock exchanges, the members of be indemnified with value. In companies from 2011. The Rules
them and merchant banks, the Bangladesh at present a total of 62 under the act are to be made and
other key players of the market insurance companies are in in process.
need to be effectively regulated operation consisting of 2
with the laws and rules BSEC has. state-owned corporations, 43 As stated earlier, the gross
Lot of allegations are pertaining general insurance companies and premium of one year of
against them by different quarters 17 life insurance companies Bangladesh is still below 1% of
for market manipulation or doing including only 1 foreign life GDP. In comparison with other
unlawful works to influence price insurance company titled Metlife countries it is observed that we are
of the securities. Efficient capital Alico. The insurance industries has far away from them. In India and
market is must to mobilize reached current stage offer verious Sri-Lanka it is 5.10% and 3%
domestic savings and also to steps: (i) The government respectively where as in the
ensure broadening the base of nationalized insurance industry developed country generally it
industrial ownership. along with banks in 1972 by varies from 9% to 15%. We have
Entrepreneurs get capital and President Order No. 95 and all ample scope to insure more people
feasible project through a sound companies and organization and assets both with life and
capital market and ICB has carrying on insurance business non-life insurance respectively.
important role to speed up capital came under nationalization order Lack of awareness and wrong
market in Bangladesh by collecting (ii) The Insurance Corporation Act perception of the role of insurance
savings through unit funds, mutual (Act of VI), 1973 was enacted to companies keep the people away
funds, underwriting, and bridge emerge two state owned from insurance. On the basis of
financing and investing in any specialized corporation namely gross premium as on 31
other company listed or to be listed Sadharan Bima Corporation (SBC) December, 2011, the structure of
with stock exchange and providing and Jiban Bima Corporation (JBC) insurance industry of Bangladesh is
capital support to investors and (iii) The Insurance Corporations as follows:

Total Premium (BDT billion %) Life Premium (BDT bilion, %) Non-Life Premium (BDT billion, %)

3.08, 5% 1.98, 10%

19.25, 2 3%

62.81, 77% 17.27, 90%

59.74, 95%

Life Non-life State Owned-JBC Private State-Owned SBC Private

56 January - March 2013 The Bangladesh Accountant

In a study by a group of students of are very standard record of respectively and the growths of
Dhaka University in 2011 on life profitability. In 2011, life insurance premium, investment and total
insurance company in Bangladesh, company earned income from assets in 2011 compared to those
it was found that profitability of investment Tk. 14,194 million in in 2010 for non-life insurance
most of the leading life insurance addition to create life fund and companies were 16.35%, 23.70%
companies are satisfactory in terms non life insurance companies and 24.37% respectively, which
of Return of Equity (ROE), Return earned net profit of Tk. 4,966 are remarkably emerging both in
on Capital Employed (ROCE), million with profit of all 44 life and non-life insurance
Return on Assets (ROA) and companies. business. Lack of awareness, lower
Earning Per Share (EPS). In 2010 per capita income, inefficient
amongst leading 7(seven) The growths of premium, life fund, agent, religious superstition and
companies, ROE from 33.91% to investment and total assets in 2011 the organizational chaos in paying
48.78%, ROCE from 15.63% to compared to those in 2010 for life claim allowed the industry slower
21.40%, ROA from 14.23 to 16.32 insurance companies were 8.00%, penetration in the market.
and EPS from 720.11 to 18,289.78 20.18%, 23.54% and 21.18%

Life Insurance (BDT in million) Non-Life Insurance (BDT in million)

600,000 100%
Total
500,000 80% Total
Total Assets, 202,94
6 Assets, 44580 Total
Assets, 167,47
400,000 3
Assets, 55444
60%
300,000 Investment, 12 Investment, 15
4,102 3,318
40% Investment, 22
200,000 926 Investment, 28
Life Fund
Life Fund 20% 360
147,600 Premium, 165
100,000 177,381
Premium 44 Premium, 192
, 58,159 Premium 0% 49
-
, 62,814

2010 2010
2011 2011

Premium Life Fund Investment Total Assets Premium Investment Total Assets

In order to make the insurance Credit Rating Agency: Credit rating taken in investing or financing in
business more competent and is the assessment of credit that securities, individual or
sound some issues like minimum worthiness of any individual or corporations. The Credit Rating
capital, use of account payee corporations. The rating company Companies Rules 1996
check for commission, commission is a new dimension of financial (subsequently amended in 2009) of
ceiling to agents, restrictions of systems to rate the securities and Bangladesh Securities and
directorship and setting premium institutions for investing therein. Exchange Commission (BSEC) is
based on specified tariff rate etc. Credit rating is essential to assess the regulating rules of rating of
The Insurance Act 2010 has been the investment due diligence of debt instruments & right offers of
enacted repealing the earlier individual, securities either debt or equity shares of premium.
Insurance Act 1938. Addressing equity of corporations and Meanwhile some more initiatives
the unhealthy competition existing institutions/companies as a whole are taken like direct listing rules of
in the industry due to lack of to reach a rank of credit viability. Dhaka Stock Exchange (DSE) to
proper regulating with rules and The Investors or financer would have at least BBB rating,
guidelines, Insurance Development decide finally, based on the rated Bangladesh Bank made mandatory
and Regulatory Authority (IDRA) rank provided by the rating for all banks with annual
has been formed under Insurance company, how they would invest surveillance in 2006 and the
Regulatory Authority (IRA) Act considering the risks associated or insurance regulator also made it
2010. what mitigating measure would be mandatory through an SRO

The Bangladesh Accountant January - March 2013 57

annually for all general insurance from public or financial institutions Co-operative Societies is “The
companies and biannually for all or the organization dealing with Department of Co-operatives is
life insurance companies. Banks public money is under proper committed to poverty reduction
also use credit rating tools for control based on rating report. Our and socio economic development
credit worthiness and risk regulators should ensure that of Bangladesh through strategic
measurement to provide loans to practice at a very starting age of management of human,
clients. At present, there are 8 credit rating in Bangladesh before agricultural, natural, technical,
(eight) credit rating companies in involving any bad culture in financial and other resources for
Bangladesh whereas it is 5 in India, accomplishing rating process. They the sustainable development of
2 each in Pakistan, Sri-Lanka and should focus on the performance co-operatives as a
Malaysia. Compared to small size in quality rather than fight on business-oriented unit.” How far
of the financial systems in profitability. we succeeded? Cooperatives have
Bangladesh, 8 companies are too not been added as stronger and
many to survive with cost Co-operative Society: Cooperative influential sector of financial
efficiency should be rating of made concept is very ancient and has systems in spite of Govt. attempt in
mandatory for all companies to developed as modern cooperatives policy & papers and establishing
issue securities instruments and for over 200 years. Cooperatives national co-operatives and
avail credit lines to bring under have the immense opportunities to department of cooperatives to
accountability about the mobilize resources for activating regulate them. Excepting ‘Milk
worthiness of issuing or availing to rural economy and underserved Vita’, one of the national
protect public interest. These will area or segment, where state and cooperatives, other national and
raise the competition amongst public sector have failed or have central cooperative are not
them for professional works and impediment to work, through performing well to contribute to
only quality service providers developing entrepreneurship, GDP remarkably. We have three
would sustain in the market. community based programs and types of co-operative as follows
activities and delivering goods & from the record of department of
The rating is a tool to ensure sound services. Cooperatives can alleviate cooperatives, Rural Development
practice of financial systems. So, a poverty and can ensure food and Cooperation Division that
good quality of rating is very security & employment generation might differ to some extent with
essential so that eligible persons or through the above economic annual report:
organizations or securities get activities. As such, the mission
privilege to avail equity or debt statement of the Department of

Type of co-operatives Basic fact

National Co-operative Societies No. of Central Cooperative Societies: 21
Amongst them some of famous national Co-operatives are: Bangladesh Milk Producer’s Cooperative Union Ltd.
(Milk Vita), Bangladesh Samabaya Bank Ltd., Bangladesh Jatiya Samabaya Shilpa Samity Ltd., Bangladesh Samabaya
Shilpa Sangstha Ltd., The Eastern Cooperative Jute Society Ltd. etc.
Central Co-operative Societies No. of Central Cooperative Societies : 1,107
No. of Member of C ooperative Societies : 1,33,188
Working Capital of Cooperative Societies: : Tk. 1,026.80 crore
Name?
Primary Co-operative Societies No. of Primary Cooperative Societies : 163,408
No. of Member of Primary Cooperative Societies : 8,505,738
Working Capital foCooperative Societies : Tk.1,909 38 crore
Name?

Co-operative movements have not Cooperatives- for providing Worker cooperatives- for providing
been spread over and established services to its members (iii) work to its members. The
in rural areas so far the micro Financial Cooperatives or credit producers’ cooperative could be
finance occupied. Co-operative union/cooperative banking- for divided into (i) Agriculture
movements can change the life of providing loan, investment and cooperatives (ii) Utility cooperative
poor or ultra poor people if the insurance services (iv) Multi (iii) Housing cooperative (iv)
following types of cooperative Stakeholder cooperatives- for Handicrafts cooperative etc.,
could be run with the intended providing common services to whatever the name is, the ultimate
objectives to achieve: (i) members being different categories objective is grouping the same
Producers’ cooperatives- for and status (v) Consumer class of producers or service
producing product and services to cooperatives- for providing good providers with a view to bring
sell to members and all (ii) Service for consumption to members (vi) under one umbrella as cluster to

58 January - March 2013 The Bangladesh Accountant

strengthen structurally, financially peoples’ works to go ahead with Bangladesh are implemented by
and technically. In Bangladesh, in prosper and prospects. NGOs, Grameen Bank,
urban area we see a lot of credit state-owned commercial banks,
cooperatives operated haphazardly Micro Finance: Bangladesh has private commercial banks, and
going beyond the cooperating been widely known all over the specialized programs of some
objectives and attainment of world as the successful country of ministries of Bangladesh
resource mobilization. micro finance with group savings government. At present as on 30
model. As recognition of its June 2011, total outstanding micro
Some projects and programs have achievement, the nobel committee finance was BDT 248 million in
been undertaken by the jointly awarded Dr. Muhammad the hands of 35 million borrowers
government that may have some Yunus and Grameen Bank Nobel (grameen bank 8.4 plus other MFIs
figures and facts in recording over Peale Prise GB is a special bank 26.08) including BDT 72 billion of
the years, but the performance of registered under Grameen Bank Grameen Bank. Other than
them is not remarkable. As said Ordinance 1972. BRAC, another Grameen Bank, all MFIs held BDT
earlier, we need to establish big micro finance institution in 173.79 billion. As per MRA, the
cooperative movements to get Bangladesh, has been shaped as structure and growth of micro
together on specialization basis international institution. At present finance in MFIs (other than GB) is
and this will give synergy effect of microcredit programs in shown below:
Particulars June, 2008 June, 2009 June, 2010 June, 2011
No. of Licensed NGO-MFIs 293 418 516 576
No. of Branches 15,077 16,851 17,252 158,066
No. of Employees 98,896 107,175 109,597 111,828
No. of Clients (Million) 23.45 24.85 25.28 26.08
Total Borrowers (Million) 17.79 18.89 19.21 20.65
Amount of Loan 134,680.96 143,134.03 145,022.66 173,797.60
Outstanding (Tk., millions)
Amount of savings (Tk. 47,386.19 50.610.04 51,362.93 63,304.44
millions)

As per report of MRA on NGO- MFIs in Bangladesh, MFIs Loan Outstanding Other than
Volume VIII, 2011 loans of the above amount are Grameen bank (BDT, BN & %)
classified into two groups; (i) Upto BDT 50,000 is micro
credit and (ii) above BDT 50,000 is micro enterprise
Micro
loan. Amongst the sectoral distribution, about BDT 135 Enterprise
billion (77%) is micro credit and the remaining 41 billion Loan, 41, 23%
is micro enterprise loan (23%). Out of these micro
enterprise loans of 41 billion, TOP ten NGO held 19%
Micro Credit, 135, 77%
and remaining 4% was held by the rest 576 NGOs.

Profitability of NGO-MFIs (ref, MRA Report, NGO_MFIs in Micro Enterprise Loan Micro Credit
Bangladesh, June 2011)
Name of MFIs Portfolio Yield Interest Return On Operational
rate Spread Assets Self Sufficiency
BRAC 28.83 22.323 2.77 111.09
ASA 26.32 22.61 10.27 159.26
Bureau Bangladesh 31.80 20.79 0.52 95.93
TMSS 23.54 18.42 2.38 105.58
Jagorani Chakra Foundation 23.1 16.24 5.88 135.87
Society for Social Services 25.05 19.12 4.8 118.25
Shakti Foundation for Disadvantage 28.28 19.36 4.22 118.07
Women
United Development Initiatives for 24.67 18.96 1.8 103.12
Programmed Actions- UDDIPON
Pdakkheo Manabik Unyan Kendra 21.84 15.42 1.12 92.67
RDRS Bangladesh 23.72 19.36 3.53 99.07
Average of TOP 10 NGOs 25.72 19.26 3.73 113.89
Average of 576 NGOs 20.33 16.26 1.18 102.88

The Bangladesh Accountant January - March 2013 59

Micro finance fund is comprised of generally fund from donors, Palli Karma Sahayak Foundation (PKSF), banks,
client’s savings, surplus over expenses etc. The fund composition of micro fiancé as per the said report is
below:

Fund Composition of micro credit (BDT, bn):

200 7.73
10.91 50.3
150 8.85 42.34
36.26 23.58
100 4.43 23.01 31.77
31.17 23.9
22.67 24.48
50 23.48 63.3
22.71 40.53 47.44
3 64
0
2008 2009 2010 2011
Clients' Savings Loan from PKSF Loan from Commercial Banks Donors' Fund Cumultaive surplus Other funds

Microcredit has extensive role (i) strengthened since the 2003 FSAP. creates inefficiencies. Moreover,
for access to finance for poor or Nonperforming loans in the inadequate information,
ultra poor people to bring them banking system have attributable to non-transparent
into economic activities and (ii) for decreased steadily since 2003, accounting and reporting,
empowering women as majority of and the stated capital position affects market discipline.
clients are from poor families and of banks has strengthened.
women. Now micro credit is Meanwhile, the total assets of • Stress tests suggest that credit
regulated by ‘The Microcredit the banking system have risk continues to have a larger
Regulatory Authority (MRA)’ under doubled during this period impact relative to other
the "Microcredit Regulatory and credit to the private sector single-factor shocks.
Authority Act 2006” to promote has risen threefold. The rapid Exchange-rate risk does not
and foster sustainable development growth in non-traditional present a major threat because
of microfinance sector through banking activities in recent the net open positions of
creating an enabling environment years is generating new risks, many banks are negligible.
for NGO-MFIs in Bangladesh. underlining the importance of Since the country relies
Bangladesh is at 5th rank in the strengthening the regulatory heavily on remittances and
indicator of “Loan Accounts at framework. exports, a protracted global
MFIs’ as assessed by World economic slowdown could
Economic Forum in the report of • Nevertheless, significant affect banks‘asset quality.
2012. long-standing risks and Although financial soundness
vulnerabilities remain. Loan indicators are generally
Stability: classification, provisioning, favorable, the asset quality of
and even capital remain commercial loans portfolios
IMF conducted the Financial uneven in the banking sector, remains weak, with a large
System Stability Assessment of creating potential share of loans classified in the
Bangladesh Financial system in vulnerabilities. Non-prudential substandard, doubtful, and
2009 based on the Financial Sector government loss categories. Despite the
Assessment Program (FSAP) and intervention—such as interest major improvements resulting
published the report in February rate ceilings, moral suasion, from Bangladesh Bank‘s
2010. The key findings of that directed credit and explicit restructuring program
report are: requirements to ease debt including the corporatization
service for some sectors of the of state banks, they remain
• “The soundness of the economy—increases risks, financially weak.”
financial sector has been reduces transparency, and

60 January - March 2013 The Bangladesh Accountant

Bangladesh Bank also published is aware of careful regulation. 37th position in ranking for
Financial Stability Report in August Bangladesh Bank correctly financial stability pillar, the best
2012 with an extensive analysis of recognized that a liberalized, rank for Bangladesh amongst seven
performance of financial sector market based, and effectively pillars. The judgment of this pillar
performance including banks, FIs, supervised and regulated financial was based on 16 (sixteen
capital market etc. The report sector is necessary in order to indicators) where Bangladesh was
reveals all indicators positive promote and sustain rapid growth in very good position for (i)
growth, reduction of NPL and in Bangladesh. As such, the Manageability of public debt (ii)
increase of provision surplus etc. Bangladesh Bank, as the supervisor Output loss during bank crisis (iii)
excepting reduction of the of the country's financial sector, frequency of banking crisis (iv)
profitability in 2011. This feature should carefully supervise & External Debt to GDP (v) C/A
reminds us of the point raised by monitor the operations, liquidity balance to GDP and finally (vi)
IMF in stability report on weak conditions and other financial External Vulnerability Indicator.
loans portfolio, vulnerabilities of developments for taking Some of the indicators are not
loan classification & provisioning appropriate actions as required. applicable (N/A) as the financial
and global meltdown affecting market is not yet expanded to that
adversely the profitability of the According to assessment of World level for happening anything so.
banks. However, Bangladesh Bank Economic Forum, Bangladesh is in

Stability Rank, Source: WEF

Credit default swap spread (N/A)

Manageaibility of public debt
Aggregate macroeconomic indicator
Foreign currency sovereign ra ng
Local currency sovereign ra ng (N/A)
Output loss during banking crisis
Tier 1 Capital Ra o
Aggregate measure of real estate bubbles (N/A)
Financial Strength Indicator (N/A)
Frequency of banking crisis
Net Interna onal Investment to GDP (N/A)
External Debt to GDP
Dolariza on Vulnerability Indicator (N/A)
C/A Balance to GDP
External Vulnerability Indicator
Change in Real effec ve Exchange Rate (N/A)

0 10 20 30 40 50 60

Good ranking in financial stability to allocate funds efficiently and weak) to make such a set of fit,
may not represent a set of fit, absorb the shock as they arise. As competent and well structured
competent and well structured we are relatively stable with 37th financial systems that can avail the
financial systems but the system’s position out of 62, we need to opportunities of emerging deterring
so far existence have the capability reform the areas (where we are the threats using strength we have.

