2016 ANNUAL REPORT 2016
01 Corporate Head Office: Khandker Tower 94 Gulshan Avenue Gulshan 1, Dhaka-1212 Bangladesh.
02 Table of Contents Particulars Pages Letter of Transmittal 4 Vision / Mission / Goal 5 Corporate Profile 6 Company Profile at a Glance 7 Expansion of Branch Network in the year, 2016 8 Expansion of ATM Network in the year, 2016 8 Board of Directors 9-10 Profile of the Board of Directors 11-16 Sub-Committees of the Board of Directors 17-19 Management Committee 20 Sub Committees of the Management 21-24 Report of the Audit Committee 25-27 From the Desk of The Chairman 28-30 From the Desk of the Managing Director 31-32 Response of NRB Global Bank to the people of Bangladesh 33 Board of Director’s Report 34-41 Value Added Statement 42 Report on Corporate Goverance 43-49 Internal Control and Compliance Division 50-63 Report on Corporate Social Responsibility 64-66 Risk Management Report (Economy 2016) 67-75 Products and Services (Consumer, SME and NRB) 76 Market Discipline 77-96 Expansion of Branch Network of the Bank 97 Independent Auditors’ Report 98-99 Balance Sheet 100-101 Profit and Loss Account 102-103 Cash Flow Statement 104-105 Statement of Changes in Equity 106 Liquidity Statement 107 Notes to the Financial Statements 108-155 Fixed Assets Schedule 156 Financial Reporting by Segment of the Bank 157 Name of Directors and their interest in different entities 158 Balance with other banks-outside Bangladesh (Nostro Account) 159 Highlights 160 Branch Network of NRB Global Bank Limited 161-162 NRBGBL 3rd AGM in 2016 163 Notice of The 4th Annual General Meeting 164
Annual Report 2016 03 Letter of Transmittal
All Shareholders of NRB Global Bank Limited Bangladesh Bank Bangladesh Securities & Exchange Commission (BSEC) Registrar of Joint Stock Companies & Firms
Subject: Annual report of NRB Global Bank Limited for the year ended 31 December 2016.
Dear Sir(s),
We are pleased to enclose a copy of the Annual Report 2016 together with the Audited Financial Statements including Balance Sheet, Income Statement, Cash Flow Statement and Statement of Changes of Equity along with notes thereof for the year ended 31 December 2016.
Yours sincerely,
Md. Manjur Hossain AVP & Company Secretary
04 Annual Report 2016 Vision
To become exceptional brand in the financial sector by offering service excellence and creating value for everybody encompassing customers, shareholders, partners, society and economy through transparency, technology, innovation & integrity.
Mission
To build confidence among the NRBs for investment.
To provide fast, accurate and adequate customer service upholding business ethics and trans- parency.
To strengthen inflow of remittance.
To create value for communities, societies and economies in which we operate by ensuring growth and sustainability.
To match technology with the help of well educated professionals and experienced sponsors of the Bank.
To create dignified working environment for Employees.
Goal
To provide " " of Banking at Home and Abroad.
Annual Report 2016 05 Corporate Profile
Name of the Company NRB Global Bank Limited
Registered Office Chairman Khandker Tower Mr. Nizam Chowdhury 94 Gulshan Avenue Gulshan 1, Dhaka-1212, Bangladesh Managing Director Mr. Proshanta K. Halder Legal Form Public Limited Company Company Secretary Date of Incorporation Mr. Md. Manjur Hossain July 21, 2013 Authorized Capital Auditors Tk. 12,000.00 Million Shafiq Basak & Co. Chartered Accountants Paid-up Capital TAX Consultants Tk. 4,250.00 Million Rahman Mostafa Alam & Co. Chartered Accountants Bank Website www.nrbglobalbank.com Rating Agency Credit Rating Information and Services Limited (CRISL)
06 Annual Report 2016 Company Profile at a Glance
Particulars Dates
Getting NOC from Bangladesh Bank June 19, 2013
Consent from BSEC for raising Paid up Capital July 07, 2013
Incorporation from RJSC July 21, 2013
Commencement of Business July 21, 2013
License from Bangladesh Bank for Banking Business July 25, 2013
Enlistment as a Scheduled Bank July 29, 2013
Opening of Corporate Head Office September 09, 2013
Start of Banking Business through October 23, 2013 Gulshan Corporate Branch
Annual Report 2016 07 Expansion of Branch Network in the year, 2016
New Branches in 2016 Districts Opening Dates
Panthapath Mahila Branch Dhaka February 15, 2016 Shindurpur Branch Feni July 17, 2016 Feni Branch Feni July 17, 2016 Mohakhali Branch Dhaka August 18, 2016 Kashipur Bazar Branch Noakhali September 01, 2016 Patiya Branch Chittagong September 04, 2016 Kaliachapra Branch Kishoregonj September 06, 2016 Dakbangla Bazar Branch Feni October 16, 2016 Nawabpur Road Branch Dhaka December 22, 2016 Cox’s Bazar Branch Cox’s Bazar December 26, 2016 Chambol Branch Chittagong December 26, 2016
Expansion of ATM Network in the year, 2016
New ATM Booths in 2016 Districts Opening Dates
Feni Shindurpur Branch ATM Feni July 17, 2016 Feni Branch ATM Feni July 17, 2016 Kashipur Bazar Branch ATM Noakhali September 01, 2016 Kaliachapra Branch ATM Kishoregonj September 06, 2016
Mohakhali Branch of NRB Global Bank was inaugurated on August 18, 2016. Mr. Nizam Chowdhury, the honorable Chairman and other Directors of the Bank were present in the occasion.
08 Annual Report 2016 Board of Directors
Mr. Nizam Chowdhury Chairman
Mrs. Maimuna Khanam Vice Chairperson
Mr. Ghulam Mohammed Mr. Mohd. Ataur Rahman Bhuiyan Dr. Mohammed Faruque Director Director Director
Mr. Arif Ahmed Mr. Osman Gani Mr. Rashed Uddin Mahmud Director Director Director
Annual Report 2016 09 Board of Directors
Mr. Morshedul Alam Mr. Wahidul Alam Seth Mr. Md. Mostan Billah Adil Director Director Director
Ms. Shahana Ferdous Ms. Danny Chowdhury Ms. Mosammat Shajada Noor Begum Director Director Director
Mr. Bourhanul Hassan Chowdhury Mr. Mohammed Oheidul Alam Ms. Rokea Yesmin Director Director Director
Mr. Mohammed Kutub Uddowllah Mr. S.A.M Salimullah Mr. Proshanta K. Halder Independent Director Independent Director Ex-Officio Director
10 Annual Report 2016 Profile of the Board of Directors
Mr. Nizam Chowdhury Chairman Mr. Nizam Chowdhury, being a non-resident Bangladeshi (NRB), was appointed as the Director of NRB Global Bank Limited on July 21, 2013 and then became the Chairman of the Bank. His Directorship was renewed in the 1st Annual General Meeting (AGM) of the Bank held on July 14, 2014. Again, he was re-elected as the Chairman of the Bank after completing a term of 03 (Three) years. He has diversified experiences in overseas Banking for about 03 (Three) decades. He worked at Wells Fargo Bank and rose to Loan Consultant in the same reputed bank. Then, he joined PMP International Company as Assistant General Manager. He is the President of Trade Balance US Corporation INC. and the Chairman & the CEO of NRB USA Inc. and World Wide Energy Source LLC. He attended many trainings, seminars and workshops at home and abroad. He completed his Graduation and Post-Graduation from the University of Dhaka. He was born on January 01, 1960.
