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    Shaqif Hasan Sajib
    This document summarizes corruption in the banking sector of Bangladesh, including fraudulent loan practices, embezzlement, and cybercrimes like ATM card skimming. Specific cases of corruption are outlined, such as irregular loans by BASIC Bank totaling $3 billion and a $1.1 billion scam by Bismillah Group using fake export documents. The Hall-Mark and Bangladesh Bank cyber heists demonstrate the enormous costs of such corruption to the economy and financial system. Recommendations are made to strengthen governance, internal controls, risk management, and cybersecurity to curb future corruption in Bangladeshi banks.

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    Presentation

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    Shaqif Hasan Sajib
    276 views19 pages
    This document summarizes corruption in the banking sector of Bangladesh, including fraudulent loan practices, embezzlement, and cybercrimes like ATM card skimming. Specific cases of corruption are outlined, such as irregular loans by BASIC Bank totaling $3 billion and a $1.1 billion scam by Bismillah Group using fake export documents. The Hall-Mark and Bangladesh Bank cyber heists demonstrate the enormous costs of such corruption to the economy and financial system. Recommendations are made to strengthen governance, internal controls, risk management, and cybersecurity to curb future corruption in Bangladeshi banks.

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    Corruption in Banking Sector of Bangladesh

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    This document summarizes corruption in the banking sector of Bangladesh, including fraudulent loan practices, embezzlement, and cybercrimes like ATM card skimming. Specific cases of corruption are outlined, such as irregular loans by BASIC Bank totaling $3 billion and a $1.1 billion scam by Bismillah Group using fake export documents. The Hall-Mark and Bangladesh Bank cyber heists demonstrate the enormous costs of such corruption to the economy and financial system. Recommendations are made to strengthen governance, internal controls, risk management, and cybersecurity to curb future corruption in Bangladeshi banks.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    276 views19 pages

    Presentation

    Uploaded by

    Shaqif Hasan Sajib
    This document summarizes corruption in the banking sector of Bangladesh, including fraudulent loan practices, embezzlement, and cybercrimes like ATM card skimming. Specific cases of corruption are outlined, such as irregular loans by BASIC Bank totaling $3 billion and a $1.1 billion scam by Bismillah Group using fake export documents. The Hall-Mark and Bangladesh Bank cyber heists demonstrate the enormous costs of such corruption to the economy and financial system. Recommendations are made to strengthen governance, internal controls, risk management, and cybersecurity to curb future corruption in Bangladeshi banks.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 19

    University of Dhaka

    Faculty of Business Studies


    Presentation on

    Corruption in Banking Sector of Bangladesh

    Course Title: Corporate Governance & Banker Ethics


    Course Code: MPB-508

    Submitted To: Submitted By :

    Prof. Dr. A R Khan Shaqif Hasan Sajib


    University of Dhaka ID: 51732009
    Master of Professional Banking

    Submission date: 17-11-2017


    What is Corruption in Bank?

    Corruption in relation to the Banks generally refers to manipulation in


    the Books of Accounts, fraudulent encashment of negotiable
    instruments, unauthorized handling of the Securities pledged or
    hypothecated to the Banks, embezzlement, misappropriation of funds,
    pilferage of cash etc by the Bank employees, account holders and also
    by third parties. Corruption and fraud are mostly happening in the
    banking sector due to the direct/indirect influence/favor/support by the
    powerful people of the society.
    Features of Fraud
     It is Deceitful

     It is Intentional

     It breaches Trust

     It involves Losses

     Concealment of Fact

     Appearance of Outward Respectability


    The causes of Corruption
     Absence of social Condemnation;
     Malafide Intention;
     Willful deviation from Laws and Practices;
     Degradation of overall Moral Values;
     Management inefficiency to Withstand Pressure;
     Procedural Lapses/Bottlenecks;
     Organized Crime;
     Corrupt Managers;
     Employee Scams;
     Financial Misstatement;
     False Accounting (e.g., bonus schemes);
     Financial Frauds;
     Computer Hackers;
     Any other significant Corporate Abuse.
    The driver of Corruption
     Limitation of Audit
     Unusual Circumstances
     Financial Misstatement
     Non Cooperation
     Non Existence of Good Governance
     Abnormalities in the Financial Statements
     Abuse of Information Technology Security
    Corruption prone Areas
     Loans & Advances
     Deposit Accounts
     Remittances
     Inter-Branch Suspense Accounts
     Clearing
     Nominal Accounts
     Foreign Exchange Transactions
     Lockers & Safe Deposit Vaults
     Cash Shortages
    Recent highlighted Corruptions
     Basic Bank
    Bismillah Group
    Hall-Mark Incidence
    Cyber-Crime
     ATM card skimming
     Bangladesh Bank Heist
    Basic Bank
    Bangladesh Bank, for example, has detected irregularities in disbursement of
    loan by BASIC Bank. This bank has disbursed loans of Tk 60 billion (Tk
    6,000 crores) in three years out of which Tk 30 billion (Tk 3,000 crores) was
    advanced in irregular manner. Loans of Tk 25 billion (Tk 2,500 crores) were
    given from three branches. These loans were given without any proper
    system. Names of the loan recipients have been published in a newspaper.
    Names of the branches are Gulshan, Santinagar and Dilkusha. These loans
    have become a burden for the BASIC Bank. The officials responsible for
    such loans were not taken to task rather they were promoted.
    Bismillah Group
    Bismillah Group, a terry towel producer, allegedly swindled Tk 1,100 crore from
    five commercial banks showing fake documents. According to a Bangladesh Bank
    report, Bismillah Group swindled about Tk 1,100 crore from state-run Janata Bank
    and four private commercial banks—Prime Bank, Shahjalal Bank, Jamuna Bank
    and Premier Bank—showing fake export documents, taking government’s cash
    incentive to open business firms abroad and with accommodated bills through
    Letters of Credit (LCs). The business group swindled Tk 392.57 crore from Janata
    Bank, Tk 306.22 crore from Prime Bank, Tk 163.69 crore from Jamuna Bank, Tk
    148.69 crore from Shahjalal Bank and Tk 62.97 from Premier Bank.