The Bangladesh Accountant January - March 2013 61

Reforms & Retreats with Integrated Policy

Bangladesh falls one step down in 2012 in ranking of Financial Development Index compared to that in 2011
as per report of World Economic Forum (WEF). The forum ranked 62 countries as top leading financial systems
where Bangladesh was ranked in 57 in 2012. Financial Development Index addressed 7 (seven) pillars grouped
into 3 (three) broad categories:

Categories Pillars
1. Factors, Policies and Ins tu ons 1. Ins tu onal Environment POLICY MAKERS
2. Business Environment
3. Financial Stability

2. Financial Intermedia on 4. Banking Financial Services FINANCIAL

5. Non-banking Financial Services INTERMEDIARIES
6. Financial Markets

3. Financial Access 7. Financial Access END USERS OF CAPITAL

Each of above 7 pillars has equal weight of 14.29% (14.29x7=100%) and is sub categorized with weight
within each pillar’s weight of 14.29. However, the rank was finally awarded for a country based on the rank
and value of 7 pillars obtained from sub categories’ rank & value of seven pillars based on the value & rank of
121 indicators under sub categories (i.e, 121 Indicators ranking- 24 subcategories ranking-7 Pillars ranking-
Country ranking). In 2012 amongst 62 countries, 20 countries of Asia were placed in the rank of world’s
leading financial systems and capital markets that may be presented below:

The Financial Development Index 2012-Asia Part, Source; WEF

Total Score 7

1. Hong Kong SAR 5.31

4. Singapore 5.1

7. Japan 4.9

15. Korea Repub. 4.42

18. Malaysia 4.24

21. Kuwait 4.03

23. China 4

24. Israel 3.94

25. Bahrain 3.93

26. UAE 3.84

31. Saudi Arabia 3.68

33. Jordan 3.56

34. Thailand 3.55

40. India 3.29

47. Kazakhstan 3.13

49. Phil ipines 3.12

50. Indonesia 2.95

52.Vietnam 2.92

57. Bangladesh 262

58. Pak istan 2.61

0 1 2 3 4 5 6 7

62 January - March 2013 The Bangladesh Accountant

Hong Kong SAR is top 1 in the needed for sound and efficient reforms we may divide the rank
world ranking followed by USA financial systems. into three groups like rank 1-30
and UK respectively. We are far very good or good, rank 31-49
away from other countries in Asia The 121 indicators under different moderate where reforms need to
especially from India, Thailand, categories of seven pillars develop better and above 50 is
Kazakhstan and Philippines. The represent the whole pictures vulnerable where reforms are must
above financial development index affecting the financial systems. and immediate to develop. The
indicates that Bangladesh needs to Hence, if we analyze the ranking following table would analyze our
reform a lot. If we review of each indicator, we may positions in financial systems and
Indicators of each sub categories conclude our decision on the area the places where we need reforms:
under pillars we could find out our where reforms are needed. With a
loopholes and where reforms are view to emphasizing immediate

Analysis of Bangladesh Financial Development Index awarded by World Economic Forum:

Sub Ran Score

Pillars Remarks
categories k out of 7
1.Institutional -Financial 61 2.5 Each of four categories of Out of 26 Indicators of
Environment Sector 61 1.1 Bangladesh is about last ranked four categories, only
Liberalization 62 3.3 from 58 to 62 out of total 62. 22 three indicators such as
-Corporate 58 2.9 indicators out of 26 vulnerable and ‘burden of government
Governance 62 2.6 hence, significant reforms are regulation (33)’,
-Legal and needed to develop the following ‘Strength of legal right
Regulatory indicators under the ‘pillar index (24)’ and ‘Strength
issues Institutional Environing’: of investor protection
-Contract -capital account liberalization index (17)’ have good
Enforcement -Commitments to WTO and moderate rank. One
Agreements on trade Services indicator ‘Domestic
-Extent of incentive based financial sector
compensation liberalization’ was not
-Efficiency of corporate boards applicable.
Reliance on professional
management
-Willingness to delegate
-Ethical behavior of firms
-Protection of minority
shareholders’ interest
-Regulation of securities exchange
-Property rights
-Intellectual property protection
-Diversion of public funds
-Public trust in politicians
-Corruptions perceptions index
-Central bank transparency
-Judicial independence
-Irregular payments in judicial
decisions
-Time to enforce a contract
-Number of procedures to enforce
a contract
- Cost of enforcing contracts

The Bangladesh Accountant January - March 2013 63

 2.Business -Human 62 2.7 Each of four categories is about last Out of 22 indicators of
Environment Capital 62 2.8 ranked from 57 to 62 out of total four categories only 5
-Taxes 55 3.4 62. 18 indicators out of 22 indicators such as,
-Infrastructure 62 1.4 indicators were vulnerable and ‘Distortive effective on
-Cost of doing 57 3.1 hence, significant reforms are taxes (37), Time to pay
business needed to develop the following taxes (46), ‘cost of
indicators under ‘Business closing a business (17),
Environment’ : Time to start a business
-Quality Management School (37) ‘Time to close a
-Quality of math and science business (48)’ are in
education moderate index where
-Extent of staff training reforms also required to
-Local availability of specialized develop more.
research and training services
-Brain drain
-Tertiary enrolment
-Irregular payment in tax
collection
-Marginal tax variation
-Quality of overall infrastructure
-Quality of electricity supply
-Internet users
-Broadband Internet subscriptions
-Telephone subscriptions
-Mobile telephone subscriptions
-cost of starting a business
-cost of registering property
-Time to register property
3.Financial -Current 37 4.4 Only one out of three categories We are best in stability
Stability Stability 9 5.6 “Risk of sovereign debt Crisis’ is pillar amongst 7 pillars.
-Banking 23 4.6 ranked 52 out of total 62. Out of 16 indicators, 6
system 52 2.8 indicators like, External
Stability 4 indicators out of 16 were vulnerability indicator
-Risk of vulnerable & should be taken as (5), Current balance to
Sovereign reform measures to develop as GDP (25), External Debt
debt crisis follows: to GDP (7), Frequency
in banking crisis (16),
-Tier1 Capital Ratio Output loss during
-Foreign currency sovereign banking crisis (top
Rating ranked, 1!),and
-Local currency sovereign rating manageability of public
-Aggregate macroeconomic debt (12) we are in good
indicator ranked.
6 indicators not
applicable for
Bangladesh.

64 January - March 2013 The Bangladesh Accountant

 4.Banking -Size index 50 3.00 Only one out of three categories Out of 14 indicators of
Financial -Efficiency 41 2.00 ‘Financial Information Disclosure’ three categories, 2 have
Services index 35 5.00 is ranked 59 out of 62. Others two very good ranked such
-Financial 59 1.00 are moderate ranking 41 and 35 as, Central bank assets
information respectively. to GDP (18) and
disclosure Aggregate profitability
2 indicators out of 14 indicators indicator (2) and 9
were vulnerable & hence, should indicators such as ‘
be taken as reforms measures to deposit money bank
develop as follows: assets to GDP (43),
Financial systems
-Public ownership of banks deposit to GDP (38). M2
-Private credit bureau coverage To GDP (45), private
credit to GDP (45), Bank
deposit to GDP (39),
money market
instrument to GDP (33),
bank overhead costs
(37), bank operating
costs to assets (32) and
public credit registry
coverage (32) are seems
to be moderate where
development is also
needed.
5.Non- -IPO activity 60 1.2 Three out of four categories are in Out of 14 indicators we
banking -M & A 35 1.3 last ranked from 58 to 61 where have 6 indicators good
financial activity 61 1.0 one is in middle ranked(35) or and moderate rank on
Services -Insurance 59 1.4 moderate. ‘Life Insurance Density
- 58 1.0 (15)’ ‘IPO market share
Securitization Out of 14 indicators of four (42), IPO access amount
categories, reforms measures (34), Share of world
should be taken to develop the IPOs (20), life insurance
following 7 vulnerable indicators: penetration (43) and
non life insurance
-M & A activity density (33).’ Yet,
-M & A transaction value to GDP reforms are also needed
-Share of total turnover of M& A in these area to improve
Deals the ‘Non-banking
-Non-life insurance penetration financial services pillar’
-Relative value added of insurance One indicator is not
to GDP applicable for
-Securitization to GDP Bangladesh.
-Share of total number of
securitization deals.

The Bangladesh Accountant January - March 2013 65

 6.Financial -Foreign 41 1.8 Out of four categories, bond Out of 17 indicators we
Markets exchange n/a n/a market development is ranked 53 have only good ranked
markets n/a and equity market development on stock market
-Derivatives n/a 2.6 seems to be moderate. turnover ratio (4) and
market 31 1.0 another 3 have
-Equity Out of 17 indicators, reforms moderate rank such as
market 53 measures should be taken to “Private domestic bond
development develop on the following4 market capitalization to
-Bond vulnerable indicators: GDP (42), stock market
market value traded to GDP
development -Stock Market capitalization to (40) and Public domestic
GDP bond market
-No. of listed companies per capitalization to GDP
10,000 peoples (45). 9 Indicators are
-Private international bonds to related to derivatives
GDP foreign exchange swap
-Public international bonds to that are not related to
GDP Bangladesh.
7.Financial -Commercial 51 2.8 One category ‘retail excess’ is Out of 12 indicators we
Access access 56 2.8 ranked 37, seems to be moderate. have very good ranked
-Retail 37 2.9 for 2 such as, Loan
excess Out of 12 indicators reforms account to MFIs (5) and
measures should be taken to Loan form a financial
develop the following 4 vulnerable institutions (3) and 6
indicators: seem to be moderate
like ‘ease of access to
-Financial market sophistication credit (40), financing
-Venture capital availability through local equity
-Foreign Direct investment to GDP market (34), ease of
-Debit card penetration access to loans (48),
market penetration of
bank accounts (44),
commercial bank
branches (45) and total
number of ATMs (48)
where reforms are also
needed.

66 January - March 2013 The Bangladesh Accountant

Major reforms so far taken by Financial Stability Report for the Bank account for distressed
Bangladesh Bank from 2009 to first time, Integrated Risk people, Bank Account for Small
September 2011 as per report of Management Guidelines, Life Insurance Policy Holder, Bank
“Bangladesh Bank Recent Reform Established Risk Management Unit Account for Aila Affected People,
Initiatives” are : (i) Currency (RMU) in banks , Risk Based Loans to farmers for spice
management and payment Capital Adequacy(RBCA) guideline cultivation, Major Policy Reforms
systems, in other way, countrywide revised, Implementation of Basel II in SME and Refinance Schemes,
electronic payment infrastructure accord, Safeguard policy for the Special Incentives and
replacing the traditional paper banks on capital market activities, Performances for Women
based clearing and settlement Accounting Guidelines for Repo Entrepreneurs, Mobile Phone
system (ii) Regulatory reforms like Transactions, Islamic Interbank based Financial Services, School
liberalization of interest rate, Fund Market (IIFM), Diagnostic banking and many more on the
rationalization of charges, Review Report (DRR), Introduced issue of Foreign exchange policy
prohibition on bank loan for Digitized Data Reporting System and reserve management , Anti
purchasing land, single borrower and Software, Expansion of Money Laundering and Combating
exposure limit waived for power Non-Banking Financial Institutions, Financing of Terrorism , Central
sector, prudential regulation for Prudential Regulations for NBFIs, Bank Strengthening Project,
customer financing, guidelines on Basel accord implementation for Corporate Social Responsibility,
Environment Risk Management NBFIs, (iv) Financial inclusion- Green banking: Banking for
(ERM), Basel-II Implementation and Bank account for farmers, Bank environmental protection, Digital
planning to implement Basel-III, account for unemployed youth, Bangladesh Bank and HR
guideline on ICT Security for Banks Bank account for hardcore poor, Development and capacity
and Financial Institutions, 2010 Banking service for physically building through training and
(iii) Supervision of banks and handicapped people, Bank Masters of Banking Management
financial institutions like Stress accounts for Freedom Fighters, (MBM) Course.
Testing became mandatory for the Bank accounts for beneficiaries
scheduled banks , Published under Social Security Program, The indicators of the above tables

The Bangladesh Accountant January - March 2013 67

 the year, the organizational own
strategy and policies should be
reviewed based on lesson learned
from past year and performance
through daylong session with
senior management, customers,
lenders, and all other stakeholders.
The issues affecting national policy
or regulations may be conveyed to
the regulator to reform or to take
necessary action after due
diligence when the central bank
chief sits with all bank and
financial institutions. In Japan,
‘kaizen’ is an idea of continuous
development and the kaizen is
“Change for better” where all
employees from cleaner to leading
crew of organization put
comments on the developments
which are taken into consideration
for a healthier organization and
happier workforce. The retreat
programs would help the banks
and all other financial institutions
for better planning and to reach the
target with efficiency and
efficiently.

Financial systems development do

not depend only on the reforms
measures taken by central banks or
by Bangladesh Securities Exchange
Commission (BSEC) for capital
market. Financial systems and
macro economics are inter-related
are broad areas of financial Governance, equity market, bond and hence, in order to develop the
systems developments and market, foreign exchange market, macroeconomic indicators we
considering each indicators the its rate and operation, FDI, cost of musts develop the financial
related factors are to be doing business, currency stability, systems indicators. We have to
identified, analyzed and then risk of sovereign debt crisis, tailor all components of both
reforms measures should be taken. efficiency, financial information formal and semiformal sectors of
The identified and analyzed disclosure, size and structure of financial systems on a thread
factors of all indicators under sector, securitization, IPO towards formation of capital and
seven pillars would provide the activities, business merger and circulation thereof for economic
picture of whole financial systems acquisition, access to finance etc. activities. We need to ensure good
covering banks, financial corporate governance, prudent
institutions, insurance companies, Retreat is organizational own regulations, fair and equitable
venture capitalists, microcredit or process to review the strategy and justice, more financial inclusions
other financial institutions, capital policies and update thereof based through cooperatives with a
market and its intermediaries, on the opinion and analysis of suitable model of resources
environment including human stakeholders. We have no tradition utilization, venture capital with
capital, tax, infrastructure and to organize retreat of each SMEs friendly policies, rules and
other laws and justice prevailing organization. In Retreat program at regulations for vibrant SMEs,
in the systems, Corporate the end of the year or starting of effective operations of MFIs,

68 January - March 2013 The Bangladesh Accountant

insurance companies & capital microcredit and micro enterprise with the strong and sound financial
market with proper regulation institutions, venture capitalists, systems and we should integrate all
under demutualized framework co-operatives, banks and NBFIs sectors of the systems in policy
with ensuring the role of ICB, should have integrated policy to papers for integrated efforts to
mutual fund, credit rating agency, emerge industrial or any business uplift our national opportunities.
merchant banks, stock exchanges undertaking from micro level. On
etc. the other hands, Insurance Bangladesh is now in a discussion
companies, Capital market and its as one of the most emerging
The role is not only for Bangladesh all players & intermediaries and country in the world registering
bank or other regulators; this role is credit rating agent must be efficient more than 6% GDP growth
comprehensive role of the to carry on the performance of consistently over the last ten years
government and us, the peoples, as financial institutions to build a together with export and
stakeholders. All sectors of strong base of country’s financial remittance growth. Goldman Sachs
financial systems are inter-related systems. So, the policies should be named it one of the “Next Eleven.”
and keeping one sector weak, we integrated encompassing all sectors In April 2010, Standard & Poor’s,
cannot make other sector of financial systems. The ultimate an American Financial services i.e.
remarkably strong. At every level objective is to create a healthy rating company, awarded
financial institutions like environment of macro economy Bangladesh a “BB- Stable/B”, the

The Bangladesh Accountant January - March 2013 69

sovereign credit rating, for a long and wise say, we are not poor, we insurance companies, co-operative
term in credit rating which is are poorly managed. World Bank societies and all others governing
below India but well over says, “Among Bangladesh’s most sectors of the financial systems
Sri-Lanka and Pakistan in South significant obstacles to growth are with a view to harvesting handful
Asia. These are all words of hope poor governance and weak public output.
to move ahead. Yes, we have institutions.” We need to ensure
strength to go beyond what we are good governance in corporate as
achieving now. well as in the state and to
strengthen our public institutions The Author is an Associate
Where are we blocked? Analysts including state owned banks, NFIs, Chartered Accountants of ICAB

70 January - March 2013 The Bangladesh Accountant

 A Tribute to Late Mufazzal
Hossain Chowdhury FCA
Parveen Mahmud FCA

There are people, we can never forget; In 1971 he was transferred to his
they live by their words; their deeds are employer’s head office in London, and
the treasures of the future generation. I am returned to Bangladesh in February 1972.
remembering a man having great virtues; In that year he was appointed Chairman
ICAB was in his heart-a legendary and Managing Director of the company.
accounting professional, for whom, we He resigned from Duncan Brothers in
can all be proud of. He is Mufazzal December 1974 to join the National Oil
Hussain Chowdhury FCA, known to us as Corporation of Libya. He left the
M H Chowdhury. corporation in June 1985 as its Financial
Advisor. Upon his return to Bangladesh he
Md. Mufazzal Hussain Chowdhury FCA, set up a chartered accountancy firm under
the second President of ICAB and the fifth the name and style of Chowdhury Hossain
to be enrolled at ICAB, was a pioneer in Zaman Co. Due to illness he left practice
our profession. Mr. Chowdhury who in October 2001 and moved to the USA to
served ICAB as President from 1973 to live with his daughters.
1974 passed away on August 2, 2011 in
the USA. During my tenure as President in 2011, I
took the initiative to gather the history of
Mr. Chowdhury’s career had spanned ICAB from the Past Presidents and senior
almost half a century. In 1954, he was the members of the profession. Mr.
first in Chandpur district, and fourth in the Chowdhury was one of those I had
erstwhile East Pakistan, to qualify as a reached out to as he was an icon in the
Chartered Accountant. He joined as a profession and had been involved with
partner of A Qasem and Co. Chartered both the Institutes of Chartered
Accountants in 1955 and left practice in Accountants of Pakistan and Bangladesh
April 1958 to join as a covenanted officer since their inception. At that time he was
in the reputed multinational company living in the USA. I telephoned him and
Duncan Brothers (Pakistan) Ltd. In 1965 requested him to send a write up on ICAB.
he successfully completed the manager’s Although he was unwell and had to be
course in Ashridge Management College, hospitalized several times, he agreed to
Hertfordshire, U.K. In the same year he send a write up.
was appointed Finance Director of the
company. He was elected a Fellow of the Mr. Chowdhury became a member of the
British Institute of Management in 1966. first Council of the Institute of Chartered