Mrs. Maimuna Khanam Vice Chairperson
Mrs. Maimuna Khanam, a non-resident Bangladeshi (NRB), is the Director of NRB Global Bank Limited. She is the Chairperson of Executive Committee of the Board of Directors of the Bank. Her Directorship was renewed in the 1st Annual General Meeting (AGM) of the Bank held on July 14, 2014. After completing studies, she has engaged herself with business since 2002. Now she is engaged with Avenue Overseas Ltd. She was born on July 13, 1981.
Mr. Ghulam Mohammed Director Mr. Ghulam Mohammed was appointed as a Director in the Board of Directors of NRB Global Bank Limited on July 21, 2013. His Directorship was renewed in the 1st Annual General Meeting (AGM) of the Bank held on July 14, 2014. He started his career in 1978. He is experienced in diversified fields of businesses in both U.A.E. and Bangladesh. He is associated with MAX Group, Gianbeen Sung Trading (L.L.C.), A.F.A. Steel industries Ltd. and Lub House Industries Ltd. He completed his B.Sc. Engineering (Mechanical) from BUET. He attended many trainings, seminars and workshops at home and abroad. He was born on January 01, 1955.
Annual Report 2016 11 Profile of the Board of Directors
Mr. Mohd. Ataur Rahman Bhuiyan Director Mr. Mohd. Ataur Rahman Bhuiyan, a non-resident Bangladeshi (NRB) was appointed as one of the Directors in the Board of the Bank on July 21, 2013. His Directorship was renewed in the 1st Annual General Meeting (AGM) of the Bank held on July 14, 2014. He is one of the members of Executive Committee of the Board of Directors of the Bank. He has diversified professional experiences for more than 19 years. He is associated with several companies like MAX Power Ltd., Vatican Properties Ltd., Toma Concrete Ltd., Toma Properties Ltd. and Toma Construction Company Ltd. He was born on January 13, 1964.
Dr. Mohammed Faruque Director Dr. Mohammed Faruque was appointed as a Director in the Board of NRB Global Bank Limited on July 21, 2013. His Directorship was renewed in the 1st Annual General Meeting (AGM) of the Bank held on July 14, 2014. He is one of the members of Executive Committee and also the Risk Management Committee of the Board of Directors of the Bank. He has professional experience for more than 32 years. He is associated with Orchard Group and Royal Aviation Services Ltd. He completed MBA and also Ph.D. on Management from Edward University, USA. He completed his B.Com. from the University of Dhaka. He was born on July 01, 1956.
Mr. Arif Ahmed Director Mr. Arif Ahmed is representing Shah Amanat Prakritik Gas Co. Ltd. in the Board of Directors of NRB Global Bank Limited. He was appointed as Director in the 26th meeting of the Board of Directors held on December 27, 2016. He is the member of Audit Committee of the Board of Directors of the Bank. He has professional experiences for more than 15 years. He is the owner of M/S. Arif Traders. He was born on October 01, 1982.
12 Annual Report 2016 Profile of the Board of Directors
Mr. Osman Gani Director Mr. Osman Gani is representing Global Trading Corporation Ltd. in the Board of Directors of NRB Global Bank Limited since November 26, 2013. His Directorship was renewed in the 1st Annual General Meeting (AGM) of the Bank held on July 14, 2014. He has diversified professional experience. He has engaged himself with S. Alam Cements Ltd., S. Alam Trading Company Ltd. and S. Alam Bag Mills Ltd. He was born on April 05, 1967.
Mr. Rashed Uddin Mahmud Director Mr. Rashed Uddin Mahmud was appointed Director of NRB Global Bank in July, 2013. It was renewed in the 1st AGM in July, 2014. He is also a member of the Audit Committee of the Bank. Mr. Mahmud received BSc in Computer Science and Master of Professional Studies from the State University of New York. He is an Entrepreneur and Business Owner having global businesses in multiple industries. He is mostly involved in export, import,ecommerce, big data analytics, digitizing supply chain, telecommunications. Prior to becoming an Entrepreneur, he had over fifteen years of corporate work experience at Fortune-100 American companies such as IBM (International Business Machines), American Express, Ford Motor Company, Bell Communications. He regularly participates in various international conferences and seminars as speaker. He also teaches part-time in Business Schools in American Universities.
Mr. Morshedul Alam Director Mr. Morshedul Alam is representing Chemon CR Strips Ltd. in the Board of Directors of NRB Global Bank Limited. He was appointed as a Director on November 26, 2013. His Directorship was renewed in the 1st Annual General Meeting (AGM) of the Bank held on July 14, 2014. After completing studies, he has engaged himself in several businesses. He has become the Managing Director of S. Alam Super Edible Oil Ltd. and Chemon Ispat Ltd. He was born on July 13, 1954.
Annual Report 2016 13 Profile of the Board of Directors
Mr. Wahidul Alam Seth Director Mr. Wahidul Alam Seth is representing Karnaphuli Prakritik Gas Ltd. in the Board of Directors of NRB Global Bank. He is a well-known businessman. He is the proprietor of INTRA and DG Print. He is a Director of Reliance Brokerage Limited and also the Managing Director of Excel Dyeing & Printing Limited. He belongs to a reputed family in Chittagong. He possesses a good morale and pleasant personality. He was born on January 07, 1970.
Mr. Md. Mostan Billah Adil Director
Mr. Md. Mostan Billah Adil is representing Fatehabad Farm Ltd. in the Board of Directors of NRB Global Bank Limited. He was appointed as a Director in the Board of the Bank on December 27, 2016. He is a member of the Executive Committee of the Board of Directors of the Bank. He has engaged himself in business since 2001. He is the owner of M/S. Mostan Billah Adil. He was born on December 15, 1987.
Ms. Shahana Ferdous Director
Ms. Shahana Ferdous is representing Portman Cements Ltd. in the Board of Directors of NRB Global Bank Limited. She was appointed as Director in the Board of the Bank on December 27, 2016. She is engaged in different businesses since 1989. She is the owner of M/S. Shahnaj Trading. She is also a Director of S. Alam Edible Oil Ltd. and the Managing Director of Galco Steel (BD) Ltd. She was born on May 01, 1976.
Ms. Danny Chowdhury Director Ms. Danny Chowdhury is one of the Directors of NRB Global Bank Limited since December 26, 2015. She is a member of Risk Management Committee of the Board of Directors. She is involved in business for more than 12 (Twelve) years. She is a Director of Trade Balance USA Corporation INC. She was born on February 22, 1970.
14 Annual Report 2016 Profile of the Board of Directors
Ms. Mosammat Shajada Noor Begum Director Ms. Mosammat Shajada Noor Begum was appointed as a Director of the Bank in the 3rd Annual General Meeting (AGM) held on December 23, 2016. She is a member of Audit Committee of the Board of the Directors of the Bank. She is engaged in business since 1998. She is a Director of Rashad Industries. She was born on January 07, 1967.