    6%
    14%
    37%
    Janata Bank
    15%
    Prime Bank
    Jamuna Bank
    28% Shahjalal Bank
    Premier Bank
    Hall-Mark Incidence
    The recently unearthed incidence of financial irregularities at the Ruposhi Bangla
    branch of Sonali Bank Limited reveals that as on 31 May 2012 total outstanding
    loans and advances related to international trade was Tk. 3,699.53 crore, of which
    funded and non-fundedunauthorized loans and advances was Tk. 3,606.48 crore.
    These unauthorized bank loan facilities were given by the General Manager and
    Assistant Manager of the branch to Hall-Mark Group (Tk. 2,667.45 crore), T and
    Brothers Group (Tk. 685.63 crore), Paragon Group (Tk. 144.44 crore), DN Sports
    Group (Tk. 28.54 crore), Nakshi Knit Group(Tk. 65.3 crore), and others (Tk. 15.12
    crore).
    Magnitude of the Hall-Mark Scam
    Tk. 3,606.48 crore is equivalent to:
    320.6 per cent of Sonali Bank’s paid up capital!
    6.6 per cent of Annual Development Programme (ADP) of FY2012-13
    15.9 per cent of allocation for social safety net programme in FY2012-13
    38.6 per cent of allocation for health in FY2012-13
    16.8 per cent of allocation for education in FY2012-13
    0.3 per cent of projected GDP of FY2012-13
    15.0 per cent of the finance requirement of the Padma Bridge
    42.9 per cent of the envisaged support by the World Bank for the Padma Bridge
    Cyber Crime
    ATM card skimming
    The initial shock came after the revelation and complaints recorded because of abuse
    of ATM machines fitting in with some banks and withdrawal from various private
    accounts of a lot of cash without approval of the record holders.14 persons were
    arrested by the police on 4 March, 2016. It included 12 foreign nationals who were
    individuals from worldwide cyber-crime fraud-gang. They had deceitfully utilized
    online networking media furthermore hacked information of individual clients.

    Skimming is a procedure utilized by digital lawbreakers to duplicate individual


    information from the magnetic strip on an ATM card. The criminal fits a skimming
    device in the card slot of ATM booth. Once a card is swiped through a skimmer,
    individual data contained on the magnetic strip is perused and put away on the gadget
    or transmitted remotely to the criminals.

    With the card information, they can lead value- based misrepresentation, make new
    cards with the stolen character and individual data, or offer the cardholder information
    on the underground market.
    Bangladesh Bank Heist
    In February 2016, the stealing of $101 million from the reserves of the Bangladesh
    Bank has raised question on the exposure of financial institutions to cyber-crime
    groups. This incident have challenged the ability of existing mechanisms in
    preventing such incidents. Besides, this theft signified the need for strengthening
    the international co-operation in tackling cyber-crime.
    Lessons learnt and Recommendations
     Absence of Risk Management Policy
     Lack of Internal Control
     Political Baggage of the Board of Directors
     Inappropriate Appointment of CEOs and Senior Officials
     Shortcomings of Human Resource Policy
     Inertia for Automation and Management Information System (MIS)
     Dualism in the Regulatory Mechanism and Regulator’s Oversight
     Ensuring Cyber Security Governance
     Need for a Commission for the Financial Sector
    Conclusion
    These incidents are not only a case of financial loss, but also a deep dent on the confidence
    and trust of the customers of the banks. It is also not the loss of good will of the particular
    bank only, but of the total banking industry. Such an erosion of reputation of banks could
    have multiple chain effect including reduction of deposit in the concerned bank and fall of
    share prices of the whole banking sector. This can also constrain the role of the banking
    sector in catalysing the growth of the economy. Without radical changes in the banking
    practices in the country such expectations may remain largely unfulfilled. Bangladesh
    Bank has to bring back discipline in the banking system. The government will have to
    cooperate in the process otherwise nothing will happen. Only professional people may be
    inducted in the boards of directors. Sincerity of the government is crucially important.
    Good governance in the commercial banks is the need of the hour. It is alleged that loan
    default is not being properly reflected in bank accounts. This is a serious lapse and an
    example of corrupt practice.

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