The Bangladesh Accountant January - March 2013 71

 THERE ARE
PEOPLE, WE CAN NEVER
FORGET; THEY LIVE BY
THEIR WORDS; THEIR
DEEDS ARE THE
TREASURES OF THE
FUTURE GENERATION.
I AM REMEMBERING A
MAN HAVING GREAT
VIRTUES; ICAB WAS IN
HIS HEART-A
LEGENDARY
ACCOUNTING
PROFESSIONALS, FOR
Accountants of Pakistan and was me from abroad, before I could have
continuously elected to the Council wished him! During Eid-ul-Azha in WHOM WE CAN ALL BE
until 1971. He was elected its Vice November 2011, he did not forget to
President three times as well. In wish me. On 7th September 2011, PROUD OF. HE IS
recognition of his merit the erstwhile Mr. Chowdhury e-mailed me “A Short
MUFAZZAL HUSSAIN
government of Pakistan awarded him History of Accountancy Profession in
the honorific title T. Pk., which he Bangladesh” with the following CHOWDHURY FCA.
relinquished in 1971. Upon preface:
independence of Bangladesh, Mr. KNOWN TO US AS M H
Chowdhury was instrumental in “As promised earlier I enclose for
CHOWDHURY.
piloting the Institute of Chartered your proposed publication an article
Accountants of Bangladesh. He was on the captioned subject which I
elected to the office of President of sincerely trust will meet approval. I
the Institute upon its establishment in would, however, request you to
January 1973. check the Register of Members to
ascertain there from the correct
Late Mufazzal Hussain Chowdhury number of members enrolled on the
had paved the way for us in the establishment of the ICAB and
profession and always focused on its replace my figure with the actual one.
advancement. He endowed two For ascertaining the correct names
scholarships for CA students, but did and numbers you may check the
not name these after him. It is only Register of Firms and correct the
after his death that the Article information given in the article.
Students Committee, decided to
name the scholarships as “M. H. Please show this article to Mr.
Chowdhury Scholarship.” Azizuddin FCA of ACNABIN to check
on the information I gave regarding
I was touched by his courteousness Auditors Certificate Rules 1932, and
and magnanimity despite his seniority the Pakistani laws, please correct the
and iconic stature in the profession information if necessary. I do not
when he e-mailed me to wish on have any of the said documents.”
Eid-ul-fitr in August 2011. He wished

72 January - March 2013 The Bangladesh Accountant

I am ever grateful to Mr. wisdom and knowledge gathered which is attached here. I hope, this
Chowdhury for taking the pain to over many years of their write-up will be compiled with the
send me the write up on 5th contribution to their profession and write-ups from other contributors,
January 2012, even in a deplorable society. I was humbled by his and edited and published in one
health condition. Along with that, words, which only happens when cohesive narrative of the legacy
he sent me an e-mail. The words of our near people who are far greater and history of our profession in the
inspiration and feeling expressed in stature than ourselves. country, in the near future.
for the profession and its people
are really worth mentioning. After I heard about the passing away
of Mr. Chowdhury, I contacted Mr. The Author is Managing Director,
And those words of true Azizuddin FCA, Past President of Grameen Telecom Trust and
belongingness are only possible ICAB and obtained his permission Past President, ICAB
from those who have a depth of to print Mr. Chowdhury’s write-up,

The Bangladesh Accountant January - March 2013 73

 A Short History of the
Accountancy Profession
in Bangladesh
By: Late Md. Mufazzal Hussain Chowdhury FCA (enrollment #05)

Prior to 1932, the government serve a number of years as either

an article clerk or audit clerk with
holding certain number of years’
experience in particular position(s)
used to control the accountancy a practicing Incorporated could practice after retirement.
profession in British India through Accountant in either British India Again, anyone holding 10 years’
the Ministry of Commerce. For this or the UK. However, such a person experience in Taxes Department
purpose, the government would have to take and pass the could take the Registered
established a small number of required examinations held in the Accountant’s examination without
commercial colleges throughout UK. requiring service of articles of
British India. A few of those clerkship. Anyone qualifying in
colleges would prepare students In 1932, the government such examinations was designated
for an annual examination known promulgated the Auditors’ Registered Accountant, could use
as Government Diploma in Certificate Rules. Under the new the initials RA and could practice
Accountancy (GDA) conducted by Rules, services as an article the profession of accountancy on
the Ministry of Commerce. A clerk/audit clerk (three years/six payment of prescribed fees. The
qualified GDA could practice as a years) with a qualified practicing Ministry of Commerce was solely
public accountant. Additionally, accountant were obligatory before responsible for regulating the
those permitted to practice the one could take examinations profession of accountancy in
profession of accountancy in conducted annually by the British India. A Board of
British India were members of the Ministry of Commerce. While an Accountancy, consisting of
Institute of Chartered Accountants article clerk was required to pay government nominated persons,
in England & Wales (ICAEW), who non-refundable premium of sums would render advices to the
would use the initials ACA/FCA, ranging from Rs.3000/- to Ministry on matters relating to the
and designate themselves as Rs.4000/-, an audit clerk would Registered Accountants’
Chartered Accountants. As well as, not. An audit clerk would get a examinations etc. On the
members of the Society of certain amount of monthly establishment of Pakistan on
Incorporated Accountants and allowance not enough to make August 14, 1947, the government
Auditors (ISAA), who went by the both ends meet. The Rules of Pakistan adopted the Auditors’
initials ASAA/FSAA, and used the recognized qualification and Certificate Rules, 1932 and
designation Incorporated membership of five bodies of continued to control the profession
Accountants & Auditors. Anyone accountancy within the British of accountancy through the
wishing to qualify in the Commonwealth, including the Ministry of Commerce.
examinations of the ICAEW would ICAEW and ISAA, and permitted
have to serve in the UK a certain members of those bodies to Around 1956, a few Registered
number of years as an article clerk practice the profession of Accountants formed a body called
with a practicing Chartered accountancy in British India on the Pakistan Institute of
Accountant. On the other hand, payment of prescribed fees. Accountants with the objective of
anyone wishing to qualify in the Additionally, certain senior officials establishing an Institute of
examinations of the ISAA could

74 January - March 2013 The Bangladesh Accountant

Chartered Accountants. On his
return in 1958 from the UK as an
Incorporated Accountant, Mr.
Rezaur Rahman joined Price
Waterhouse Peat & Co., Chartered
Accountants, in Chittagong. In the
early 1960s, Price Waterhouse
Peat & Co. closed its operations in
Pakistan, whereupon, Mr. Rezaur
Rahman set up Rahman Rahman
Huq & Co. (now Rahman Rahman
Huq) and took over its clientele.
He was an active member of the
Pakistan Institute of Accountants,
in the drafting of the Chartered The Chittagong Chamber of learnt, during this time, of his
Accountants of Pakistan Ordinance Commerce graciously granted a appointment as a member of the
1961, and the by-law. The writer free space on top of its car garage Ad-hoc committee. The Ad- hoc
gratefully acknowledges Mr. with electricity to accommodate committee formed a
Rezaur Rahman, who included his the library. The Association spent sub-committee to draft an
name, as a member of the first the grant on purchase of one table, ordinance and the by-laws of the
council of the Institute of Chartered two benches, one ceiling fan and proposed Institute and appointed
Accountants of Pakistan and one bookshelf. The members and the writer chairperson.
inspired him to serve the cause of the Asia Foundation donated Furthermore, it authorized him to
accountancy profession. In all books. The ICAEW supplied its free look after the day-to-day affairs of
elections of the council, both Mr. publications from time-to-time. In the proposed Institute.
Rezaur Rahman and the writer 1969, Mr. Faiz Ahmed FCA took
would win. Mr. A Qasem over charge of that library. In During the preparation of the draft
continued to obtain nomination to Dhaka, the office of the Regional ordinance and by-law, I had
the council by government. The Committee was set up in a received considerable assistance
head office of the Institute was in one-room rented space in the Red from Mr. Rafiqul Islam FCA and
Karachi. The Ordinance catered for Cross building at Motijheel valuable advice from Mr. Rezaur
formation of Regional Committees Rahman who had settled in
in Karachi, Lahore and Dhaka. The On December 16, 1971, upon the London after his escape from
government had power to independence of Bangladesh, the Pakistan in October 1971, but
nominate one-third of the members government did not adopt the would visit Bangladesh
to the council. The Secretary to the Institute of Chartered Accountants occasionally. We made a good
Ministry of Commerce was the of Pakistan Ordinance 1961. number of amendments to the
President of the Council–none Instead, it formed an Ad- hoc Pakistani Ordinance and the
would dare to oppose him. The Committee of 11 members by-law inserting new provisions,
by-law, however, provided consisting of the members of the deleting some and amending a few
election to that office by the ICAP with Mr. A. Qasem FCA as others. A few of those provisions
members of the Council. The President. The writer joined the are:
general members belonging to a parent company of Duncan
region elected certain number of Brothers (Pakistan) Ltd., in May I. inserting a provision stating
members of that Regional 1971. He returned to Dhaka in that after expiry of the term of
Committee. February 1972, when he learnt that the third Council power of the
Mr. A Qasem had resigned from government to nominate will
In 1963, to solve the problems of the Ad-hoc Committee being cease automatically,
the students living in Chittagong, unable to face student
the writer established an unofficial demonstration in front of his II. empowering the Council
body known as Chittagong District residence for acceptance of certain solely to frame, re-frame,
Association of Chartered demands. Thereafter, neither did cancel or amend the by-law
Accountants. The Council granted Mr. Qasem attend any meeting of without prior or subsequent
a paltry sum of Rs.500/- to the the Ad-hoc Committee nor did he approval of the government,
Association to establish a library. visit the Institute. The writer also

The Bangladesh Accountant January - March 2013 75

III. requiring private limited The draft was ready by September paid the prescribed fees. As far as I
companies to appoint auditors 1972 and placed before the remember, number of such
only from members of the Ad-hoc Committee for approval. members amounted to more than
ICAB, Soon thereafter, the Ad-hoc 40. Again, based on my memory,
committee approved and sent the the following firms obtained from
IV. requiring ICAB members to draft of the ordinance and by-law the ICAB certificates of practice on
practice Management to Mr. M R Siddiqui, FCA, at the application and payment of fees:
Consultancy only with its time Minister of Commerce. Mr. M
existing practices by R Siddiqui, without any delay, 1. A Qasem & Co.,
providing a new definition of obtained approval from the 2. S F Ahmed & Co.,
the word “practice”-old law Ministry of Law and sent it to the 3. M MRahman & Co.,
would allow practice of President of Bangladesh who 4. Ata Khan & Co.,
Management Consultancy by promulgated, in January 1973, the 5. J A Gomes & Co.,
formation of unlimited Institute of Chartered Accountants 6. Rahman Rahman Huq.,
liability company, of Bangladesh Ordinance, 1973, 7. M J Abedin& Co., (successor
and the Institute of Chartered to A G Merchant & Co.),
V. requiring a member intending Accountants of Bangladesh By-law, 8. S A Zaman& Co. (now
to practice to be engaged the 1973. At this point, I must defunct)
whole time in his practice acknowledge with gratitude the 9. Howlader Yunus & Co.,
either as a sole proprietor or provision free of charge of 10. A C Nath & Co. (successor to
by formation of partnership, stationery and typing assistance by Basu Banerjee & Co.)
Duncan Brothers (Bangladesh) Ltd., 11. Hoda Vasi Chowdhury & Co.
VI. totally forbidding a member to as needed by the proposed (successor to A F Ferguson &
become partner in more than Institute. Co.)
one firm, 12. A Wahab & Co.,
The Ad-hoc Committee used the 13. Howlader Mahfel Huq & Co.,
VII. prohibiting a member to be in Dhaka Regional Committee’s 14. Z U Ahmed & Co.,
full time employment and at one-room office cum-library at the 15. Mufazzal Ali Mallick & Co.
the same time to be engaged Red Cross building for its activities. 16. Badrul Ahsan & Co.,
in practice, In or about June 1972, Mr. M 17. M A Jalil & Co.
Yunus, who was an assistant 18. K M Alam & Co.
VIII. requiring ICAB members not secretary of the ICAP, Karachi, 19. H S Dhar & Co. (now defunct)
to charge premium for managed to escape from Pakistan,
engaging an article clerk; joined the proposed Institute, and I would be failing in my duty if I
became Secretary upon the do not mention the late M M
IX. deleting the provision of establishment of ICAB. The Ad-hoc Rahman FCA who, as a member of
engaging audit clerks, Committee after the formation of the Board of Trustees of the Dhaka
the ICAB held an election of its Improvement Trust (now RAJUK),
X. changing the designation of Council, which in its first meeting obtained allotment of the land in a
article clerk to article student, unanimously chose the writer as prominent place where the
President. Since then the ICAB has impressive building of the ICAB
XI. allowing formation of continued to grow to the position now stands. I must also express
association by article students where it is now under the gratitude to the Government of
only under the supervision of competent guidance, wisdom and Bangladesh for providing generous
the Council, selfless diligent work of all the annual and other special grants
subsequently elected Presidents. and assistances to the ICAB for
XII. and inserting a new schedule improvement of quality of training
titled Schedule D regarding After its establishment, the ICAB and education of the members as
ethical requirements for granted membership to any well as those of the article
practice of Management member of the ICAP present in students.
Consultancy. Bangladesh who applied to it and

76 January - March 2013 The Bangladesh Accountant

Preparing Accountants
for Future Challenges
ICAB President Md Abdus Salam in an interview with
the Daily Star States that existing curricula match global standards

Md. Abdus Salam FCA, President

of the Institute of Chartered
Accountants of Bangladesh (ICAB)
had conversation with Daily Star
Reporter Md Fazlur Rahman on
various professionals issues in an
exclusive interview that was
published in the Daily Star on 25
April 2013. The qualified
Chartered Accountants shared his
vast experience, knowledge and
his mission & vision with the
media in the interview. His
interview with Daily Star is a part
of his on-going activities to make
the Institute more vibrant and to let Md Abdus Salam FCA, President-ICAB in an
the people know about the ICAB interview with The Daily Star
curriculum that mach global
standard for creating CA
professionals to meet the future standards and meet demands of the accountancy and how people in
challenges. time,” Salam told The Daily Star in the profession could be
an interview at his office in Dhaka incorporated to foster national
The Institute of Chartered last week. development.
Accountants of Bangladesh (ICAB)
is integrating global practices and “We are following the same The ICAB has a strategic
ethics in its curriculum to prepare syllabus as in other countries. We partnership with Institute of
accountants who will be able to have incorporated the ethics of Chartered Accountants in England
produce credible financial International Federation of and Wales (ICAEW), the world’s
statements and tackle future shocks Accountants, the global oldest institution in the sector.
in the financial sector, its president organisation for the accountancy
said. profession,” he said. “The evaluation of the profession
has increased in the last five years
ICAB President Md Abdus Salam The ICAB is a professional following the global financial
FCA said, since the devastating organisation, supporting more than crisis,” Salam said.
economic and financial crisis of 1,200 chartered accountants and
2008-09, the national institute is 20,000 students. It provides insight He said he does not think that top
grooming its chartered accountants and leadership to the accountancy leaders in the profession prepared
to take on tough times in and finance profession at home for the global economic storms,
protecting the companies they and abroad. which broke the financial systems
work with. around the world.
Salam said a new kind of
“We have incorporated curricula awakening is going on globally on
and syllabus that match global the evaluation and standing of the

The Bangladesh Accountant January - March 2013 77

“The top-brass should have have found jobs overseas. There is Bank, Salam said a company’s
foreseen the crisis much before it even a possibility to send more internal audit department should
was unleashed. The debacle came CAs to Africa.” spot any irregularity.
because it was not in their
planning process,” he said. He said the ICAB is overseeing The CAs also have limitations, said
whether the CA firms are properly Salam, also a council member of
Accountants play key roles in auditing the balance sheets of the ICAB. “The difficulty with
ensuring financial transparency in respective companies. “We have a auditing is that auditors do not
trade and commerce and the quality assurance board, quality audit all the offices or branches of
financial sector. However, there is assurance department and an office, company or bank. They
mistrust in the profession as there technical and research committee. audit randomly, on a risk-weighted
are allegations that CA firms help We also have an investigation and basis.”
prepare false balance sheets, have disciplinary committee.”
the audit reports approved to “Everybody thinks that as CAs
evade taxes, or flatter balance “We regularly monitor whether certify the audit reports, they are
sheets to attract investors. audit reports have been prepared responsible for irregularities. But
in line with the set guidelines. The that is not right.”
“Many generalise without ICAB takes action against the CA
understanding the reality. Top firms that fail to stick to the They cannot go through thousands
management of any company is guidelines. Recently, we took of pages of company documents
responsible for any false report, but punitive measures against some dealing with thousands of crores of
accountants are always blamed.” firms that were found guilty of taka within two months to unearth
misconduct.” irregularities. It is not possible for
He said the CAs in Bangladesh and them, he said.
around the world are now He said the ICAB is serious about
prepared and have repositioned ethics and standards of the The 57-year-old said the number of
themselves to counter any future International Federation of students entering the accountancy
challenge. Accountants. profession is increasing day by
day. On an average, 1,700
“We have asked our accountants to Salam is satisfied with the quality students enrol to study chartered
remain alert as crisis can come any of audit reports being produced by accountancy a year.
time. It is now integrated in our the local accountants and auditors.
planning process.” “They match international The ICAB has also partnered with
standards and are in line with the Office of the Comptroller and
He said they have arrangements corporate best practices.” Auditor General in joining a Tk
with countries like Ireland and 450-crore World Bank project to
Australia so they accept ICAB’s “We are proud that the audit audit the spending of the country’s
certification. The organisation is reports and financial statements union parishads, the last tier of the
also going to sign ‘mutually awarded by the ICAB have won local government.
recognition’ arrangements with the highest number of South Asian
developed countries, including Federation of Accountant awards.” (The interview was published in
Canada. the Daily Star on 25 April 2013)
Salam said there are a few On the recent financial
professions that can match the irregularities such as Hall-Mark
potential of chartered accountancy Group that misappropriated more
currently. “Many of our students than Tk 2,500 crore from Sonali