Mr. Bourhanul Hassan Chowdhury Director Mr. Bourhanul Hassan Chowdhury was appointed as one of the Directors of the Bank on July 27, 2017. He is representing Modern Properties Ltd. in the Board of Directors of the Bank. He is an emerging young businessman. He is involved with different concerns like Idea Infinity,Greenvest Properties Ltd., Bijoy TV Ltd., Café Milano and also Premier University. He completed the Executive MBA. He was born on January 27, 1988.
Mr. Mohammed Oheidul Alam Director Mr. Mohammed Oheidul Alam, being appointed as a Director representing Bangladesh Petro Chemicals Ltd. in the Board of Directors of the Bank. He is a renowned businessman and also a Non-Resident Bangladeshi (NRB). He is involved with different concerns like C&A Real Estate Limited, The Travel World, Lank Mark Hotel & Restaurant, Tysir Trade, Wasir International, Orchid Business Hotel and Blue Touch. He was born on March 03, 1969.
Annual Report 2016 15 Profile of the Board of Directors
Ms. Rokea Yesmin Director
Ms. Rokea Yesmin is representing Prasad Paradise Resorts Ltd. in the Board of Directors of NRB Global Bank. She is engaged with different entities. She is the proprietor of Chittagong Export. She is the Chairperson of Moon Express (Private) Ltd. She is also the Director of JMC Builders (Private) Ltd. and Mostafa Salt Industries (Private) Ltd. She was born on January 07, 1970 in Chittagong.
Mr. Mohammed Kutub Uddowllah Independent Director Mr. Mohammed Kutub Uddowllah is an Independent Director of NRB Global Bank Limited since December 27, 2016. He is the Chairman of Audit Committee of the Board of Directors of the Bank. He is engaged in business since 1997. He is the Director and CEO of DS Line. He was born on October 01, 1949.
Mr. S.A.M Salimullah Independent Director Mr. S.A.M Salimullah is an Independent Director of NRB Global Bank Limited since December 27, 2016. He is a member of the Audit Committee of the Board of Directors of the Bank. He passed a major portion of his life as a Banker in different financial institutions. He is the CEO of Union Bank Foundation. He was born on November 10, 1950.
Mr. Proshanta K. Halder Ex-Officio Director Mr. Proshanta K. Halder joined NRB Global Bank Limited as the Managing Director on July 16, 2015. Prior to that, he was the Managing Director of Reliance Finance Limited. He is a Chartered Financial Analyst (CFA) from CFA Institute, USA. He completed B.Sc. in Mechanical Engineering from BUET and M.B.A. from IBA of University of Dhaka. He has diversified experiences in his career. He worked with renowned institutions like IIDFC and ILFSL. He attended many seminars and workshops at home and abroad. He was born on November 03, 1966.
16 Annual Report 2016 Sub-Committees of the Board of Directors
Executive Committee
Mrs. Maimuna Khanam Chairperson
Mr. Mohd. Ataur Rahman Bhuiyan Member
Dr. Mohammed Faruque Member
Mr. Md. Mostan Billah Adil Ms. Shahana Ferdous Member Member
Annual Report 2016 17 Sub-Committees of the Board of Directors
Audit Committee
Mr. Mohammed Kutub Uddowllah Chairman
Mr. Rashed Uddin Mahmud Member
Mr. Arif Ahmed Member
Ms. Mosammat Shajada Noor Begum Mr. S.A.M Salimullah Member Member
18 Annual Report 2016 Sub-Committees of the Board of Directors
Risk Management Committee
Mr. Arif Ahmed Chairman
Dr. Mohammed Faruque Member
Ms. Danny Chowdhury Member
Annual Report 2016 19 Management Committee MANCOM
Mr. Proshanta K. Halder Managing Director Chairman of the Committee
Mr. Md. Golam Sarwar Additional Managing Director Member
Mr. Mohammad Shamsul Islam Mr. Kazi Mashiur Rahman Jayhad Deputy Managing Director Deputy Managing Director Member Member
Mr. Ataus Samad Senior Executive Vice President Mr. Mohammad Enamul Islam Khan Manager, Gulshan Corporate Branch Executive Vice President Member Head of Agricultural Credit Division Member
Mr. Md. Zillur Rahman Mr. Zulfiquar Ali Khan Senior Vice President Senior Vice President Head of Finance & Accounts Division Head of General Services Division Member Member
Mr. Mohammad Mahmud Alam Mr. Md. Manjur Hossain Senior Vice President Assistant Vice President Head of Credit Risk Management Division Company Secretary Member Member Secretary
20 Annual Report 2016 Management Team of NRB Global Bank
Sub-Committees of the Management
Asset Liability Committee (ALCO)
Sl. Executives/Officials Designation Status
01 Mr. Proshanta K. Halder MD Chairman 02 Mr. Md. Golam Sarwar AMD Member 03 Mr. Kazi Mashiur Rahman Jayhad DMD Member 04 Mr. Mohammad Shamsul Islam DMD Member 05 Mr. Ataus Samad SEVP Member 06 Mr. Mohammad Enamul Islam Khan EVP Member 07 Mr. Zulfiker Ahmed Khan EVP Member 08 Mr. Md. Zillur Rahman SVP Member 09 Mr. Deen Mohammad Khan SVP Member Secretary 10 Mr. S.M. Mizanur Rahman VP Member 11 Mr. Mohammad Kamrul Hossain VP Member 12 Mr. Md. Al-Mamun SPO Member & Manager of ALM
Annual Report 2016 21 Management Credit Committee (MCC)
Sl. Executives Designation Status 01 Mr. Md. Golam Sarwar AMD Chairman 02 Mr. Kazi Mashiur Rahman Jayhad DMD Member 03 Mr. Mohammad Shamsul Islam DMD Member 04 Mr. Ataus Samad SEVP Member 05 Mr. Mohammad Enamul Islam Khan EVP Member 06 Mr. Zulfiker Ahmed Khan EVP Member 07 Mr. Md. Zillur Rahman SVP Member 08 Mr. Zulfiquar Ali Khan SVP Member 09 Mr. Mohammad Mahmud Alam SVP Member Secretary 10 Mr. S.M. Mizanur Rahman VP Member 11 Mr. A.A.M Noorun Nabi VP Member 12 Mr. Ahmed Shoeb SAVP Member
Risk Management Unit
Sl. Executives/Officials Designation Status 01 Mr. Kazi Mashiur Rahman Jayhad DMD CRO & Chairman 02 Mr. Mohammad Enamul Islam Khan EVP Member 03 Mr. Zulfiker Ahmed Khan EVP Member 04 Mr. Md. Zillur Rahman SVP Member-Secretary 05 Mr. Deen Mohammad Khan SVP Member 06 Mr. Mohammad Mahmud Alam SVP Member 07 Mr. Mohammad Kamrul Hossain VP Member 08 Mr. Md. Azizur Rahman AVP Member 09 Mr. Yaqub Hossain SPO Member
Sustainable Finance Committee
Sl. Executives Designation Status