78 January - March 2013 The Bangladesh Accountant

 The Institute of Chartered Accountants of Bangladesh (ICAB)

I Proposal for increase of Government Revenue

Section
Subject Matter Existing provision/Situation Proposal Reasons/Justification
Reference
01. Reintroduction of Dividend distribution tax for non listed Companies with two tire and Exclusions of Dividend from total
income on which Dividend Distribution tax is payable.
“Charge of There is no control on the dividend A new section may be inserted after It is necessary to have
Dividend with regards to paid up capital. section 16CCC as follows: a reasonable capital
Distribution tax” Withholding tax on Dividend to base and reasonable
foreign shareholder is made subject Notwithstanding anything contained payout ratio
to DTA which varies within the in this Ordinance where a Company particularly for FDI’s
range of 10% to 15%. registered under ‡Kv¤úvbx AvBb, 1994 Tax burden of the
Withholding tax rate for (1994 m‡bi 18 bs AvBb) and not listed individual
Bangladeshi shareholders is with any stock Exchange in shareholder for the
For company 20% Bangladesh declares dividend Private limited
Other than company 10% whether interim or otherwise on or Company needs to be
Tax rate for dividend income for after the first day of July 2013, the rationalized as
Company is 20%. company shall pay in addition to tax corporate tax rate is
For individual in line with payable under this Ordinance 37.50%.
respective rate. dividend distribution tax at the
following rates on such dividend
within sixty days from the date of
such declaration:

Dividend Dividend
distribution
tax
a) where declared dividend
does not exceed 50% of
Paid-up
capital...........................15%
b) Where declared dividend
exceeds 50% of the
Paid-up capital..........................
25%

Provided that the Provision of this

Section shall not apply in case of
dividend referred to in sub clause
(dd) and sub clause (e) of clause
(26) of Section 2 of the
Ordinance..
........................................................
...
New Para 21A with the following
provision may be inserted after
Para 21 of Part A of the Sixth
Schedule of the Ordinance.

“Any income from dividend for

which dividend distribution tax
is payable by the company”

02. Special provision for computing profits and gains of foreign companies engaged in the business of civil construction, errection, testing or commissioning
in connection with turnkey project
Page 1 of 12
 Section
Subject Matter Existing provision/Situation Proposal Reasons/Justification
Reference
A new clause may be inserted u/s To increase Revenue
28 of the Ordinance: from foreign contractors
“Notwithstanding anything to the and justified imposition
contrary contained in this of tax on contract under
Ordinance in the case of an turnkey project.
assessee, being a foreign
company, engaged in the business
of civil construction or the
business of erection of plant or
machinery or testing or
commissioning thereof, in
connection with a turnkey project,
a sum equal to fifteen per cent of
the amount paid or payable
(whether in or out of Bangladesh)
to the said assessee or to any
person on his behalf on account of
such civil construction, erection,
testing or commissioning shall be
deemed to be the profits and gains
of such business chargeable to tax
under the head “Profits and gains
of business or profession”.

03. Increase of the rate of TDS under section 52.

Section 52 TDS from the
(Rule 16) suppliers, contractor, The existing rate of TDS under Proposed to revise the rate as
subcontractors section 52 (Rule 16) is as follows : follows:
Sl. Amount of Rate of Sl. Amount of Rate of
No. payments Deduction No payments Deduction
of tax at the . of tax at To rationalize the rate of
time of the time of TDS and to increase
making making Government Revenue.
payments. payments.
1. Where the payment Nil 1. Where the payment Nil
does not exceed taka does not exceed
2,00,000(two lakh) taka 2,00,000(two
2. Where the payment 1% lakh)
exceeds taka 2. Where the payment 1%
2,00,000 (two lakh) exceeds taka
but does not exceed 2,00,000 (two
taka 5,00,000(five lakh) but does not
lakh) exceed taka
3. Where the payment 2.5% 5,00,000(five lakh)
exceeds taka 3. Where the payment 2.5%
5,00,000 (five lakh) exceeds taka
but does not exceed 5,00,000 (five lakh)
taka but does not exceed
15,00,000(fifteen taka
lakh) 15,00,000(fifteen
4. Where the payment 3.5% lakh)
exceeds taka 4. Where the payment 3.5%
15,00,000(fifteen exceeds taka
lakh) but does not 15,00,000(fifteen
exceed taka lakh) but does not
25,00,000(twenty exceed taka
lakh) 25,00,000(twenty
5. Where the payment 4% lakh)
exceeds taka 5. Where the payment 5%
25,00,000 (twenty exceeds taka
five lakh)but does not 25,00,000 (twenty
exceed taka five lakh)but does
3,00,00,000 (three not exceed taka
Page 2 of 12
 Section
Subject Matter Existing provision/Situation Proposal Reasons/Justification
Reference
crore) 3,00,00,000 (three
6. Where the payment 5% crore)
exceeds taka 6. Where the payment 6%
3,00,00,000 (three exceeds taka
crore) 3,00,00,000 (three
7. In case of oil supplied by oil crore)
marketing companies- 7. In case of oil supplied by oil
marketing companies-
(a) Where the payment does not
exceed taka 2,00,000 (two (a) Where the payment does
lakh).............................................. not exceed taka 2,00,000 (two
Nil lakh)..........................................
...Nil
(b) where the payment exceeds
taka 2,00,000 (two (b) where the payment exceeds
lakh).......................0.75% taka 2,00,000 (two
lakh).................0.75%

04. To introduce higher rate of TDS if the person receiving payment does not have TIN certificate and VAT registration certificate.
52A & Deduction of tax Existing Rate of TDS is 10% Apart from the existing rate of Expansion of Tax net
52AA at source from 10% TDS, higher rate of TDS Increase of Govt.
professional fees @15% may be introduced if the revenue.
& Technical Payee fails to furnish TIN, VAT
services and from registration certificate to the
certain services. payer.

05. Introduction of withholding tax @ 1% from gross payment to freight forwarders against any sea freight, Airfreight, other
charges and commission etc. and deletion of existing section 52M.
52M Connection of tax U/S 52M Freight forwarding agency As worldwide freight forwarding Enhancement of
from freight commission is subject to deduction of business run on revenue sharing revenue
forwarders tax at source @ 15% basis, rather than commission Control of tax
basis hence to ensure revenue evasion
collection and control on the
expenditure claim, it is
recommended that :
TDS will be on gross
amount payable to freight
forwarder @ 1%.
Existing provision u/s-52M
may be deleted.

06. Introduction of collection of tax at source from subcontractors of RMG by the Industrial exporters @ 0.8% where the
payment is made without establishing any Back to Back letter of credit or local letter of credit and consider such income u/s
82 (C).
Technically subcontract is included Collection of tax at source from To ensure revenue from
under section 52 for deduction of tax subcontractors of RMG by the this sector.
at source. Industrial exporters @ 0.8% is
recommended where the payment
Practically the above situation of is made without establishing any
subcontractors of RMG is not always Back to Back letter of credit or
considered local letter of credit and such
income may be considered for
assessment u/s 82(C).
07. Increase of rate of TDS from agent of foreign buyer @10% instead of existing 7.5%

Page 3 of 12
 Section
Subject Matter Existing provision/Situation Proposal Reasons/Justification
Reference
53EE Deduction of tax Where, in accordance with the terms The rate of seven and a half Stream of revenue will
from commission of the letter of credit or under any percent may be increased to ten be increased.
or remuneration other instruction, a bank, through percent
paid to agent of which an exporter receives payment
foreign buyer for export of goods, pays any amount
out of the export proceeds to the credit
of any person being an agent or a
representative of the foreign buyer, as
commission, charges or remuneration
by whatever name it may be called,
the bank shall deduct or collect tax in
advance at the rate of [seven and a half
percent] on the commission, charges
or remuneration so paid at the time of
such payment.
08. To introduce TDS from payment of signing money by the real estate developers.
Collection of tax The developer shall deduct tax To ensure collection of
from signing @10% at the time of payment Govt. revenue.
money from the person receiving such
money.

Credit of such tax should be

allowed in the year of completion
of transfer of the property.
09. To introduce Collection of tax at source from payment of booking money to hotel, community centre, convention hall,
conference centre etc.
Collection of tax Hotel, Community Centre, To ensure collection of
from booking Convention hall, Conference Govt. revenue.
money centre run by company shall
collect tax @10% at the time of
receiving booking money from
the person against conference,
meeting etc.

Collected tax shall be deemed to

be an advance payment of tax by
the person from whom tax has
been collected at source and
shall be given credit for in the
assessment of his tax.
10. Imposition of tax on income from ITES and software development business.
6th Income derived Income derived from the business of To impose tax @ 5% on income To increase tax net and
Schedule, from the business software development & ITES is derived from the business of ITES Government revenue
Part-A, of software exempt from tax . and software development except as the exemption in this
Para-33 development & export sector is continuing for
ITES a long time.
11. Imposition of tax on income from poultry firming withdrawing the exemption.
6th Schedule, Income from Income from poultry farming is Tax @ 5% on income from It will increase the
Part-A, Para- poultry farming exempt from tax under certain poultry farming may be stream of revenue and
42 conditions imposed. be rational with similar
others sectors.
12. Imposition of tax on capital gain earned by nonresident assessee withdrawing the exemption.
6th Schedule Capital gain arising Capital gain of nonresident assessee is Recommended to withdraw the To remove the
Part – A, from transfer of exempted provided that such exemption for imposition of tax on discrimination between
Para 43 share of a public exemption is also available in the capital gain of nonresident resident & nonresident
company listed in country in which the assessee is assessee assessee
any Stock Exchange resident
by non resident

13. Change of Rule 33B to impose higher tax on rent free accommodation.
Rule – 33B Rent free For rent free accommodation, the Proposed to change the Rule as To maintain relevance
accommodation rental value of the accommodation or follows: with Rule 33A.
25% of the basic salary whichever is

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 Section
Subject Matter Existing provision/Situation Proposal Reasons/Justification
Reference
less is included in income of the For rent free accommodation, the
employee. rental value of the accommodation
or 25% of the basic salary
whichever is higher is to be
included in income of the
employee.
14. To increase the percentage of deemed income under Rule 39 from 10% to 16%
Rule 39 Computation of Under Rule 39 income, profit and Proposed that under Rule 39 This will remove
income of gains derived from such operation income, profit and gains derived unnecessary
contractor, etc., shall, subject to provision of this from such operation shall, complication in the
of an oil company rule ,be deemed to be an amount subject to provision of this rule , process of assessment.
residing outside equivalent to ten percent of the be deemed to be an amount
Bangladesh gross earnings from such operation equivalent to sixteen percent of
the gross earnings from such
operation
15. Imposition of tax on actual income basis withdrawing presumptive income from transport sector.
S.R.O No- Presumed income According to the SRO’s fixed rates of The system of presumptive tax for This would be helpful
220/222/22 for transport tax are imposed for vehicle like bus, these sectors causes substantial for revenue collection.
4/ vehicle, lorry, minibus, truck and vessel, lorry, etc. revenue leakage. This sectors This would also ensure
cargo, etc. regardless of their actual income. should be brought under normal transparency in the
system of assessment by sectors.
withdrawing relevant SRO’s.

Suitable provision for collection of

tax at source may be introduced in
Chapter VII of the Ordinance.
16. To include a proviso for imposing higher tax on income from Fish Farming, Dairy etc.
SRO : Reduced Tax Rate Up to 30.06.2013 To include a condition Considering industry
238/2011, of 5% on Income “ Provided that if any income specific character.
dated from Fish Farming derived from such head is
06.07.2011 Dairy, etc. invested other than the said
area than additional 5% tax is
to be paid in the year of such
investment by the company
To extent the time up to 2015

Page 5 of 12
II. Proposal for Changes on the ground of natural justices and reasonability

Section
Subject Matter Existing provision/Situation Proposal Reasons/Justification
Reference

17. Effective constitution of the Tribunal bench.

Section-11 Establishment of There are provisions for appointment of non To make the Tribunal more effective it
and Section Appellate departmental personnel as member of the is proposed to include a non- This would make the
12 Tribunal (e g Chartered Accountant, Cost departmental member in each Tribunal effective and
Tribunal and
and Management Accountant, Income tax
Excercise of power bench assessee’s confidence level
practitioner, legislative expert, Advocate and
of the Tribunal by will improve
Distric Judge
Benches Alternatively,the provisions of judicial
Presently almost all benches are run by the member and accountant member which
departmental personnel was deleted by Fiance Act 2002 may be
reintroduced

18. Charge of Mimimum tax for company should be withdrawn

Section Charge of Notwithstanding anything contained in Removal of Section 16CCC of ITO- Income tax should be based
16CCC minimum tax any other provisions of this Ordinance, 1984 is recommended on income, not on revenue
Income is computed by
every company shall, irrespective of
deducting allowable
its profits or loss in an assessment year expenses from revenue This
for any reason whatsoever, including basic prinviple is ignored in
the sustaining of a loss, the setting off formulating this section
of a loss of earlier year or years or the
claiming of allowances or deductions Company may incur loss and
(including depreciation) allowed under carry it forward Charging of
minimum tax is a restriction
this Ordinance, be liable to pay
on the fundamental principle
minimum tax at the rate of zero point for set off of loss and carry
five zero (0.50%) per cent of the forward Moreover, some
amount representing such company's times it may lead payment of
gross receipts from all sources for that tax out of equity
year.

19. Modification of provisions for Charge of Mimimum tax for company to enjoy the previlge of reduced or special rate of taxes granted under
different provisions of the Ordinance unless the provisions of Section 16CCC are removed.
Section Charge of 1 Notwithstanding anything contained To facilitate the exemptions granted As the companies,
16CCC minimum tax in any other provisions of this under Part A of Sixth Schedule of ITO- enjoying tax holiday and
Ordinance, every company shall, 1984 and benefit of reduced rate of the tax exempted
taxes and exemptions and concessions
irrespective of its profits or loss in an under different SROs or orders issued companies have no tax
assessment year for any reason by NBR, it is necessary to introduce a while there are several
whatsoever, including the sustaining provisio before the word “Explanation” implication payment of
of a loss, the setting off of a loss of of Section 16CCC minimum tax in field
earlier year or years or the claiming of “Provided that nothing contained in this level, an explanation is
allowances or deductions (including section shall apply to classes of income required on the issue
referred in section 82(C) of the
depreciation) allowed under this ordinance, Part A of Sixth Schedule of regarding payment of
Ordinance, be liable to pay minimum the ordinance and the reduced rate of minimum tax.
tax at the rate of zero point five zero taxes referred under different SROs or
(0.50%) per cent of the amount General Order for the time being in For instances, some
representing such company's gross force companies are paying
receipts from all sources for that year.” tax at reduced rate.
Explanation For the purposes of this Hence, the companies,
section, 'gross receipts' means- paying tax at reduced
(a) all receipts derived from the sale of rate, should be excluded
goods; from the application of
(b) all fees or charges for rendering section 16CCC
services or giving benefits including considering justice to
commissions or discounts; (c) all those companies
receipts derived from any heads of income
While Paripatra-1(Incometax)/2011 of NBR
has a clarified that income stream that will be
assessed u/s 82(C){Final discharge of tax
liability} shall not be under the ambit of
minimum tax under section 16CCC

Page 6 of 12
 Section
Subject Matter Existing provision/Situation Proposal Reasons/Justification
Reference

20. Amendment to allow the subsequent refund of relevant loans as allowable deduction in the year of repayment if made
through Account Payee Cheque or bank transfer.
19(26) Receiving loan Where an assessee, being a company, New proviso may be inserted Fundamental principle of
by company receives any amount as loan from any Single point tax to be
other person otherwise than by a “Provided that where the loan in established.
crossed cheque or by bank transfer, this sub section is paid back in
the amount so received shall be subsequent income year, the
deemed to be the income of such amount so paid through account
assessee for that income year in which payee cheque or bank transfer
such loan was taken and shall be shall be deducted in computing the
classifiable under the head "Income income in respect of that
from other sources" subsequent year
21. Amendment to allow the subsequent refund of relevant loans as allowable deduction in the year of repayment if made
through Account Payee Cheque or bank transfer.

19(28) Receiving loan & Where an assessee being an individual New proviso may be inserted Fundamental principle of
gift by individual receives any any sum, or aggregate of Single point tax to be
assessee sums exceeding taka five lakh as loan Provided that where the loan in established.
or gift from any other person this sub section is paid back in
otherwise than by a crossed cheque or subsequent income year, the
bank transfer, the amount so received amount so paid through account
shall be deemed to be the income of payee cheque or bank transfer
the such assessee for that income year shall be deducted in computing the
in which such loan or gift was taken income in respect of that
and shall be classifiable under the subsequent year
head "Income from other sources":

22. NBFI’s Interest income in relation to classified loan should be treated in consistent with commercial and specialized banks.
Section Income from Existing Section: 28 (3) reads as The word “and” after the words All the activities of Non
28(3) of business or follows: Bangladesh Krishi Bank may be Banking Financial
ITO 1984 profession. replaced with a coma and the Institutions (NBFIs) are
“Notwithstanding anything to the words “and any Non Banking supervised and controlled
contrary contained in any other Financial institutions” may be by Bangladesh Bank
provisions of this Ordinance, in the inserted after the words Rajshahi similar to commercial
case of Bangladesh Shilpa Bank, Krishi Unnayan Bank. banks. Like commercial
Bangladesh Shilpa Rin Sangstha, banks, NBFIs are required
Investment Corporation of Bangladesh to comply more or less
and any commercial bank including with all the regulatory
the Bangladesh Krishi Bank and requirements particularly
Rajshahi Krishi Unnayan Bank, the in terms of lending, capital
income by way of interest in relation adequacy, risk
to such categories of bad or doubtful management,
debts as the Bangladesh Bank may provisioning, etc. As
classify in the income year in which it NBFIs are regulated by the
is credited to its profit and loss same authority and
account for that year or, as the case through similar regulations
may be, in which it is actually like commercial banks, tax
received, whichever is earlier.” treatment for same issue
should be done in the
similar way.

23. Increase of allowable limit of perquisite to Tk. 3,50,000 from Tk. 2,50,000 (Per person per year)
30(e) Deduction not The maximum limit of allowable The amount may reasonably be Taka 250,000 as
admissible in perquisite is Taka 250,000. increased to Taka 350,000 allowable limit is quite
certain inadequate considering
circumstances the present economic
situation.

24. Enhancement of rate of investment tax credit to 15% instead of 10%

Section Investment tax Present rate of investment tax credit is Proposed to increase the rate to It was 15% up to the
44(2)(b) credit 10% 15% to encourage investment year 2007 now to be
reintroduced considering
general growth of
Page 7 of 12
 Section
Subject Matter Existing provision/Situation Proposal Reasons/Justification
Reference
investment trend.

25. Extension of exemption of tax of newly established industrial undertaking setup between the period July 2011 to June 2015
instead of July 2011 to June 2013.
Section - Exemption from Specified Industrial Undertaking setup Such exemption may be extended Considering industry
46B tax of Newly between the period of 1st day of July to the new industrial undertaking specific incentive
Established 2011 and 30th June 2013 are eligible setup by June 2015.
Industrial for exemption of tax for five years at
Undertakings. different rates based on location and
year as well.

26. Extension of exemption of tax of newly established physical infrastructure facility setup between the period July 2011 to June
2015 instead of July 2011 to June 2013.
Section - Exemption from tax Newly established physical Such exemption may be extended To encourage the sector
46C of Newly infrastructure facility set up between to the new physical infrastructure and infrastructure
Established Physical the period of 1st day of July 2011 and facility setup by June 2015. development of the
Infrastructure 30th June 2013 are eligible for country.
Facility. exemption of tax for five years at
different rates.
27. Timing and audit of return U/S 75A.
75(A) 2(C) Return of Return under Section 75A is to be Proposed that the return along To ensure reliability of
withholding tax filed by the fifteenth day of October, with certificate from a Chartered the return and to make
January, April and July of the Accountants is to be filed by the the submission more
financial year for which the tax is next thirty days from the end of easy.
deducted or collected; the quarter.

28. To make exercise of section 82C optional and to delete sub section (6), (7) and (8) u/s 82 (C)
82(C) Tax on income of The provision of sub-section (6) (7) a) To include the following This is obviously
certain persons and (8) of section 82C provide for sections for final discharge of unreasonable and against
imposition of additional tax over and tax: 52A, 53BBBB, 53E, ; the basic principle of
above the tax deducted at source. b) Sub sections (6), (7) and (8) of “Final Settlement”. and
section 82C may be deleted in self-contradictory. This
order to restore the original self-contradiction may
idea of final settlement.; be removed by deleting
c) The assesses eligible for final those sub-sections.
discharge of tax liability under Moreover, basically at
section 82(C) may exercise the present there are no
option for final settlement or difference between
not. normal assessment and
assessment under section
82C. Hence assessment
under section 82C
should be optional.

29. To make ADR effective and efficient

Section- Alternative The ADR was introduced in 2011 and The system of Alternative Dispute This is a tax-payer
152F to dispute resolution was expected to Act as an alternative Resolution (ADR) has not yet friendly measure and its
152S to the normal appeal system. gained the expected popularity. progress would promote
NBR should launch a vigorous tax-payers confidence as
and effective campaign to make it well as improve revenue
more popular and easier. collection.

30. Reduction of rate of tax payment for filing Reference Application to High Court.
160(1) Reference to In case of making Reference The provision of paying at least This amount can be quite
High Court Application to the High Court tax 25% or 50% (as may be large in some cases and a
Division payers has to pay: applicable) of the demanded tax heavy burden for the tax
for making a Reference payer. Seeking justice at
a) 50% of the net tax payable after application to High Court (sec-160 the High Court level
the Tribunal’s order if the of ITO 1984) causes genuine should be made easier
amount of tax payable exceeds hardship and hassle for the for the tax payers.
Taka 10 lakh; and taxpayer.
b) 25% if the amount does not As such we propose to fix the flat
exceed Taka 10 lakh rate of 25% for all cases.

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Subject Matter Existing provision/Situation Proposal Reasons/Justification
Reference
31. Revision of the allowable limit of Motor Vehicle for claiming normal depreciation.
3rd Schedule Maximum At present the ceiling is Tk. 20 Lakh Recommended to increase the Considering increased
11(6) (a) Allowable Cost limit to Tk. 40 Lakh price of motor vehicle
of a Motor
Vehicle for
Normal
Depreciation
Allowance
32. Allowance of amortization/depreciation on intangible assets.
Amortization/De To Allow Considering the cost of
preciation on Amortization/Depreciation on intellectual property
Intangible Assets Intangible Assets like License fee, used in such businesses
etc. as Deductible Expenses in and allow ability of such
case of Information Technology cost.
Related Companies including
Mobile Operator and other
Telecom Companies, a new
provision may be included in 3rd
Schedule
33. Extension of time for exemption to handicraft exporters
6th Exemption of Exempted up to 30.06.2013 May be extend to 30.06.2015 Considering industry
Schedule, Income from specific incentive
Part-A, Para Export of
- 35, Handicrafts.
34. Enhancement of limit of yearly turnover of SME and clear definition of SME may be introduced.
6th Exclusion of Presently, Maximum Yearly Turnover Recommended to increase the This limit was fixed in
Schedule, SME income of Tk. 24 lakh is set as pre-condition limit of Maximum Yearly the year 2008 (4 to 5
Part-A, Para from the total for exclusion of Income of Small and Turnover to 50 Lakh as a pre- years before) which may
- 39 income Medium Enterprise (SME). condition for exclusion of Income now be revised
of Small and Medium Enterprise considering inflation.
(SME). Further separate definition
of SME should be introduced.
35. Exemption to commercial producer of Biogas.
Production of To include in the Sixth schedule The investor will be
Biogas to extend the exemption facility to motivated to make
commercially the producers of Biogas investment in this sector
commercially
36. Time limit to deposit TDS to be specific
Rule 13 Time limit for Income tax deducted at source is to be Proposed to change the Rule to This is not practical to
payment of tax deposited within three weeks from the allow deposit of withholding tax identify each deduction or
deducted at source date of deduction or collection within the immediate next month collection and deposit the
of deduction. same within three weeks.
Deduction or collection at
source is a continuous
process, hence it should
not be from the date of
deduction rather it should
be on calendar month
basis.
37. Enhancement of exemption limit of house rent allowance from Tk. 15,000 to Tk. 25,000 per month
Rule-33A House rent The limit for exempted house rent This may reasonably be increased This amount is
allowance allowance for an employee is Taka to Taka 25,000 per month. unchanged since 2002.
receivable in cash 15,000 per month.
37. Increase of exemption limit in respect of conveyance allowance from Tk. 24,000 to Tk. 48,000 p.a.
Rule - 33C Maximum Existing limit is Tk. 24,000 (Tk. 2,000 Proposed to increase the same to This amount is
Exemption Limit per month) Tk. 48,000 (Tk. 4,000 per month) unchanged since 2008
of Conveyance and quite low.
Allowance
receivable in cash

39. Enhancement of rate of allowable expenditure on distribution of free sample.

Rule – 65C Allowance in Based on the limit of turnover, rates Proposed to raise the rates as 3%, Considering nature of
respect of allowable for free sample are 2%, 1% 1% & 0.50% in the case of a market competition in
Page 9 of 12
 Section
Subject Matter Existing provision/Situation Proposal Reasons/Justification
Reference
Expenditure on & 0.50% respectively in the case of a Pharmaceutical Industry and to businesses
Distribution of Pharmaceutical Industry and 1.5%, 2%, 0.75% & 0.375% in the case
Free Samples 0.75% & 0.375% respectively in the of Other Industries.
case of Other Industries.
40. Increase of the limit of total income for individuals from Tk. 2,00,000 to Tk. 2,50,000 for tax imposition.
Finance Threshold for The exempted income for individuals Tax exempted income for General price index has
Act, 2012 exempted income is Taka 200,000 individuals should be raised from gone up significantly
Taka 200,000 to at least 250,000. during the year. This
justifies the increase.
41. Enhancement of limit of net wealth imposing surcharge
Finance Surcharge in The minimum limit for imposition of This amount may be increased This amount is rather
Act, 2012 addition to surcharge is Taka 2 crore of net reasonably low in view of the fact
assessed tax wealth. that value of property
has gone up remarkably
in recent years
42. Corporate tax rate of banks and financial institutions may be reduced to 40% instead of 42.5%
Finance Corporate tax rate Corporate tax rate is quite high Corporate tax rate may be reduced Our corporate tax rate is
Act, 2012 compared to other regional countries, to 40% particularly for the much higher compared
particularly the rate for banks and financial institution, banks. to other regional
financial institutions 42.5% is countries. This is a
unusually high discouraging factor for
corporate growth and
FDI
43. Corporate Tax Rate for trading and manufacturing company should be different
Finance Corporate tax rate There is no difference in Tax rate for There should be at least difference The manufacturing
Act, 2012 trading and manufacturing companies of 2.5% in corporate Tax rate, companies add more
manufacturing companies being @ value and employment to
35% and trading company @ 35% the economy.
43. Corporate Tax Rate for mobile phone operating companies should be lesser than cigarette manufacturing companies
Finance Corporate tax rate Tax Rate for mobile phone operating Tax rate for both mobile phone Health and
Act, 2012 companies-45% operating companies and cigarette environmental reasons.
manufacturing companies should
Tax Rate for cigarette manufacturing be 42.5%.
companies -42.5% for non-publicly
trading company.
44. Corporate Tax Rate should not be higher than individual Tax rate
Finance Corporate tax rate Base Corporate tax rate -37.5% Corporate Tax Rate should not be High corporate Tax rates
Act, 2012 Corporate tax rate for Publicly Traded higher than individual Tax rate. discourage FDI and also
Company declaring dividend more local investment.
than @20% - 24.75%; if dividend is
declared@10% to 20% - 27.5%; and if
dividend is declared less than @10% -
37.5%
Highest individual Tax rate -25%.
45. Tax rebate for dividend shall be eligible for all companies
Finance Corporate tax rate 10% Tax rebate available for publicly Tax rebate for dividend shall be To be Just and fair.
Act, 2012 traded companies for declaring eligible for all companies and
dividing more than @ 20% is not penalty for non-payment of
available for bank, insurance and dividend minimum @10% should
financial institutions. There is no also be applicable for mobile
conditionality of declaring dividend phone and cigarette manufacturing
for mobile phones and cigarette companies.
manufacturing companies for reduced
Tax rate of @35% from their base rate
of @45% and 42.5%.
46. Introduction of progressive tax rate for SMEs
Finance Corporate tax rate None A progressive tax rate for SMEs To encourage the SMEs
Act, 2012 either base on turnover or profit
and employment may be
introduced
47. Interest payable by the assessee on deficiency in payment of advance tax
Section Interest payable The period for which interest under The period for which interest Income Tax Ordinance
73(2) by the assessee sub-section (1) shall be payable shall under sub-section (1) shall be prescribes uniform
Page 10 of 12
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Subject Matter Existing provision/Situation Proposal Reasons/Justification
Reference
on deficiency in be the period from the (first day of payable shall be the period from assessment year for all
payment of April) of the year in which the the (first day of April) of tax payers. That is, all
advance tax advance tax was paid to the date of preceding the assessment year in tax payers pay tax as per
regular assessment in respect of the of which the advance tax was paid to rates and laws applicable
the income of that year or a period of the date of regular assessment in for same assessment year
two years from the said (first day of respect of the of the income of that irrespective of the
April), whichever is shorter year or a period of two years from different ending day of
the said (first day of April), their financial year (any
whichever is shorter date between July 1 to
June 30 preceding to the
assessment year).
Therefore, to remove the
confusion and for
ensuring uniformity in
calculating interest on
deficiency in payment of
advance tax for all tax
payers, first day of April
should be the preceding
the assessment year
48. To Extend upto 30 June 2015 the Incentives expiring on 30.06.2013
SRO : 221/2011, 15% Reduced Tax Rate for Textile To Extend upto 30 June 2015 the To relieve to the
dated 04.07.2011 Industries. Incentives expiring on 30.06.2013 Industries concerned

SRO : 220/2011, 15% Reduced Tax Rate for Jute

dated 04.07.2011 Industries

Para - 35, Part -

A, 6th Schedule Exemption of Income from Export of
Handicrafts
Section - 46B.
Exemption from tax of Newly
Established Industrial Undertakings.
Section - 46C.
Exemption from tax of Newly
Established Physical Infrastructure
Para - 42, Part - Facility.
A, 6th Schedule.
Exemption of Income from Poultry
SRO: 238/2011, Farming.
dated 06.07.2011.

Reduced Tax Rate of 5% on Income

SRO: 218/2012, from Fish Farming Dairy, etc.
dated 27.06.2012)
& (SRO:
21/2012, dated Reduced Tax Rate of 10% on
11.01.2012. Investment of untaxed legal income in
shares of listed companies

49. Disallowances of Expenses claimed in the Trading Account and Profit & Loss Account in violation of Provision of Section 30A
Section 30A Disallowances of “Notwithstanding anything contained To Issue a General Direction to To avoid dispute and
and Expenses claimed in sections 28, 29 and 30, the Deputy the Assessing Officers to strictly delay in collection of
Paragraph in the Trading Commissioner of taxes shall not make comply with the provisions of revenue.
29 (3) of Account and any disallowance or deduction for any Section - 30A in respect of
Paripatra 1 Profit & Loss year from any claim made by an Disallowance of Expenses claimed
(Income Account in assessee in the trading account or in the Trading Account and Profit
Tax) dated violation of profit or loss account without & Loss Account and not to make
27.07.2002 Provision of specifying reason for such disallowances on estimate and on
Section 30A disallowance or deduction. surmise or suspicion without
citing any specific instance of un-
verifiability.

Page 11 of 12
 Section
Subject Matter Existing provision/Situation Proposal Reasons/Justification
Reference
50. To remove the Conflicting provisions
SRO No. To remove the The SRO provides that the tax rate for To remove the conflicting To remove the
269/2010, conflicting a Company being a Sponsor provisions of the SRO No. conflicting provisions
dated provisions Shareholder is 10% whereas the 269/2010, dated 01.07.2010 and of
01.07.2010 Section 53M provides that the 5% the Section 53M in respect of Tax
and of the TDS on such income is Final Tax Rate for a Company being a
Section liability U/S 82C. Sponsor Shareholder on Profit on
53M Sale of Shares of a Listed
Company.