01 Mr. Kazi Mashiur Rahman Jayhad DMD Chairman 02 Mr. Mohammad Enamul Islam Khan EVP Member 03 Mr. Zulfiker Ahmed Khan EVP Member 04 Mr. Md. Zillur Rahman SVP Member 05 Mr. Zulfiquar Ali Khan SVP Member 06 Mr. Imtiaz Ahmed Siddiqui VP Member 07 Mr. S.M. Mizanur Rahman VP Member Secretary 08 Mr. A.A.M. Noorun Nabi VP Member 09 Mr. Mohammad Kamrul Hossain VP Member 10 Mr. Mosaddeque Hossain Chowdhury SAVP Member 11 Mr. Ariful Hassan Khan SAVP Member 12 Mr. Md. Azizur Rahman AVP Member 13 Mr. Md. Safiqul Islam PO Member
22 Annual Report 2016 Heads/ In-Charges at the Corporate Head Office
Sl. Names Designation Status
Head of 01 Mr. Mohammad Enamul Islam Khan EVP Agricultural Credit Division and Anti-Money Laundering Division Head of 02 Mr. Zulfiker Ahmed Khan EVP International Division
Head of 03 Mr. Md. Zillur Rahman SVP Finance & Accounts Division
Head of 04 Mr. Deen Mohammad Khan SVP Treasury Division
Head of 05 Mr. Zulfiquar Ali Khan SVP General Services Division
Head of 06 Mr. Mohammad Mahmud Alam SVP Credit Risk Management Division Head of 07 Mr. S.M. Mizanur Rahman VP SME, Retail Division and Research & Development Division Head of 08 Mr. Md. Osman Gani Mollah VP Human Resources Division
Head of 09 Mr. Mohammad Kamrul Hossain VP Information & Communication Technology Division
Head of 10 Mr. Ariful Hassan Khan SAVP Alternate Delivery Channel & Cards
In charge of 11 Mr. Md. Azizur Rahman AVP Internal Control & Compliance Division
12 Mr. Md. Manjur Hossain AVP Company Secretary
Head (Acting) of 13 Mr. Yaqub Hossain SPO Credit Administration Division and Special Asset Management Division In-charge of 14 Mr. Md. Safiqul Islam PO Communication & Branding Division
Principal of 15 Mr. S M Nurul Alam Chowdhury - NGB Training Institute
Annual Report 2016 23 Managers of Urban Branches of NRB Global Bank Limited
Sl. Names Designation Status Branches 1 Mr. Ataus Samad SEVP Manager Gulshan Corporate 2 Mr. Md. Shamsur Rahman Majumder EVP Manager Motijheel 3 Mr. Ekram Elahi EVP Manager Banani 4 Mr. Md. Nizam Uddin VP Manager Dhanmondi 5 Mr. M. Alauddin VP Manager Agrabad Corporate 6 Mr. Imtiaz Ahmed Siddiqui VP Manager Mohakhali 7 Ms. Humayra Chinu VP Manager Panthapath Mahila 8 Mr. Md. Zillur Rahman VP Manager Naya Paltan 9 Mr. Md. Shamsul Alam SAVP Manager Khatungonj 10 Mr. Mohammad Nasir Uddin AVP Manager Nasirabad 11 Mr. Arabinda Chowdhury AVP Manager Sylhet 12 Mr. A.K.M Zafor Ulla AVP Manager Nawabpur Road 13 Mr. Mohammad Sayek Ahammad Chowdhury FAVP Manager Uttara 14 Mr. Mohammad Faisal Abedin FAVP Manager Patiya 15 Mr. Md. Jahangir Alam FAVP Manager Jubilee Road 16 Mr. G. M. Shahadat Hossain FAVP Manager Khulna 17 Mr. Md. Rafiqul Haider Chowdhury FAVP Manager Cox’s Bazar 18 Mr. Mohammad Abul Bashar Bhuiyan FAVP Manager Feni 19 Mr. Md. Nazmul Hassan SPO Manager Bogra
Managers of Rural Branches of NRB Global Bank Limited
Sl. Names Designation Status Branches 1 Mr. A.K.M. Nurul Afsar AVP Manager Patherhat 2 Mr. Md. Noor-A-Alam Siddique AVP Manager Anwara 3 Mr. Mohammad Shafiqul Islam FAVP Manager Dohazari 4 Mr. Mohammad Tarin Habib SPO Manager Beldi Bazar 5 Mr. Mujtaba Zaman SPO Manager Ulokhola 6 Mr. Abu Naim Mohammed Misbaul Hoque SPO Manager Link Road 7 Mr. Jahangir Alam SPO Manager Rowshan Hat 8 Mr. Shahriar Bahasty SPO Manager Ashulia 9 Mr. M A Rahim SPO Manager Dakbangla Bazar 10 Mr. Md. Zulhash Uddin SPO Manager Kashipur Bazar 11 Mr. Kazi Rafiqul Islam SPO Manager Gunabati 12 Mr. Mohammad Saiful Hasan SPO (Cash) Manager Nandiapara 13 Mr. Mohammad Rashedul Hasan Khan PO Manager Kaliachapra 14 Mr. Kowshar Ahammed Chowdhury PO Manager Shindurpur 15 Mr. Mohammad Ruhul Amin PO Manager Acting Panchgachia Bazar 16 Mr. Md. Al-Amin Sarkar PO Manager Acting Mawa 17 Mr. Sefaitul Aman PO Manager Adhunagar 18 Mr. A.K.M. Azamgir Chowdhury PO (Cash) Manager Chambol
24 Annual Report 2016 Report of the Audit Committee
The Audit Committee (AC) of the Board of NRB Global Bank Limited was formed by the Board of Directors to provide independent oversight of the company’s financial reporting, non-financial corporate disclosures, internal control systems and compliance to governing rules and laws etc. in compliance with Bangladesh Bank circulars/guidelines and Bangladesh Securities and Exchange Commission (BSEC) notification on Corporate Governance.
Audit Committee of the Board
The Audit Committee of the Board of Directors of NRB Global Bank Limited is responsible to supervise effective implementation of the procedures set out in business plans and policies of the Bank complying with regulatory circulars/guidelines. The Board of Directors sorts out the overall business plans and formulates necessary policies that the management is required. According to the guidelines of Bank Companies Act & BSEC directives, the Audit Committee of the Board of NRB Global Bank Limited has been formed by the Board of Directors ensuring true reflection of financial statements and fair view of state of the affairs of the bank. It also carries out the oversight responsibilities for implementation and compliance of various policies structured by the Board and the regulators.
Composition and Qualifications
The current Committee is constituted with the following 05 (Five) members of the Board:
Status with Status with Educational Qualification Names Bank Committee Mr. Mohammed Kutub Uddowllah Independent Chairman B.Sc. Director Mr. Rashed Uddin Mahmud Director Member Graduation in Global Fashion Mgt. State University of NY-FIT. Mr. Arif Ahmed Director Member M.Sc. C.E.M. Ms. Mosammat Shajada Noor Begum Director Member Under S.S.C. Mr. S.A.M Salimullah Independent Member M.B.A. Director
Roles and Responsibilities of Audit Committee Internal Control To assess if management is following the proper compliance culture by communicating the importance of Internal control and risk management to ensure that all employees have clear understanding of their respective roles and responsibilities. To check the procedures handled by the management for improving and maintaining a precise Management Information System (MIS). To review whether internal control strategies referred by internal and external Auditors have been implemented timely by the management.
To evaluate the existing risk management policy and activities for ensuring an effective internal check and control system.
To review the preventive measures taken by the management as regards to the reports relating to fraud forgery, deficiency in internal control or other analogues issues rectified by the internal and external auditors and inspectors and notify the board on a regular basis.
Annual Report 2016 25 Financial Reporting
Evaluating the Annual Financial Statements and fix whether they are complete and consistent with applicable accounting and reporting standards set by respective governing bodies and regulatory authorities. Negotiating with Management and External/Statutory Auditors to review annual financial statements before their finalization. Reviewing along with management, the half yearly and annual financial statements beforesubmission to the Board for approval.
Internal Audit
Review the activities and organizational structure of the internal audit function and ensure that no unjustified restrictions or limitations are made. Assess the annual internal audit plan.
Check the efficiency and propriety of internal audit function.
Evaluate that findings and recommendations made by the Internal Auditors for removing the Irregularities, if any, detected are duly acted upon by the Management in running the affairs of the bank
External Audit
To consider and make recommendations to the Board, to be put to shareholders for approval at the AGM, in relation to the appointment, re-appointment and removal of the bank’s external auditor. The Committee shall supervise the selection process for new auditors and if an auditor resigns the Committee shall investigate the issues leading to this and decide whether any action is required. To have recommendation to the Board for appointment of the external auditor. Advising the management to ensure fulfillment of KYC (Know Your Customer) requirement and treat its deviation with “Zero Tolerance”. To review the Comprehensive Inspection Report on NGB by Bangladesh Bank. To review the Audit Rating by Internal Audit on Anti Money Laundering of all branches.
Meetings of the Audit committee
The Audit Committee of the Board of Directors of NRB Global Bank held 04 (Four) meetings in the year, 2016:
Meetings Dates 8th Audit Committee Meeting February 13, 2016 9th Audit Committee Meeting June 19, 2016 10th Audit Committee Meeting September 07, 2016 11th Audit Committee Meeting December 07, 2016
The Committee advised the management of the Bank in those meetings on different issues relating to improve the bank’s business. The management tried their level best to comply with those advices. The following issues were also checked by the Committee in those meetings:
26 Annual Report 2016 Whether the rules & regulations of Bangladesh Bank and all other authorities and Bank’s policy guidelines approved by the Board of Directors of the Bank duly complied with or not. Internal Control Security measures are being adequately undertaken by the Bank in facilitating Information Technology (IT) based/computerized banking includes appropriate Management Information System (MIS). The Bank’s system of Internal Control and its process are strengthened including ensuring right man in right place towards creation of a compliance culture in the Bank. The assets of the Bank are safeguarded and the creation of Liabilities and commitments are made transparent. The Financial Statements of the Bank has been prepared in accordance with Bangladesh Financial Reporting Standards (BFRS) and contained full disclosure.
The Committee also reviewed the audited financial statements as of 31 December 2016.
While reviewing financial statements, the Committee thoroughly reviewed adequacy of provisions kept against loans and advances and other assets and capital adequacy ratio (CAR). The Committee stressed on the need for close co-ordination between external Auditors and Internal Controls and Compliance Division for continuous improvement of internal control procedure and risk management system of the Bank. Finally, the Audit Committee are expressing their sincere gratitude to the Directors and Shareholders of the Bank, management team, Bangladesh Bank’s inspection team and external auditors for their continuous support to our Bank. We believe that we will be able to continue providing “Great Experience” to our valued customers along with establishing ourselves as a compliant Bank in the industry.
On behalf of the Audit Committee,
Mohammed Kutub Uddowllah Independent Director and Chairman Audit Committee of the Board
Annual Report 2016 27 “From the Desk of The Chairman”
Dear Fellow Stakeholders,
Assalamualaikum,
I express my deepest gratitude and due respects to all of our well-wishers, my sincere gratefulness to all partners for their generous supports and continuous contribution to NRB Global Bank since inception. Once again, I would like to present the “Fourth Annual Audited Financial Report- Fiscal Year (FY) 2016 (January-December, 2016)”. On behalf of our distinguished Directors and Sponsor Shareholders, I would like to thank you for your tremendous continuous supports rendered to me as well as Bank Management, which helped me a lot to manage the NRB Global Bank effectively and appropriately with full satisfaction.
On behalf of NRB Global Bank, I would like to make the commitment to socio-economic development and welfare for our local and global supports to our valuable clients, as we stepped into the new milestone for accredited welfare of all communities in the society.
As promised to be the most unique name in NRB Banking as well as being responsible socially, we are pacing with great confidence of hope and trust keeping in mind the strength of long ventured sustainable growth of Bangladesh.
Prominently is changing in the banking landscape – with regulations, technology, demographics, changing customer expectations, greater competition and issues with banks’ own legacy business and operating models. The Mission, Vision and challenges are clear, even if, we have been trying our best to achieve it within the mandatory period.
28 Annual Report 2016 Global Economic Stature:
For the last few years the global economy has been in a low-growth trap, with growth disappointingly low and stuck at around 3%. Persistent growth shortfalls have weighed on future output expectations and thereby reduced current spending and potential output growth. Global trade and investment have been weak, limiting the advances in labour productivity and wages that are required to support sustainable consumption growth. However, fiscal policies, both implemented and proposed, could, if effective, catalyse private economic activity and push the global economy to a modestly higher growth rate of around 3.5% by 2018.
Stature of Bangladesh’s Economy:
In the facade of the global economic challenges, Bangladesh economy experienced positive changes on many frontages critically important for its accelerated growth over the past few years. Economic condition of Bangladesh is on stable position with a positive near-term macroeconomic outlook. Declining inflation, rising reserves, contained fiscal deficit and stable public debt are the positive signal for economic development. Thus the significance of the year 2015 is remarkable. Because of supporting policy of Bangladesh Bank, GDP increased from 6.51% in 2015 to 7.11% in 2016 and declining inflation rate from 6.19% in 2015 to 5.57%. Public and private consumption, investment and net foreign trade position have not shown positive indication. Revenue income has fallen and Remittance has slided in the first half of the current fiscal. Nevertheless, it is expected that our domestic economy will perform better from the macroeconomic viewpoint and inflationary pressures will be kept under reasonable control having no effect on our growth.
Banking Industry Overview:
The banking sector performance of the country was under tremendous pressure because of limited resources, rigorous monetary policy, excess liquidity in the money market, less demand for new investment and absence of quality investment opportunity. NRBGBL, though, accepted the challenge, endured the hardship successfully and marked the year with steady growth and success which can be mainly endorsed to the strong nitty-gritties of the bank.
Financial Performance of NRB Global Bank:
Despite facing formidable challenges from unhealthy business and political environment, NRBGBL has continued to deliver consistent financial performance. At the end of the year, 2016, bank’s total deposit stature stood at BDT 42,880.37 million whereas, total loans and advances stood at BDT 34,958.29 million. Regardless of the diverse atmosphere, NRBGBL managed to pin down a moderate network of 45 branches in the country map so far. But continuing the promise, NRBGBL wishes to proclaim the necessity measures for the ease on creating more vibration in the stipulated arena.