SRO No. The SRO provides Nothing whether it

269/2010, is applicable for both Residents and To remove the conflicting
dated Non - Residents. However, such provisions of the SRO No.
01.07.2010 income of Non - Residents is Exempt 269/2010, dated 01.07.2010 and of
and of the from tax as per Para 43 of Part - A of the Para 43 of Part - A of the Sixth
Para 43 of Sixth Schedule if, exemption is Schedule relating to tax of Non-
Part - A of allowed in his/her country. Residents on income from sale of
the Sixth shares of a Listed Company.
Schedule
51. To delete Para 1(A) of 6th Schedule Part A
Para 1(A) of Income derived "Any income derived from the This should be withdrawn. To be just and fair and
6th from operation of operation of the microcredit by a non- Instead, income derived from the increase Tax GDP ratio.
Schedule microcredit by government organization registered operation of the microcredit by a
Part A and the NGOs with NGO Affairs Bureau" is excluded non-government organization
Section 44 from total income registered with NGO Affairs
(1) Bureau may be given rebate or
may be assessed under regular
provisions at reduced rate of
income tax

Page 12 of 12
2
2
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8
9
10
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12
12
12
13
13
14
14
14
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15
15
Sl. Section/Rule/ Existing
Reference Proposal Reasons / Justifications
No. SRO/Order Provision/Situation
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†Kv¤úvbx wn‡m‡e MY¨ nq bv|
(1) wb¤œwjwLZ ms¯’v ev wKš‘, Zviv ‡UªW jvB‡mÝ, AvqKi
cÖwZôvb‡K, AZtci ÔDr‡m mb` I g~mK wbeÜb wb‡q e¨emv
g~j¨ ms‡hvRb Ki K‡ib| †m‡¶‡Î Zv‡`i wewa
KZ©bKvixÕ ewjqv Dwj-wLZ 18K Abyhvqx Dr‡m g~mK
mieivn †mev MÖn‡Yi mgq Dr‡m g~j¨ Òwjwg‡UW ‡Kv¤úvwbÓ k㸇jvi KZ©‡bi ¶gZv bvB| Ab¨w`‡K
1 MÖnbKvix KZ©„K ms‡hvRb Ki KZ©b Kwi‡Z cwie‡Z© ÒAvqKi Aa¨v‡`k, wVKvavix e¨emvq gvjvgvj ev
wewa (18K) Gi †mev mieivnKvixM‡Yi h_vh_
Dr‡m g~j¨ nB‡e, h_vt- 1984 Gi aviv 2(20)-G
Dc-wewa (1) KvVv‡gvMZ wfwË bvB Ges Zviv
ms‡hvRb Ki msÁvwqZ †Kv¤úvwbÓ k㸇jv
KZ©b (K) miKvwi, AvavmiKvwi ev cÖwZ¯’vwcZ Kiv Avek¨K| g~mK mwVKfv‡e cwi‡kva K‡ib
¯^vqËkvwmZ cÖwZôvb; bv|
(L) GbwRI;
ZvB miKv‡ii ivR¯^ AvniY e„w×
(M) e¨vsK, exgv cÖwZôvb, ev
Kivi j‡¶¨ D³ cwieZ©b
Ab¨‡Kv‡bv Avw_©K cÖwZôvb;
/ms‡kvab Ri“ix|
(N) wjwg‡UW †Kv¤úvwb; ev
(O) wk¶v cÖwZôvb| o ivR¯^ Avni‡Yi ¯^v‡_© we‡`kx
†Kv¤úvwbi kvLv Awdm ev
wjqv‡Rv Awdm mg~n‡K
my¯úófv‡e Dr‡m g~mK KZ©bKvix
cÖwZôvb wnmv‡e wPwýZ Kiv
cÖ‡qvRb| hvnv cÖ¯—vweZ
ms‡kva‡bi gva¨‡g wbwðZ nB‡e|
Avg`vwb ch©v‡q g~mK Ae¨vnwZi myweav evwYwR¨K Avg`vwbKvi‡Ki Rb¨ evwZj cÖ`vb cÖm‡½ t
o Avg`vwb cieZx© weµ‡qi †¶‡Î
A‡bK evwYwR¨K Avg`vwbKviK
Af¨š—ixb m¤ú` Avg`vwb ch©v‡q
eZ©gv‡b D³ GmAviI Gi AvBb Abyhvqx g~j¨ †NvlYv bv
wefvM, A_© (‡Uwej-1),
†Uwej-1 G †hmKj cY¨ mg~n w`‡q cY¨ weµq K‡i| d‡j
gš¿Yvjq, Avg`vwb I
Aš—©fy³ Av‡Q Zv‡`i †¶‡Î Zv‡`i weµq g~j¨ Kg nq|
MYcÖRvZš¿x Drcv`b ch©v‡q Avg`vwb ch©v‡qi (‡Uwej-1)
Avg`vwb ch©v‡q g~mK Avevi hvnviv g~j¨ †NvlYv w`‡q
evsjv‡`k (‡Uwej-2), mKj cY¨‡K evwYwR¨K
Ae¨vnwZcÖvß wKš‘, e¨emvqx g~mK cÖ`vb K‡i weµq K‡i
miKv‡ii Drcv`b ch©v‡q Avg`vwbKviK KZ©„K Avg`vwbi
2 ch©v‡q KwZcq cY¨ e¨wZZ Zv‡`i weµq g~j¨ †ekx nq|
GmAviI bs- (‡Uwej-3), †¶‡Î g~mK Ae¨vnwZ cÖ`vb Kivi
Ab¨vb¨ c‡Y¨i †¶‡Î g~mK d‡j †µZviv Kg g~‡j¨i
180- cÖ`Ë †mev myweav evwZj Kivi cÖ¯—ve Kiv
Ae¨vnwZcÖvß bq Ges †mmKj mieivnKvixi wbKU †_‡K cY¨
AvBb/2012/63 (‡Uwej-4) Ges nB‡jv|
cY¨ Avg`vwbi †¶‡Î Avg`vwb µq Kwi‡Z D™¢z× nq Ges
8-g~mK ZvwiL e¨emvqx ch©v‡q
ch©v‡q AMÖxg g~mK Av`vq Kiv G‡¶‡Î ivR¯^ AvniY nq bv|
07 Ryb, 2012 (‡Uwej-5) g~mK
nq| ZvB AvB‡bi D³ cÖ¯—vewU ivR¯^
wLª÷vã Ae¨vnwZ|
Avni‡Yi ¯^v‡_© ev¯—evqb Kiv
Ri“ix|
mdU&Iq¨vi Avg`vbxi †¶‡Î g~j¨ ms‡hvRb Ki A‡ivc cÖm‡½ t
Af¨š—ixY m¤ú` ‡Uwej 2 Abyhvqx Avg`vbx I o ‰e‡`wkK gy`ªv wbqš¿‡b mnvqK
Avg`vbx I
wefvM, A_© Drcv`b ch©v‡q mdU&Iq¨vi f‚wgKv ivL‡e|
Drcv`b ch©v‡q mdU&Iq¨vi Avg`vbxi †¶‡Î g~j¨
3 gš¿Yvjq, (H.S. Code 8523.29.12 o ivR¯^ e„w× cvB‡e|
g~j¨ ms‡hvRb Ki ms‡hvRb Ki Av‡ivc Kiv DwPZ|
MYcÖRvZš¿x Ges 8523.49.20) g~mK o ‡`kxq mdUIq¨vi Indurstiry
Ae¨vnwZ msµvš—
evsjv‡`k Ae¨vnwZ cÖvß| i Dbœqb

c„ôv - 2
Sl. Section/Rule/ Existing
Reference Proposal Reasons / Justifications
No. SRO/Order Provision/Situation
miKv‡ii -Gi
GmAviI bs-
180/AvBb/
2012/638-
g~mK| ZvwiL 7
Ryb, 2012
wLª÷vã
L) Ab¨vb¨ t
e¨emvqx KZ©„K cY¨, Avg`vwb ev µq ev AR©b ev msMÖn I cY¨ weµ‡qi mv‡_ m¤ú„³ †mevi Dci †iqvZ MÖn‡bi myweav‡_© DcKi‡Yi msÁv cwieZ©b t
o e¨emvqxi †¶‡Î cY¨ msMÖn Ges
wewµi ‡¶‡Î Z_v e¨emv
cwiPvjbvi Rb¨ wewfbœ †mev MÖnb
Ri“ix (†hgb weÁvcb, exgv,
†d«BU d‡ivqvwW©s, wK¬qvwis I
aviv (2) Gi `dv (M) Gi Dc-
d‡ivqvwW©s, cwienb wVKv`vi,
`dv (Av) Gi wb¤œiƒc cÖwZ¯’vcb
e¨vsK KZ©„K FbcÎ †mev
Kivi cª¯—ve Kiv njt
BZ¨vw`)| eZ©gv‡b D³ ‡mev
(Av) e¨emvq cwiPvjbvi †¶‡Î,
mg~‡ni Dci cwi‡kvwaZ g~m‡Ki
ÒDcKiYÓ weµq, wewbgq ev cÖKvivš—‡i n¯— (Av) e¨emvq cwiPvjbvi †¶‡Î,
aviv (2) Gi †iqvZ MÖnb m¤¢eci nq bv| hvnv
1 (Input) Gi vš—‡ii D‡Ï‡k¨ Avg`vbxK…Z, weµq, wewbgq ev cÖKvivš—‡i
`dv (M) e¨emv cwiPvjbvi †¶‡Î Cost
msÁv µqK…Z, AwR©Z ev Ab¨ †Kvbfv‡e n¯—vš—‡ii D‡Ï‡k¨ Avg`vwbK…Z,
msM„nxZ cY¨; µqK…Z, AwR©Z ev Ab¨‡Kvbfv‡e of Doing Business-‡K e„w×
msM„nxZ cY¨ Ges cY¨, Avg`vwb Ki‡Q Ges DcKiY Ki †iqvZ
ev µq ev AR©b ev msMÖn I cY¨ MÖn‡bi †¶‡Î g~m‡Ki ‡gŠwjK
weµ‡qi mv‡_ m¤ú„³ †mev| bxwZi mv‡_ mvsNwl©KI e‡U|

ZvB e¨emv cwiPvjbv e¨q

n«vmKiY Ges g~m‡Ki †gŠwjK
bxwZi ev¯—evq‡bi Rb¨ AvB‡bi
cÖ¯—vweZ ms‡kvabx AZxe Ri“ix|
‡mev ißvwbi †¶‡Î ißvwbi c×wZ mywbw`©óKiY t
wewa 27 Gi Dc-wewa 10-G ev
bZzb Dc-wewa 11 ms‡hvR‡bi
gva¨‡g †mev ißvwbi ‡¶‡Î
wb¤œwjwLZ welq¸‡jv Aš—f©y³ Kiv
†h‡Z cv‡i t
o ißvwb bxwZ‡Z mywbw`©ó †mev
(K) †mev ißvwbi Rb¨ †mev
ißvwbi LvZ wba©vwiZ Av‡Q|
mieivnKvix Ges †mev
wewa-27-G cY¨ ißvwbi c×wZ MÖnYKvixi g‡a¨ ¯^v¶wiZ
o evsjv‡`k †_‡K eZ©gv‡b ‡mev
ißvwbi msL¨v e¨vcK nv‡i e„w×
we¯—vwiZfv‡e eY©bv Kiv Av‡Q A½xKvicÎ (‡jUvi Ae
2 wewa 27 ißvwb c×wZ cv‡”Q|
wKš—†mev ißvwbi c×wZ we¯— Gb‡MR‡g›U) _vK‡Z nB‡e;
vwiZfv‡e D‡j-L Kiv †bB| (L) †mev ißvwbi †¶‡Î g~mK o mywbw`©ó w`K wb‡`©kbv _vK‡j
PvjvbcÎ cÖ`vb Kwi‡Z nB‡e; †mev ißvwbi †¶‡Î mKj cÖKvi
(M) †mev ißvwbi wecix‡Z weåvwš—i wbimb nB‡e Ges †mev
evsjv‡`‡k ˆe‡`wkK gy`ªv ißvwb DrmvwnZ nB‡e|
cÖZ¨vevwmZ nB‡Z nB‡e; Ges
(N) ˆe‡`wkK gy`ªv cÖvwßi `wjj
`vwLjc‡Îi mwnZ mshy³ Kwi‡Z
nB‡e|
K›Uªv±i KZ©„K mve-K›Uªv±i‡K ‡mev g~j¨ ev Kwgkb cwi‡kv‡ai mgq g~mK Dr‡m KZ©b bv Kiv cÖm‡½ t
GB avivi Ab¨vb¨ weavbvejx Ò‰e‡`wkK mvnvh¨c~óÓ k㸇jv o g~mK w`‡Z nq g~j¨ ms‡hvR‡bi
m‡Ë¡I, †Kvb wbewÜZ e¨w³ KZ…©K wejyß Kivi Rb¨ cÖ¯—ve Kiv nj| Dci Ges hLb K›Uªv±i‡K
cÖ‡`q g~j¨ ms‡hvRb Ki †evW© ïaygvÎ ˆe‡`wkK mvnvh¨cyó cÖKí †mevg~j¨ ev Kwgkb cwi‡kva Kiv
aviv (6) Gi
cwi‡kv‡ai mgq KZ…©K, wewa Øviv wba©vwiZ bq, eis Ab¨vb¨ cÖKíI Giƒc nq ZLb m¤ú~Y© †mevg~‡j¨i ev
3 Aaxb Dc-aviv
I c×wZ c×wZ‡Z, †mev MÖnYKvix ev, myweav cvIqvi AwaKvix nIqv Kwgk‡bi Dci †mevMÖnYKvix
(4KK)
†¶ÎgZ, †mevi g~j¨ ev Kwgkb DwPZ| G‡¶‡Î aviv 6(4KK) g~mK Dr‡m KZ©b K‡i iv‡Lb|
cwi‡kvaKvix KZ…©K †mevi g~j¨ ev Gi Ab¨vb¨ mKj kZ© AcwiewZ©Z hw` K›Uªv±i †mev cÖ`v‡bi Rb¨
Kwgkb cwi‡kvaKv‡j Dr‡m _vKv DwPZ| mve-K›Uªv±i, G‡R›U ev Ab¨‡Kvb
c„ôv - 3
Sl. Section/Rule/ Existing
Reference Proposal Reasons / Justifications
No. SRO/Order Provision/Situation
Av`vq ev KZ©bc~e©K miKvix †mev mieivnKvix e¨w³‡K
†UªRvix‡Z Rgv Kwi‡Z nB‡et wb‡qvM †`b Ges †mevg~j¨ ev
Kwgkb cÖ`vb K‡ib ZLb mgy`q
Z‡e kZ© _v‡K †h, ˆe‡`wkK †mevg~j¨ †_‡K g~j¨ we‡qvRb
mvnvh¨c~ó †Kvb cÖK‡íi AvIZvq nq| G‡¶‡Î g~j¨ ms‡hvRb nq
†Kvb †mev MÖnYKvix KZ…©K cÖ‡`q bv|
g~j¨ ms‡hvRb Ki hw` †mev
MÖnYKvix ev, †¶ÎgZ, †mevi o we‡qvR‡bi Dci g~j¨ ms‡hvRb
g~j¨ ev Kwgkb cwi‡kvaKvix Ki Av‡ivc Kiv g~mK bxwZi
e¨w³ †mevi g~j¨ ev Kwgkb mv‡_ mvsNwl©K| Z_v AwaK g~mK
cwi‡kvaKv‡j †evW© KZ…©K, wewa Av‡ivc/cwi‡kva Kiv n‡”Q hv
Øviv wba©vwiZ c×wZ‡Z Dr‡m e¨emv cwiPvjbv e¨q‡K e„w×
Av`vq ev KZ©bc~e©K miKvix Ki‡Q, †`‡ki A_©‰bwZK
†UªRvix‡Z Rgv K‡ib Ges D³ AeKvVv‡gv wbg©v‡Yi †¶‡Î weiƒc
†mev mieivnKvix e¨w³ KZ…©K cÖwZwµqv m„wó Ki‡Q Ges Ki
D³ mgy`q †mevi Askwe‡kl duvwKi cÖebZv e„w× Ki‡Q|
mieiv‡ni †Kvb mve-K›Uªv±i,
G‡R›U ev Ab¨ ‡Kvb †mev o ‡h‡nZz K›Uªv±‡ii m¤ú~Y© †mevg~j¨
mieivnKvix e¨w³‡K wb‡qvM ev Kwgk‡bi Dci g~mK Dr‡m
K‡ib, †mB‡¶‡Î D³ †mev KZ©b Kiv n‡”Q Ges miKvix
mieivnKvixi mve-K›Uªv±i, †KvlvMv‡i Rgv cÖ`vb Ki‡Q,
G‡R›U ev wb‡qvMK…Z Ab¨ ‡Kvb ‡m‡nZz mve-K›Uªv±‡ii Dci g~mK
†mev mieivnKvix e¨w³i wbKU Av‡ivc Kiv g~mK Gi ‡gŠwjK
nB‡Z, D³ †mevi Dci cÖv_wgK bxwZi mv‡_ mvsNwl©K|
ch©v‡q cÖ‡hvR¨ g~j¨ ms‡hvRb Ki
Av`vq ev KZ©b Ges miKvix
†UªRvix‡Z Rgv cÖ`v‡bi `vwjwjK
cÖgvYvw` Dc¯’vcb mv‡c‡¶
cybivq Dr‡m g~j¨ ms‡hvRb Ki
Av`vq Kiv hvB‡e bv|
DcKi‡Yi µqg~j¨ ev g~j¨ ms‡hvR‡bi cwieZ©‡bi cwigvY †NvwlZ gybvdvi mv‡_ mgš^‡qi my‡hvM _vKv mv‡c‡¶ g~j¨ †NvlYv bv ‡`Iqv Ges †iqvZ KZ©b bv Kiv
cÖm‡½ t
aviv (9) Gi Aaxb Dc-aviv (1) aviv (9) Gi Aaxb Dc-aviv (1)
o DcKi‡Yi g~j¨ ev g~j¨
Gi `dv (QQ) †Z ejv n‡q‡Q †h ms‡hvR‡bi cwigvY e„w× †c‡j
Gi `dv (QQ) t
DcKi‡Yi bvg g~j¨ wfwËi g‡a¨ hw` c‡Y¨i weµqg~j¨ e„w× bv Kiv
Aš—f©y³ _vK‡j †mB DcKi‡Yi nq Zvn‡j e„w×cÖvß AskUzKz
aviv 5 Gi
Dci †iqvZ cÖvß nB‡e Ges gybvdvi mv‡_ mgš^q nq| ZvB
Dc-aviv (2) G G‡¶‡Î g~j¨ †NvlYvq cÖ`wk©Z weµq g~j¨ e„w× bv †c‡j
Dwj-wLZ c‡Y¨i DcKiY g~‡j¨i n«vm e„w× †iqvZ ms‡kvwaZ g~j¨ †NvlYvi cÖ‡qvRb
Ki‡hvM¨ g~j¨ MÖn‡Yi wfwË nB‡e bv| bvB| G‡¶‡Î g~mK KZ…c¶
aviv (9) Gi wfwËi g‡a¨ Aš—fy©³ Ab¨vw`‡K, wewa (3) Gi Aaxb ewa©Z DcKiY g~j¨ Ges g~j¨
Aaxb Dc-aviv bq Ggb DcKi‡Yi Dc-wewa (2L) Abyhvqx g~j¨
04 Ki †iqvZ ms‡hvR‡bi cwigvY †NvwlZ
(1) Gi `dv wecix‡Z ms‡hvR‡bi cwieZ© ‡ bi nvi cu v P g~bvdvi mv‡_ mgš^q nq wKbv Zv
(QQ) cwi‡kvwaZ g~j¨ kZvs‡ki †ekx n‡j ms‡kvwaZ ‡`L‡Z cv‡i Ges mgš^q bv n‡j
ms‡hvRb Ki; g~j¨ †NvlYv `vwLj Kwi‡Z nB‡e| AwZwi³ DcKiY g~j¨ ev g~j¨
ms‡hvR‡bi cwigv‡Yi Dci
(Av) Dc-aviv (2) Gi wØZxq Ab¨w`‡K, aviv (9) Ges wewa †iqvZ evwZj Ki‡Z cv‡i|
kZ©vs‡k Dwj-wLZ e¨emvqx KZ©„K (19) G h_vµ‡g Ki †iqvZ Ges
µqK…Z DcKi‡Yi Dci DcKiY Ki †iqvZ c×wZi o DcKiY g~j¨ e„w× †c‡jI, weµq
cwi‡kvwaZ DcKiY Ki; kZ©¸‡jv ewY©Z Av‡Q| wKš‘, g~j¨ e„w× bv †c‡j Ges e„w×cÖvß
†NvwlZ DcKi‡Yi µq g~j¨ e„w× DcKiY g~j¨ †NvwlZ gybvdvi