Contrariwise, the Bank remains cautious in the light of uncertainties in the global economy and will continue to be sensible to maintain sustainable growth. With the Bank’s robust track record of financial performance as well as strong asset quality and backed by a firm capital structure, the Bank is well prepared to clutch opportunities ascending from the next phase of growth. As the banking scenery continues to progress and change, the bank will continue to be unfaltering and engrossed building a sustainable business that has the strength to support its customers through economic cycles and grasp new opportunities when they arise.
Going for the Futuristic Approach:
As on the ride of its own set of mind, NRBGBL wishes and plans to redefine its stature and enter in the spree of creating milestones for new avenues of business services and betterment of NRB Banking. With this promise inclined, NRBGBL has already designed and structured new products and services for expats abroad. In Corporate Banking with growing focus on SME and Consumer businesses, NRBGBL offers a wide range of depository, loan and card products to cater virtually for every customer segment. From Student Banking to Priority Banking to Visa Signature card, NRBGBL has almost all banking products in its service span. The product basket is rich in content featuring different types of Savings and Current Accounts, Personal Loans, Debit Cards, Credit Cards, Pre-paid Cards, Internet Banking, Corporate Banking, SME Banking, Investment Banking, Treasury & Syndication services etc. NRBGBL hopes to undertake more unique avenues of financial services to bank the more unbanked cultures of the society, to welcome new competitions and stable healthy welfare in the banking business arena.
Annual Report 2016 29 Appreciation:
At last, but not the least and with immense pleasure and gratefulness to our relentless support binding stakeholders, our distinguished clientele and ever learned regulatory body of the country, particularly Bangladesh Bank and with the blessings and learned guidance from the members of the BSEC counterparts of the country. Our efforts for goodwill and responsibilities towards our benevolent society for prosperous and steady sustained growth.
I am also ever grateful to our very compassionate Board of Directors for their very decent and continued support and my sincere gratitude to my fellow management colleagues under the leadership of Mr. Proshanta K. Halder, Managing Director, for their learned and tremendous supports with sustained commitment and endeavours for NRBGBL’s successful story. The rest assured responsibilities and the farm belief to go forth together. I believe the speed, commitment and services of NRBGBL will be sustained under the strong leadership of the Board of Directors which will enable the better services for all and ensure a sustainable profit and growth of the bank which will foster the country’s economic growth as well. Let’s make a slogan – “Serve better for all forever to foster economic growth”.
Sincerely,
Nizam Chowdhury Chairman Board of Directors
30 Annual Report 2016 From the Desk of the Managing Director
Dear Shareholders,
It’s my honor and privilege to be able to present before you the operational performance, achievements and business strategy of our beloved NRB Global Bank Limited for the Financial Year ended on December 31, 2016.
We are in the fourth year of operation. The basic physical and management infrastructure needed to enter into the growth face of the business is already present. We have already made a soft take off and you will see in the financial statement that all financial indicators are showing positive results. Our next strategy is to embrace the growth phase in a calculated way.
The economic growth in the country has been driven by a few indicators and readymade garments industry has always played the major role in exports as well as growth. The other major factor behind the economic development has been the remittance. The garment industry has been stagnant for last two years. Remittance inflow is gradually going down. Excess liquidity in the Banking Sector is slowly drying up. There is question about the quality of the credit growth in the Banking Industry. National Election is expected to take place in late 2018. With all these factors in place we do not see that our journey in the coming days will be smooth.
You are aware that we have established ourselves as an IT based bank and we are operating with world famous core banking solution Temenos T24. While we have mastered the operational issues of the IT Infrastructure and have been able to protect ourselves against recent surge in cyber-crimes, we are not complacent about our achievements. We are relentlessly working round the clock to safeguard our system and as well as investing heavily to acquire latest hardware and software in this regard. The management can best assure all our stakeholders that your bank is safe in all respect.
Annual Report 2016 31 We are a responsible investor. We are committed to create sustainable value for our shareholders, customers, employees and society. Our goal is to create a culture of high performance and dedicate our services to provide our customers great experience. Our responsibilities to the society are manifested by our activities in areas such as education, health, culture, environment etc. We believe that balancing non-financial factors like environment and social issues with financial priorities is indispensable to demonstrate the features of good corporate governance. We have already established required policies to be a responsible investor and are administrating it without any deviation.
The Banking industry is getting competitive every day. Innovative and hi-tech business models are replacing conventional banking. Banks are handling almost similar financial products. Hence, differentiation in service delivery, efficient management and meaningful governance will make the difference in achieving sustainable growth and remaining ahead in competition. Managing growing credit risk in the market, maintaining strong capital and liquidity position, increasing efficiency factors will be major concerns for our future operation.
In conclusion, I express my humble gratitude to the Governor of Bangladesh Bank and his learned team for their continuous support, wise advices and guidance. I am also humbled and appreciate the continuous support, guidance and co-operation given by the Chairman and the members of the Board of Directors and shareholders in discharging my responsibilities. I express my sincere respect and gratitude to all the customers of our Bank for placing their faith and confidence on me and my team. I am also grateful to all the employees of the Bank, my team for all their support, honesty, dedication and hard work that have made us successful.
I am confident that we, all together, will be able to establish your Bank at a standard of Great Experience.
Proshanta K. Halder Managing Director
32 Annual Report 2016 Response of NRB Global Bank to the people of Bangladesh
NRB Global Bank Limited donated BDT 50 Lac to the PM’s relief Fund as a part of corporate social responsibility of the Bank. Mr. Nizam Chowdhury, the Chairman & Mr. Belal Ahmed, the Vice Chairman of the Bank handed over the cheque to the honorable Prime Minister Sheikh Hasina at Gonobhaban in the year, 2016.
NRB Global Bank Limited handed over 50 thousand pcs of blankets for the cold-stricken people as a part of corporate social responsibility of the Bank Mr. Nizam Chowdhury, the Chairman & Mr. Proshanta K.Halder the Managing Director of the Bank handed over the Blankets to the honorable Prime Minister, Sheikh Hasina at her Jatiya Sangsad Bhaban office in the year, 2016.
Annual Report 2016 33 BOARD OF DIRECTOR’S REPORT Duration: 1st January – 31st December, 2016
The Board of Directors of NRB Global Bank is pleased to welcome all of you to the 4th Annual General Meeting (AGM) and presenting Annual Report for the year 2016 (Duration: 1st January-31st December) which includes company profile, reports on business strategy and review, risk management, corporate governance, audited financial statements, investor relations and a sustainability supplement. The Annual Report has been prepared in compliance with Section 184 of the Company Act 1994, Bank Company Act 1991 (Amendment till 2013) and the Guidelines issued by Bangladesh Securities and Exchange Commission, Bangladesh Bank and other applicable rules and regulations of regulatory authorities.
The Director’s Report is a snapshot of annual report including global economy, Bangladesh economy, banking industry, company’s profile, product and services, institutional performances, corporate governance, future outlook etc. The Directors believe that the Report will give captivating insights of the bank’s performance during the year under review to the all concerned stakeholders.
GLOBAL ECONOMY: AN OVERVIEW Stagnant global trade, subdued investment, and heightened policy uncertainty marked another difficult year for the world economy. A moderate recovery is expected for 2017, with receding obstacles to activity in commodity-exporting emerging markets and developing economies. Weak investment is weighing on medium-term prospects across many emerging markets and developing economies. Although fiscal stimulus in major economies, if implemented, may boost global growth above expectations, risks to growth forecasts remain tilted to the downside. Important downside risks stem from heightened policy uncertainty in major economies.
Global growth is expected to be tepid at 3.4 percent in 2017 and 3.6 percent in 2018, according the IMF World Economic Outlook Update, January 2017. Growth in emerging market and developing economies is expected to rise slightly in 2017 to 4.5 percent. Despite an improving outlook for the advanced economies, growth risks have increased reflecting policy uncertainties and implementation risks, accompanied by the balance sheet weaknesses in the euro area, geopolitical tensions in the Middle East and other parts of the world. However, emerging markets and developing economies are projected to grow by 4.2 percent in 2016, 0.2 percentage points higher than in 2015, rising further to 4.6 percent in 2017. The downward growth revisions in advanced economies reflect a deterioration of economic activities in Euro zone following the exit process of UK from EU (Brexit) and its subsequent impact on the US and the Japanese economies. US growth was expected to decrease to 1.6 percent in 2016 from 2.6 percent in 2015 and increase to 2.2 percent in 2017. Reflecting the adverse impact from Brexit, growth in the Euro area has been revised downward to 1.7 percent and 1.5 percent in 2016 and 2017 respectively from 2.0 percent in 2015. Japan is projected to grow by 0.5 percent in 2016 as in 2015 and is expected to grow by 0.6 percent in 2017.
The growth in emerging market and developing economies in 2016 is expected to improve as a result of buoyant economic activities in leading Southeast and South Asian countries,
modest recovery of oil prices, contained asset price and exchange rate after the Brexit referendum and despite some growth moderation in China. Chinese growth Macroeconomic Performance and Prospects is revised downward to 6.6 percent in 2016 and 6.2 percent in 2017, from 6.9 percent in 2015. India's economic growth in 2016 and 2017 is expected to continue at 7.6 percent.
According to Global Financial Stability Report (GFSR) of October 2016, short-term risks have moderated in the past few months as markets have shown resilience to a number of shocks. Pressures on emerging market assets have eased, helped by firmer commodity prices, reduced uncertainty in leading emerging markets, and expectations of lower interest rates in advanced economies. However, medium-term risks are rising in a new environment of increased political and policy uncertainty. Expectations for monetary normalization in advanced economies have shifted even further into the future, and weak growth and low interest rates are increasing the challenges for banks, insurers, and pension funds. Although most advanced economy bank balance sheets are robust, sustainable profitability is weak, reflecting unresolved legacy problems and bank business model challenges. Corporate leverage in many emerging market firms has peaked at high levels, and debt servicing capacity remains weak. These developments have complicated the outlook for attaining a more balanced and potent policy mix, and could lead to a prolonged era of economic and financial stagnation.
34 Annual Report 2016 Advanced economies continue to struggle with subdued growth and low inflation in a context of increased uncertainty about policy direction, tepid investment, and sluggish productivity growth. Activity decelerated in the United States and, to a lesser degree, in some other major economies. As a result, advanced-economy growth is now estimated to have slowed to 1.6 percent in 2016, a downward revision of 0.1 percentage point.
GDP Growth: (year-to-year, in percentage)
Actual Projections
Year 2015 Year 2016 Year 2017 Year 2018 World Output 3.1 3.1 3.5 3.6 Advanced Economies 1.9 1.7 2.0 2.0 United States 2.5 1.6 2.3 2.5 Euro Area 1.5 1.7 1.7 1.6 Japan 0.6 1.0 1.2 0.6 United Kingdom 2.2 1.8 2.0 1.5 Canada 1.2 1.4 1.9 2.0 Other Advanced Economies 2.1 2.2 2.3 2.4 Emerging and Developing Economies 4.0 4.1 4.5 4.8 Russia -3.7 -0.2 1.4 1.4 China 6.9 6.7 6.6 6.2 India 7.3 6.8 7.2 7.7 ASEAN-5 4.7 4.9 5.0 5.2 Emerging and Developing Europe 3.4 3.0 3.0 3.3 Latin America and the Caribbean -0.3 -1.0 1.1 2.0
Advanced economies continue to struggle with subdued growth and low inflation in a context of increased uncertainty about policy direction, tepid investment, and sluggish productivity growth. Activity decelerated in the United States and, to a lesser degree, in some other major economies. As a result, advanced-economy growth is now estimated to have slowed to 1.6 percent in 2016, a downward revision of 0.1 percentage point.
BANGLADESH ECONOMY: AN OVERVIEW
The market-based economy of Bangladesh is the 44th largest in the world in nominal terms, and 32nd largest by purchasing power parity; it is classified among the next eleven emerging market economies and a frontier market. According to the IMF, Bangladesh's economy is the second fastest growing major economy of 2016, with a rate of 7.1%. Dhaka and Chittagong are the principal financial centers of the country, being home to the Dhaka Stock Exchange and the Chittagong Stock Exchange. The financial sector of Bangladesh is the second largest in the subcontinent.
Bangladesh has experienced high and steady growth for more than a decade, with an average growth of over 6.0 percent. Growth exceeded 7 percent in FY16, a decade high, and higher than the average in peer Asian economies, making Bangladesh the 3rd best growth performer in Asia.
Growth accelerated to 7.1 percent in FY16, up from 6.6 percent in FY15, with support from both domestic and external demand. On the supply side, industry and services sectors contributed to the growth.
According to the Bangladesh Bureau of Statistics (BBS), GDP at current market price was Taka 17328.6 billion for FY16 which was 14.3 percent higher than that of the preceding fiscal year. In FY16, per capita real GDP and GNI were estimated at Taka 55259 and Taka 58442, respectively. Per capita nominal GDP and per capita real GDP grew faster in FY16 than in the previous fiscal year.
Sectorally, industry, services, and agriculture sectors grew by 11.1, 6.3, and 2.8 percent, respectively. Growth decomposition shows that the largest share (3.4 percentage points) came from the industry sector, followed by services (3.3 percentage points) and then agriculture (0.4 percentage points).
Annual Report 2016 35 Bangladesh economy grew by 7.1 percent, exceeding the 7.0 percent growth target and the 6 percent growth trajectory. This strong growth was mainly supported by industry and services sectors. Annual average CPI inflation continued to decline to 5.9 percent in June 2016, below the target of 6.2 percent. The declining trend in average CPI inflation is mainly driven by favorable food inflation.
In FY16, Bangladesh Bank implemented a cautious but pro-growth monetary policy stance that promotes investments through the strategy of selective easing to support the 7 percent growth target and the 6.2 percent inflation target. Both the targets were fulfilled in FY16. In the H2 of FY16, BB lowered the policy rates by 50 basis points. Market interest rates moderated, reflecting policy support and liquidity conditions.
Bangladesh is strategically important for the economies of Northeast India, Nepal and Bhutan, as Bangladeshi seaports provide maritime access for these landlocked regions and countries. China also views Bangladesh as a potential gateway for its landlocked southwest, including Tibet, Sichuan and Yunnan.
Export grew by 8.9 percent, while import by 5.5 percent in FY16. Remittances, however, ended up with a negative growth of 3.0 percent during the same period. The current account
surplus of USD 3.7 billion led to an overall balance of USD 5.0 billion, building net foreign assets.