c„ôv - 4
Sl. Section/Rule/ Existing
Reference Proposal Reasons / Justifications
No. SRO/Order Provision/Situation
n‡j Ges µq g~j¨ e„w×i cwigvY mwnZ mgš^‡qi my‡hvM _vK‡j
cuvP kZvs‡ki AwaK n‡j Zvi †iqvZ evwZj Kiv A‡hŠw³K Ges
wfwˇZ ms‡kvwaZ g~j¨ †NvlYv aviv (9) Gi Aaxb Dcaviv (1)
`vwLj bv Kwi‡j AwZwi³ Gi `dv (QQ) cwicš’x|
DcKiY Ki A‰ea wn‡m‡e M„wnZ
nB‡e Giƒc kZ© aviv (9) Ges
wewa (19) G ewY©Z ‡bB| GB
Bmy¨wU we‡ePbv bv K‡i g~mK
wewa (3) Gi Dc-wewa (2L)
KZ©„c¶ †iqvZ evwZj Ki‡Q hv
†µZvi wbKU nB‡Z cÖvc¨ c‡Yi
AvBb m¤§Z b‡n| Bnv we‡ePbv
cwieZ©b bv NwU‡j Ges g~j¨
Kwiqv wewa (3) Gi Aaxb Dc-
g~j¨ ms‡hvRb ms‡hvRb cwieZ©‡bi nvi cuvP
wewa (2L) wb¤œiƒ‡c cÖwZ¯’vcb
Ki ev, †¶ÎgZ, kZvs‡ki Kg nB‡j, Dc-wewa
Kiv cÖ‡qvRb t
g~j¨ ms‡hvRb (2) Ges (2K) Gi weavb
wewa (3) Gi
Ki I m¤ú~iK Abyhvqx †NvlYv cÖ`v‡bi cÖ‡qvRb
Dc-wewa (2L) Ò‡µZvi wbKU nB‡Z cÖvc¨ c‡Yi
ïé av‡h©i Rb¨ nB‡e bv:
cwieZ©b bv NU‡j Ges DcKiY
g~j¨ †NvlYv Z‡e kZ© _v‡K †h, GB weav‡bi
g~j¨ ev g~j¨ ms‡hvR‡bi
Kvi‡Y Dc-wewa (3) G ewY©Z
cwieZ©‡bi cwigvb c~‡e© †NvwlZ
Z`š—ev Rwic msµvš— Kvh©µ‡gi
g~j¨ †NvlYvi gybvdvi mv‡_
GLwZqvi ¶zYœ nB‡e bv|
mgš^‡qi my‡hvM _vK‡j, Dc-wewa
(2) Ges (2K) Gi weavb
Abyhvqx †NvlYv cÖ`v‡bi cÖ‡qvRb
nB‡e bv|

Z‡e kZ© _v‡K †h, GB weav‡bi

Kvi‡Y Dc-wewa (3) G ewY©Z
Z`š—ev Rwic msµvš—Kvh©µ‡gi
GLwZqvi ¶zbœ nB‡e bv|Ó
†mev cÖ`vbKvixi Ab¨Zg DcKiY we‡ePbv K‡i AeKvVv‡gvi wbg©vY, fvov BZ¨vw`i Dci cÖ`Ë g~m‡Ki Dci †iqvZ MÖn‡bi my‡hvM cÖ`vb cÖm‡½ t
aviv (9) Gi Aaxb Dc-aviv (1)
Gi `dv (O) Abymv‡i wb‡¤œ ewY©Z
†¶Î mg~‡ni †¶‡Î ÒDcKiY Ki
†iqvZÓ MÖnb Kiv hvq bv t

Ki‡hvM¨ cY¨ Drcv`b ev o ÒAeKvVv‡gvÓ A‡bK †mev

Ki‡hvM¨ †mev cÖ`v‡bi mwnZ cÖ`vbKvix cÖwZôv‡bi †mev
mivmwi m¤ú„³ nB‡jI †Kvb cÖ`v‡bi Rb¨ ¸i“Z¡c~Y© DcKiY|
`vjvb-†KvVv ev AeKvVv‡gv ev †Kbbv AeKvVv‡gv wbg©vY ev fvov
aviv (9) Gi Aaxb Dc-aviv (1)
aviv (9) Gi ¯’vcbv wbg©vY, mylgxKiY, K‡i A‡bK ‡mev cÖ`vbKvix †mev
Gi `dv (O) Gi Òev AeKvVv‡gvÓ
05 Aaxb Dc-aviv Ki †iqvZ AvaywbKxKiY, cÖwZ¯’vcb, cÖ`vb K‡i _v‡K|
kã¸wj wejyß Kivi cÖ¯—ve Kiv
(1) Gi `dv (O) m¤cÖmviY, cybtms¯‹viKiY I
nB‡jv|
†givgZKiY, mKj cÖKvi myZivs AeKvVv‡gv wbg©vY, fvov
AvmevecÎ, †ókbvix `ªe¨vw`, BZ¨vw`i Dci cwi‡kvwaZ g~mK
GqviKwÛkbvi, d¨vb, Av‡jvK DcKiY Ki wnmv‡e †iqvZ cÖ`vb
miÄvg, †Rbv‡iUi BZ¨vw` µq ev Kwi‡Z nB‡e|
†givgZKiY, ¯’vcZ¨ cwiKíbv I
bKkv, hvbevnb, BZ¨vw` fvov ev
jxR MÖnY, BZ¨vw`i mwnZ
mswk-ó cY¨ Ges †mevi Dci
cwi‡kvwaZ g~j¨ ms‡hvRb Ki;
GKB e¨w³/cÖwZôv‡bi wewfbœ weµq ‡K‡›`ªi g‡a¨ cY¨ mieiv‡ni Rb¨ µqg~j¨ e¨vswKs ev B‡jKUªwbK gva¨‡g cwi‡kvwaZ bv n‡j †iqvZ KZ©b bv Kiv cÖm‡½ t
aviv (9) Gi Aaxb Dc-aviv (1) aviv (9) Gi Aaxb Dc-aviv (1) o g~j¨ ms‡hvRb Ki AvBb, 1991
aviv (9) Gi Gi `dv (X) Abymv‡i wb‡¤œ ewY©Z Gi `dv (X) wb¤œiƒ‡c cÖwZ¯’vcb Abyhvqx Drcv`bKvix / e¨emvqx /
06 Aaxb Dc-aviv Ki †iqvZ †¶‡Î DcKiY Ki †iqvZ MÖnb Kivi cÖ¯—ve Kiv nB‡jv t evwYwR¨K Avg`vwbKviKMY hw`
(1) Gi `dv (X) Kiv hvq bv t cY¨ Drcv`b/msMÖn Kivi ci Zv
ÒcY¨ ev †mevi DcKi‡Yi GK ev GKvwaK weµq †K›`ª

c„ôv - 5
Sl. Section/Rule/ Existing
Reference Proposal Reasons / Justifications
No. SRO/Order Provision/Situation
o cY¨ ev †mevi DcKi‡Yi µqg~j¨ GK j¶ UvKv ev Z`ya© nB‡Z weµq Kwi‡Z Pvb, Zvn‡j
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c„ôv - 6
Sl. Section/Rule/ Existing
Reference Proposal Reasons / Justifications
No. SRO/Order Provision/Situation
(Customized) ‡evW© KZ©„K
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(K) SYMPHONY Softech

Ltd., 1st Floor, 160 Lake
Circus, Kalabagan,
Mirpur Road, Dhaka-
1205.
(L) UNISOFT Systems
Limited, A/2 Rupsha
Tower, 7 Kamal Ataturk
Avenue, Banani, Dhaka-
1213.
(M) UY Systems Ltd., House:
289, Road: 19/B, New
DOHS, Mohakhali,
Dhaka-1206.
(N) Ennovia Technologies
Ltd., House # 279 (G.F),
Road # 19, New DOHS,
Mohakhali, Dhaka-
1206.
(O) Dhrupadi Techno
Consortium Limited,
House # 375/A (1st
Floor), Road# 28, New
DOHS, Mohakhali,
Dhaka-1206.
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c„ôv - 7
Sl. Section/Rule/ Existing
Reference Proposal Reasons / Justifications
No. SRO/Order Provision/Situation
Customs Act Gi bv|
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sub-section (2).
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c„ôv - 8
 Sl. Section/Rule/ Existing
Reference Proposal Reasons / Justifications
No. SRO/Order Provision/Situation
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c„ôv - 9
Sl. Section/Rule/ Existing
Reference Proposal Reasons / Justifications
No. SRO/Order Provision/Situation
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†_‡K A_ev DcKiY Avg`vbxi
†¶‡Î cÖ‡hvR¨ DcKiY Avg`vbx
e›`i †_‡K mivmwi Pzw³ wfwËK
Drcv`‡Ki wbKU mieiv‡ni
e¨e¯’v Kwi‡Z cvwi‡eb| ‡m †¶‡Î
¯^Ë¡vwaKvixi µ‡qi wecix‡Z †h
Ki †gqv‡` PvjvbcÎ cÖ`vb Kiv
nB‡e A_ev †h Ki †gqv‡` cY¨
Avg`vbxi ïévqY mgvwß nB‡e,
¯^Ë¡vwaKvix †m Ki †gqv‡`i A_ev
cieZx Ki †gqv‡`i †h‡Kv†bv
Zvwi‡L Zvnvi Drcv`b¯’‡j
DcKiY Ki †iqvZ MÖnY Kwi‡eb
Ges Z`vbyhvqx Ab¨vb¨ wnmve
i¶Y Kwi‡eb|”
Pzw³wfwËK Drcv`‡bi †¶‡Î Drcvw`Z cY¨ Pzw³wfwËK Drcv`bKvix KZ©„K ¯^Ë¡vwaKvixi wVKvbvq †cÖiY bv Kwiqv Zvnvi wb‡`©wkZ ¯’v‡b †cÖiY cÖm‡½ t
o ‡h‡nZz Pzw³wfwËK Drcv`K
wewa (16) Gi Dc-wewa (3N) Gi KZ©„K cY¨ Drcv`‡bi ci A‡bK
wb¤œiƒc cÖwZ¯’vcb Kivi cÖ¯—ve †¶‡Î Avi †Kvb Drcv`‡bi
Kiv nB‡jv t cÖwµqv Aewkó¨ _v‡K bv †m‡nZz
Pzw³wfwËK Drcv`K Gi ¯’vb
ÒPzw³wfwËK Drcv`K Pzw³i †_‡K ¯^Ë¡vwaKvixi Drcv`bKvix
wfwˇZ Drcvw`Z cY¨ wn‡m‡e wbewÜZ ¯’v‡b cY¨ ¯’vbvš—
¯^Ë¡vwaKvixi Pvwn`v †gvZv‡eK †h i bv K‡i mivmwi ¯^Ë¡vwaKvix
‡Kvb wbewÜZ wVKvbvi AbyKy‡j KZ©„K wb‡`©wkZ Ab¨ wVKvbvq
Pzw³wfwËK Drcv`K Pzw³i mieivn Kwi‡Z cvwi‡eb Ges mieivn Kwi‡j wb‡¤œv³
wfwˇZ Drcvw`Z cY¨ †KejgvÎ cY¨ mieiv‡ni †¶‡Î Dc-wewa NVbv¸‡jv †_‡K Ae¨vnwZ cvIqv
Ki‡hvM¨ c‡Y¨i
wewa (16) Gi ¯^^Z¡vwaKvixi wbewÜZ wVKvbvi (1) Gi weavb AbymiY Kwi‡eb| hvB‡et
mieivn I
12 Aaxb Dc-wewa AbyK‚‡j mieivn Kwi‡Z cvwi‡eb 2. Pzw³wfwËK Drcv`K †_‡K
ißvwbi †¶‡Î
(3N) Ges cY¨ mieiv‡ni †¶‡Î Dc- Z‡e kZ© _v‡K †h, ¯^Ë¡vwaKvixi ¯^Ë¡vwaKvixi wVKvbvq
PvjvbcÎ cÖ`vb|
wewa (1) Gi weavb AbymiY Pvwn`v †gvZv‡eK †h‡Kv†bv cvVv‡bvi mgq AcPq †iva
Kwi‡eb| wbewÜZ wVKvbvi AbyK‚‡j cY¨ nB‡e;
mieiv‡ni mgq Pzw³wfwËK 3. AwZwi³ cwienb LiP
Drcv`K Dc-wewa (1) Gi weavb Kwg‡e;
AbymiY Kwiqv PvjvbcÎ cÖ`vb 4. c‡Y¨i DVvbvgv msµvš—¶wZ
Kwi‡eb Ges †mRb¨ c„_K wnmve ‡_‡K i¶v nB‡e|
msi¶Y Kwi‡eb| PvjvbcÎ o GKB mv‡_ aviv (9) Ges wewa
cÖ`v‡bi †¶‡Î, ¯^Ë¡vwaKvixi (19) Gi ‡iqvZ MÖnY msµvš—
m s w k - ó weavbvewj ¯^Ë¡vwaKvixi Rb¨
Kg©KZ©v KZ…©K Aby‡gvw`Z g~mK cwieZ©b Kwi‡Z nB‡e| †Kbbv
Av‡ivc‡hvM¨ g~‡j¨i wfwˇZ aviv (9) Abyhvqx †iqvZ MÖn‡Yi

c„ôv - 10
Sl. Section/Rule/ Existing
Reference Proposal Reasons / Justifications
No. SRO/Order Provision/Situation
A_ev cÖ‡hvR¨ †¶‡Î, ¯^Ë¡vwaKvix Rb¨ cY¨ ev †mev ¯^Ë¡vwaKvixi
KZ…©K `vwLjK…Z g~j¨ †NvlYvi wbewÜZ wVKvbvq Avwm‡Z nq|
g~mK Av‡ivc‡hvM¨ g~‡j¨i wfwˇZ
PvjvbcÎ cÖ`vb Kwi‡eb|”

aviv 9 Gi Dc-aviv (1) Gi

mwnZ wb‡¤œv³ kZ© ms‡hvRb Kivi
cÖ¯—ve Kiv nB‡jv t

ÒAv‡iv kZ© _v‡K †h, aviv 5(2K)

Abyhvqx †Kv‡bv wbewÜZ Drcv`K
KZ…©K Pzw³i wfwˇZ Ab¨ †Kvb
wbewÜZ Drcv`‡Ki eªvÛhy³ cY¨
Drcv`‡bi †¶‡Î, †evW©, wewaØviv
D³ †jb‡`‡bi †¶‡Î †iqvZ
MÖn‡Yi c×wZ Ges mgq wba©viY
Kwi‡Z cvwi‡e|Ó

wewa 19 Gi Dc-wewa (7) Gi

ci wb¤œiƒc bZyb Dc-wewa (8)
ms‡hvRb Kivi cÖ¯—ve Kiv
nB‡jvt

(8) Òaviv 5(2K) Abyhvqx, Pzw³i

wfwˇZ c‡Y¨i Drcv`bKvix
A_©vr Pzw³wfwËK Drcv`K wewa
16(3N) Abyhvqx ¯^Ë¡vwaKvixi
Pvwn`v †gvZv‡eK †h †Kvb
wbewÜZ wVKvbvi AbyK‚‡j cY¨
mieivn Kwi‡eb| wKš‘
¯^Ë¡vwaKvix Zvi Drcv`b¯’‡j
Pzw³wfwËK Drcv`K KZ…©K
PvjvbcÎ cÖ`v‡bi wfwˇZ aviv 9
Gi D‡j-wLZ †gqv‡`i g‡a¨
cÖ‡hvR¨ †iqvZ MÖnY Kwi‡eb Ges
Z`vbyhvqx Ab¨vb¨ wnmve i¶Y
Kwi‡eb|

Z‡e kZ© _v‡K †h, ¯^Ë¡vwaKvixi

Pvwn`v †gvZv‡eK †h‡Kv†bv
wbewÜZ wVKvbvi AbyK~‡j cY¨
mieiv‡ni †¶‡Î, Pzw³wfwËK
Drcv`K KZ©„K wewa 16 (1)
Abyhvqx PvjvbcÎ cÖ`v‡bi 24
NÈvi g†a¨ ¯^Ë¡vwaKvix cY¨
mieiv‡ni cÖ‡hvR¨ Ki PjwZ
wnmv‡e mgš^q mvab Kwiqv wewa
16 (1) Abyhvqx PvjvbcÎ cÖ`vb
Kwi‡eb|”
cY¨ ev †mev ‡di‡Zi †¶‡Î cÖ`Ë g~mK mgš^‡qi mgq e„w× msµvš—t
†h †¶‡Î †Kv‡bv wbewÜZ e¨w³ o evsjv‡`‡ki e¨emvi †cÖ¶vcU
KZ…©K PvjvbvcÎ c~iY ev cÖ`v‡bi we‡ePbv K‡i †`Lv hvq †h 90
wewa (17K) ci ev PjwZ wnmv‡e cÖ‡`q Ki Òbe¶BÓ kãwUi cwie‡Z© w`b ciI AwaKvsk †¶‡Î cY¨ ev
‡µwWU †bvU I
13 Gi Dc-wewa mgwš^Z Kivi ci Zvnv evwZj ÔÔGKkZ AvwkÓ kãwU †mev †diZ Av‡m Ges †m‡¶‡Î
†WweU †bvU
(1) Kivi cÖ‡qvRb nq, wKsev cY¨ cÖwZ¯’vwcZ Kiv Avek¨K| cY¨ ev †mevi Dci cÖ`Ë g~mK
mieiv‡ni ev †mev cÖ`v‡bi ci mgš^‡qi my‡hvM bv _vK‡j
Zvnv m¤ú~Y© ev AvswkKfv‡e e¨emvq ¶wZ mvwaZ nq Ges

c„ôv - 11
Sl. Section/Rule/ Existing
Reference Proposal Reasons / Justifications
No. SRO/Order Provision/Situation
†diZ cÖ`Ë nq wKsev cY¨ eZ©gvb cÖwZ‡hvMxZvg~jK e¨emvq
mieiv‡ni ev †mev cÖ`v‡bi wU‡K _vKv K÷`vqK nq|
cÖK…wZ †gŠwjKfv‡e cwiewZ©Z nq
wKsev Pvjvbc‡Î cÖK…Z cÖ‡`q
K‡ii Zzjbvq AwaK Ki Dwj-wLZ
nq, †mB‡¶‡Î wZwb evwZjK…Z
Pvjvbc‡Î cÖ`wk©Z Ki wKsev
†diZ cÖ`Ë cY¨ ev †mevi
wecix‡Z cÖ`Ë Ki wKsev
Pvjvbc‡Î AwaK cÖ`wk©Z Ki
PjwZ wnmve I cÖ‡hvR¨ †¶‡Î
cieZx `vwLjc‡Î mgš^‡qi
D‡Ï‡k¨ PvjvbcÎwU evwZj Kwiqv
cY¨ ev †mevi MÖnxZvi AbyK‚‡j
dig Òg~mK-12Ó-G GKwU
†µwWU †bvU Bmy¨ Kwi‡eb Ges
cieZx Kvh©w`‡mi g‡a¨ mswk-ó
mv‡K©j ivR¯^ Kg©KZ©vi wbKU
Dnvi GKwU Abywjwc `vwLj
Kwi‡eb:
Z‡e kZ© _v‡K †h,
(K) cY¨ mieivn ev †mev
cÖ`v‡bi ci Zvnv m¤ú~Y© ev
AvswkKfv‡e †diZ MÖn‡Yi †¶‡Î
cY¨ ev †mev KviLvbv ev
e¨emvq¯’j nB‡Z Acmvi‡Yi
be¶B w`b ci †diZ M„nxZ
nB‡j;
(L) c‡Y¨i ¸YMZgvb Lvivc
nIqvi Kvi‡Y mieivnK…Z cY¨ ev
†mev cÖZ¨vnvi Kiv nB‡j;
D³ wbewÜZ e¨w³i †¶‡Î GB
wewa cÖ‡hvR¨ nB‡e bv|
Dr‡m g~mK KZ©‡bi AvIZvaxb †mev mieivnKvix KZ…©K †iqvZ MÖnb Ki‡j Ges 15% nv‡i g~mK cÖ`vb Ki‡j, Dr‡m g~mK KZ©b bv Kiv cÖm‡½ t
RvZxq ivR¯^ 35wU †mev cÖ`vbKvix KZ©„K †mev
†ev‡W©i mvaviY cÖ`v‡bi wecix‡Z Dr‡m g~mK o DcKiY Ki †iqvZ ‡bIqv
KZ©‡bi wb‡`©kbv †`Iqv Av‡Q| n‡j †m‡¶‡Î me©‡gvU cÖvwßi
Av‡`k bs-
Ab¨vw`‡K 35wU †mev cÖ`vbKvixi D³ 35wU ‡mev cÖ`vbKvixi g‡a¨ Dci 15% nv‡i g~mK †_‡K
09/g~mK/2011
DcKiY Ki †iqvZ mgš^q
ZvwiL: 12 g‡a¨ ÒS007.00 weÁvcbx hw` †Kvb †mev cÖ`vbKvix 15%
g~mK Dr‡m K‡i Aewkó Ask cÖ`vb Kiv
A‡±vei, 2011 ms¯’vÓ mg~n †h‡¶‡Î ¯’vbxq g~j¨ nv‡i g~mK cÖ`vb K‡i Ges
Av`vq/KZ©b Ges nq| wKš‘ hw` 15% Gi
ms‡hvRb Ki Kvh©vj‡qi ivR¯^ DcKiY Ki †iqvZ MÖnb K‡i
14 cieZx© KiYxq mgy`q Ask Dr‡m KZ©b Kiv
RvZxq ivR¯^ Kg©KZ©v/mnKvix ivR¯^ Kg©KZ©v _v‡K, Zv‡`i †¶‡Î Dr‡m g~mK
m¤ú‡K© w`K nq †m‡¶‡Î †mev cÖ`vbKvix
†ev‡W©i mvaviY KZ©„K cÖZ¨vwqZ Òg~mK-11Ó KZ©b cÖ‡hvR¨ nB‡e bv Ges
wb‡`©kbv msµvš—| KZ©„K cÖ`Ë g~mK †diZ `vwe
Av‡`k bs- PvjvbcÎ ev Òg~mK-11Ó wn‡m‡e weÁvcbx ms¯’vi Abyiƒc weavb
Ki‡Z n‡e| †diZ cvIqv ev¯—
01/g~mK/2012 we‡ewPZ †Kvb PvjvbcÎ cÖ`vb Zv‡`i †¶‡Î Aš—f©~³ Kiv DwPZ|
weK A‡_© LyeB K÷Ki Ges
ZvwiL: 28 Ki‡e, †m‡¶‡Î g~j¨ ms‡hvRb
hš¿bv`vqK| A‡bK‡¶‡Î
†deªæqvwi, Ki (g~mK) Dr‡m KZ©‡bi
†diZ cvIqvI hvq bv|
2012 Avek¨KZv †bB|Ó
¯^Ë¡vwaKvix KZ©„K Pzw³wfwËK Drcv`‡Ki wbKU †cÖiYK…Z DcKiY †diZ cÖ`v‡bi weavb Aš—f©~³KiY t
Pzw³ evwZj ev Ab¨‡Kvb Kvi‡b ¯^Ë¡vwaKvix KZ©„K Pzw³wfwËK
Drcv`‡Ki wbKU †cÖwiZ DcKi‡Yi †_‡K Ae¨eüZ DcKiY †diZ
o e¨emvqxK Kvi‡b, gvb-
wbqš¿b/ev¯—eZv wbix‡¶
15 eZ©gv‡b GB msµvš—†Kv‡bv weavb bvB †`Iqvi cÖ‡qvRb nB‡j Òg~mK-11MÓ Gi Abyiƒc Pvjvbc‡Îi gva¨‡g
mieivnK…Z DcKiY †di‡Zi
D³ DcKiY ïaygvÎ ¯^Ë¡vwaKvixi wbKU †diZ cÖ`v‡bi weavb Kiv
weavb _vKv AZ¨vekK|
Avek¨K|
KwZcq †mevi Dci cÖ‡`q K‡ii m¤ú~b© Ask †iqvZ MÖnb cÖm‡½ t
wewa (19) Gi DcKiY Ki (1K) Dc-wewa (1) G hvnv wKQyB ‡h‡nZz wb‡¤œv³ †mev mg~n D³ †mevmg~n e¨w³MZ e¨env‡ii
16
Dc-wewa (1K) †iqvZ c×wZ| _vKzK bv †Kb, Ki‡hvM¨ cY¨ Drcv`b ev e¨emv‡qi mv‡_ m¤ú~Y© mv‡_ RwoZ bq eis Drcv`b ev

c„ôv - 12
Sl. Section/Rule/ Existing
Reference Proposal Reasons / Justifications
No. SRO/Order Provision/Situation
Gi `dv (K) Drcv`b evmieivn ev Ki‡hvM¨ RwoZ Ges e¨w³MZ ch©v‡q e¨emv cwiPvjbvi mv‡_ mivmwi
Ges (L) †mev cÖ`v‡bi mwnZ m¤c„³ e¨env‡ii mv‡_ RwoZ bq t m¤ú„³ myZivs g~m‡Ki †gŠwjK bxwZ
GBiƒc ¯’vb, ¯’vcbv ev A½‡b 1. exgv; Abyhvqx GmKj †mev mg~‡ni Dci
e¨eüZ 2. ‡d«BU d‡ivqvW©vm; cÖ`Ë mgy`q g~mK, DcKiY Ki
(K) exgv, M¨vm I we`y¨r 3. cwienb wVKv`vi; †iqvZ wnmv‡e mgš^q‡hvM¨ nIqv
weZi‡Yi Ici cwi‡kvwaZ g~j¨ 4. wK¬qvwis I d‡ivqvwW©s G‡R›U; DwPZ| Ab¨_vq e¨emv cwiPjbv e¨q
ms‡hvRb K‡ii AvwkkZvsk; Ges 5. FbcÎ ‡mev cÖ`vbKvix; e„w× cv‡e|
6. AwWU I GKvDw›Us dvg©;
(L) †Uwj‡dvb, †UwjwcÖ›Uvi, 7. AvBb civgk©K;
d¨v·, B›Uvi‡bU, †d«BU 8. wmwKDwiwU mvwf©m|
d‡ivqvW©vm©, wK¬qvwis I d‡ivqvwW©s
G‡R›U, Iqvmv, AwWU I ‡m‡nZz Dc‡iv³ †mev mg~‡ni
GKvDw›Us dvg©, †hvMvb`vi, wecix‡Z cÖ`Ë g~m‡Ki mgy`q
wmwKDwiwU mvwf©m, AvBb Ask †iqvZ †hvM¨| Z`vbyhvqx
civgk©K, cwienb wVKv`vi I wewa (19) Gi Dc-wewa (1K) Gi
FYc‡Îi Ici cwi‡kvwaZ g~j¨ `dv (K) †_‡K exgv †mev Ges
ms‡hvRb K‡ii lvU kZvsk, wewa (19) Gi Dc-wewa (1K) Gi
cwigvY †iqvZ MÖnY Kiv hvB‡e| `dv (L) †_‡K wK¬qvwis I
d‡ivqvwWs G‡R›U, FbcÎ †mev
cÖ`vbKvix, ‡d«BU d‡ivqvWvm©,
AwWU I GKvDw›Us dvg©, AvBb
civgk©K, wmwKDwiwU mvwf©m Ges
cwienb wVKv`vi †mev wejyß Kiv
mgxPxb|
`vwLjcÎ ‡ckKi‡Yi mgq e„w× msµvš—t
cÖ‡Z¨K Ki‡hvM¨ c‡Y¨i
eZ©gvb wewawU evwZj Kwiqv
cÖ¯‘ZKviK ev Drcv`K ev
wb¤œiƒ‡c cÖwZ¯’vwcZ Kiv †hŠw³K
e¨emvqx ev Ki‡hvM¨ †mev o eZ©gv‡b wba©vwiZ mg‡q mKj
e‡j g‡b nq t
cÖ`vbKvix‡K cÖwZwU Ki †gqv‡`i AvBb I wewa ‡g‡b `vwLjcÎ
Rb¨ dig Òg~mK-19Ó G Rgv ‡`Iqv LyeB KwVb;
ÒcÖ‡Z¨K Ki‡hvM¨ c‡Y¨i
`vwLjc‡Îi `yBwU Abywjwc Ki
cÖ¯‘ZKviK ev Drcv`K ev
†gqv` cieZx gv‡mi 15 (c‡bi) o ‡Kvb †Kvb gv‡m †ek K‡qKw`b
e¨emvqx ev Ki‡hvM¨ †mev
Zvwi‡Li g‡a¨ ¯’vbxq g~j¨ miKvix QzwU †hgb C`, c~Rv
cÖ`vbKvix‡K cÖwZwU Ki †gqv‡`i
ms‡hvRb Ki Kvh©vj‡q Rgv w`‡Z BZ¨vw`i Kvi‡b Kg©w`em Kg
Rb¨ dig Òg~mK-19Ó G
nB‡e cvIqv hvq, hvi d‡j wba©vwiZ
wewa (24) `vwLjc‡Îi `yBwU Abywjwc Ki
`vwLjcÎ mg‡qi g‡a¨ `vwLjcÎ ‡ck Kiv
17 Gi Dc-wewa †gqv` cieZx gv‡mi 30 (wÎk)
†ckKiY Z‡e kZ© _v‡K †h, 15 (c‡bi) hvq bv|
(1) Zvwi‡Li g‡a¨ ¯’vbxq g~j¨
Zvwi‡L miKvwi QywU _vwK‡j
ms‡hvRb Ki Kvh©vj‡q Rgv w`‡Z
Aek¨B Zrc~e©eZx Kvh©w`e‡m
nB‡e
h_vwbq‡g dig Òg~mK-19Ó G o ‡h‡nZz, `vwLjcÎ GKevi Rgv
`vwLjcÎ Rgv cÖ`vb Kwi‡Z w`‡j Zv‡Z †Kvbiƒc cwieZ©‡bi
Z‡e kZ© _v‡K †h, 30 (wÎk)
nB‡e| cÖ‡qvRb n‡j cybivq Zv Rgv
Zvwi‡L miKvwi QywU _vwK‡j
Aek¨B Zrc~e©eZx Kvh©w`e‡m †`Iqv m¤e¢ bq| †m‡nZ,z wbf©j
~
Z‡e AviI kZ© _v‡K †h, †Kv‡bv `vwLjcÎ Rgv †`Iqv e„w× Kivi
h_vwbq‡g dig Òg~mK-19Ó G
exgv †Kv¤úvwb Ki †gqv‡`i j‡¶¨ Dc‡iv³ cwieZ©b Ri“ix|
`vwLjcÎ Rgv cÖ`vb Kwi‡Z
cieZx gv‡mi wek Zvwi‡Li g‡a¨
nB‡e|Ó
`vwLjcÎ Rgv w`‡Z cvwi‡e|
KwZcq †mev‡K g~j¨ †NvlYv †_‡K Ae¨vnwZ cÖ`vb cÖm‡½ t
g~j¨ ms‡hvRb Ki AvBb, 1991 Av‡`kwUi †Uwej †_‡K wb‡¤œv³ o Mš—e¨, IRb Ges MÖvn‡Ki
†mevcÖ`vbKvix Gi aviv 5(4) I aviv 7 Gi †mev¸‡jv wejyß Kivi cÖ¯—ve Kiv cÖKvi‡f‡` Kzwiqvi I G·‡cÖm
RvZxq ivR¯^ nB‡jv t
wbewÜZ e¨w³ D‡Ïk¨c~iYK‡í KwZcq wbewÜZ †gBj mvwf©‡mi g~j¨ c„_K n‡q
†ev‡W©i mvaviY
KZ©„K e¨w³ KZ©„K meivn‡hvM¨ †mevi 1. ÒS028.00 Kzwiqvi I _v‡K, †m‡nZz g~j¨ †NvlYv m¤¢e
Av‡`k bs-
18 mieivnK…Z Ici cÖ‡`q g~j¨ ms‡hvRb Ki, G·‡cÖm †gBj mvwf©mÓ b‡n|
06/g~mK/2012
†mevi g~j¨wfwË ev, †¶ÎgZ, g~j¨ ms‡hvRb Ki I 2. ÒS034.00 AwWU GÛ o AwWU GÛ G¨vKvDw›Us dvg,©
ZvwiL: 7 RyjvB,
†NvlYv cÖ`vb m¤ú~iK ïé av‡h©i j‡¶¨ mswk-ó G¨vKvDw›Us dvg©Ó AvBb civgk©K, wmwKDwiwU
2012
cÖm‡½| †mevi g~j¨wfwË m¤úwK©Z †NvlYv 3. ÒS040.00 wmwKDwiwU mvwf©m Ges e¨vswKs I bb-
`vwLj Kwievi Rb¨ KwZcq mvwf©mÓ e¨vswKs †mev cÖ`vbKvixi †¶‡Î

c„ôv - 13
Sl. Section/Rule/ Existing
Reference Proposal Reasons / Justifications
No. SRO/Order Provision/Situation
†mevmg~n‡K wba©viY Kwij| 4. ÒS045.00 AvBb ‡h‡nZz wdm wbw`©ó _v‡K bv Ges
civgk©KÓ Kv‡Ri aiY, mg‡qi
5. ÒS056.00 e¨vswKs I bb- cÖ‡qvRbxqZv, `¶Zv, Kv‡Ri
e¨vswKs †mev cÖ`vbKvixÓ cwiwa BZ¨vw` we‡ePbv Kwiqv
wdm wba©vib Kiv nq †m‡nZz g~j¨
†NvlYv m¤¢e b‡n|
o D³ ‡mevmg~‡ni g~j¨ †NvlYv
miKv‡ii ivR¯^ Av`v‡q †Kvb
cÖfve †d‡j bv| Bnv g~mK
Kg©KZ©vi Ges †mev cÖ`vbKvixi
ïay mgqB bó K‡i bv eis
AcÖ‡qvRbxq kÖgI e¨q nq|
Avg`vwbK…Z Jl‡ai Dci g~mK cÖ`vb c×wZ mywbw`©óKiY Ges cvBKvix I LyPiv ch©v‡q g~mK Ae¨vnwZ cÖ`vb KiY t
†`‡k Drcvw`Z Jl‡ai
g~mK‡hvM¨ g~j¨ I cÖ‡`q g~mK o eZ©gv‡b e¨emvqxK ch©v‡qi (1g
†`‡k Drcvw`Z Jl‡ai †¶‡Î wba©vi‡bi †¶‡Î Abym„Z RvZxq ¯—i cieZx©) g~mK Av`vq
cvBKvix I LyPiv ch©v‡q cÖ‡hvR¨ ivR¯^ †ev‡W©i bw_ bs-8(15) m‡›`nfvRb nIqvq GKw`‡K
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c„ôv - 14
Sl. Section/Rule/ Existing
Reference Proposal Reasons / Justifications
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c„ôv - 15
Sl. Section/Rule/ Existing
Reference Proposal Reasons / Justifications
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c„ôv - 16

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