Import benefitted from subdued global commodity prices. Despite some initial competitiveness concerns from appreciation in REER, exports held up well, despite weak external demand. Support mechanisms like low cost export development fund (EDF) financing for input imports and cash incentives provide some cushion to competitiveness. Foreign exchange reserves reached USD 30.2 billion at the end of FY16, around 8 months of prospective import. Bangladesh Bank tried to smooth out any large fluctuations in the exchange rate and nominal Taka-USD exchange rate remained broadly stable.
Remittance takes center stage this year as remittance figures experienced a fall in FY16 ($14.7 billion), recording a decline of 2.5% after a satisfactory growth of 7.6% in FY15 ($15.2 billion). More recently, remittances steadily declined almost every month in FY16 and the declining trend is still continuing in the first quarter of FY17.
The services sector holding the largest share (53.1 percent of GDP) grew by 6.3 percent in FY16, compared to 5.8 percent in FY15. The growth of two major services
Components -wholesale and retail trade repair of motor vehicles, motorcycles, and personal and household goods; and transport, storage and communication largely contributed (1.7 and 1.3 percentage points respectively) to the overall service sector growth. Moreover, public administration and defence; and education sub-sectors grew markedly by 11.4 and 11.7 percent, respectively. In addition, health and social works; hotel and restaurants; and real estate, renting and other business activities subsectors grew faster in FY16. Saving
Investment as a share of GDP increased at a slower pace in recent years. It improved marginally to 29.7 percent in FY16 from 28.9 percent in FY15. The share of private investment in GDP rose from 22.1 percent in FY15 to 23.0 percent in FY16. In contrast, the share of public investment in GDP declined a little bit from 6.8 to 6.7 percent over the same period. Forecasting GDP Growth: FY2016- FY2019
Actual Projection 8
7
6
5
4
2 4 6 8 0 2 4 6 8 0 0 0 0 1 1 1 1 1 0 0 0 0 0 0 0 0 0 2 2 2 2 2 2 2 2 2
Source: Monetary Policy Statement, Jan-Jun 2016, Bangladesh Bank
36 Annual Report 2016 Bank deposits (excluding interbank items) increased by Taka 1032.81 billion or 13.84 percent to Taka 8495.81 billion during FY16 against 12.64 percent increase in FY15. The rise in total bank deposits was shared by all kinds of deposits. Time deposits increased by Taka 771.47 billion or 12.31 percent and stood at Taka 7039.47 billion in FY16 against growth of 12.13 percent during FY15. Demand deposits increased by Taka 173.75 billion or 24.00 percent in FY16 to Taka 897.59 billion against 12.50 percent decrease in FY15. Government deposits increased by Taka 87.58 billion or 18.59 percent to Taka 558.75 billion in FY16 against 20.14 percent increase in FY15.
Bank deposits (excluding interbank items) increased by Taka 1032.81 billion or 13.84 percent to Taka 8495.81 billion during FY16 against 12.64 percent increase in FY15. The rise in total bank deposits was shared by all kinds of deposits. Time deposits increased by Taka 771.47 billion or 12.31 percent and stood at Taka 7039.47 billion in FY16 against growth of 12.13 percent during FY15. Demand deposits increased by Taka 173.75 billion or 24.00 percent in FY16 to Taka 897.59 billion against 12.50 percent decrease in FY15. Government deposits increased by Taka 87.58 billion or 18.59 percent to Taka 558.75 billion in FY16 against 20.14 percent increase in FY15.
Several indicators point to robust economic activity in the first half of FY17, aided by macroeconomic and political stability, and strong domestic demand. Private credit growth at around 15-16 percent is at a three-year high, with strong demand coming from trade, construction, and small and medium enterprise (SME) sector, which helps productivity and job creation. Export growth moderated but has held up relatively well (4.4 percent in December 2016), compared to peers and is expected to pick up. The buoyancy in activity is somewhat softened by the decline in remittance. Based on the recent economic developments, BB’s econometric model estimate, and sectoral analysis, growth is projected to be above 7 percent (7-plus) in FY17.
BANKING INDUSTRY OUTLOOK 2016
The banking sector in Bangladesh comprises four categories of scheduled banks- state-owned commercial banks (SCBs), state-owned development financial institutions (DFIs), private commercial banks (PCBs) and foreign commercial banks (FCBs). As of December 2015 there are 56 banks in Bangladesh and the number of bank branches increased to 9397 from 9040 as of December 2014 due mainly to opening of new branches by the banks during the year. At the end of June 2016, the total number of bank branches increased further to 9453.
In 2015, the SCBs held 27.5 percent share of the total assets which was the same as in 2014. PCBs' share of the total assets increased from 63.3 percent in 2014 to 64.5 percent in 2015. The FCBs held 5.2 percent share of the total assets in 2015, showing a decline of 0.3 percentage points over the previous year. The DFIs' share of the total assets was 2.8 percent in 2015 against 3.7 percent in 2014 as one bank of this group was categorized as SCB.
Total deposits of the banks in 2015 rose to Taka 7928.6 billion from Taka 6965.1 billion in 2014 showing an overall increase of 13.8 percent. The SCBs' share in deposits slightly increased from 28.0 percent in 2014 to 28.4 percent in 2015. PCBs' deposits in 2015 amounted to Taka 5110.4 billion or 64.5 percent of the total deposit compared to Taka 4449.4 billion or 63.9 percent in 2014. FCBs' deposits in 2015 slightly increased by Taka 10.8 billion over the year 2014 though its contribution to total deposits decreased to 4.3 percent from 4.7 percent. The DFIs' deposits in 2015 was Taka 226.6 billion against Taka 237.6 billion in 2014 showing a decrease of 4.6 percent over the year.
CAPITAL MARKET SCENARIO 2016 Bangladesh Bank's attention in support of capital market stability continued in FY16. Stock markets in Bangladesh have stabilized by now after the 2010 bubble creation and the subsequent collapse. Bangladesh Bank proactively lent hand in stabilizing the capital market, at the same time reining in banking sector's capital market exposures within global best practice norms linked to their capital bases.
The capital market in Bangladesh was mostly stable though currently somewhat anguishing from a lack of investors' confidence. The DSEX stood at 4507.6 at the end of June 2016 which is slightly lower than the level of 4583.1 in June 2015. The market capital to GDP ratio declined to 18.42 percent at the end of June 2016 from 21.45 percent of end June 2015. The price earnings ratio of the DSE also declined to 14.61 in June 2016 from 15.90 in June 2015. Capital market authorities now needs to focus on further streamlining processes and bringing down costs in equity issuance, facilitating access of potential corporate to capital markets for raising finance.
Annual Report 2016 37 It may be noted that the Government of Bangladesh has recently taken up an initiative of introducing long term pension savings schemes for general citizens, to be supervised by a new Pension Funds Regulator. Successful introduction of such initiative may help the financial and capital markets greatly in mobilizing long term savings for long term investments and restoring public confidence in a sustained mode
To ensure that capital market can finance long- term investment while exuberance remains rational, banks need to upgrade their surveillance of loan usages of their customer borrowings away from the intended purposes. BSEC has already taken some welcome steps with cautionary messages, financial literacy promotion, and so forth. Bangladesh Bank has tightened monitoring to ensure banks abide by statutory limits on their capital market exposures. Bangladesh Bank may also direct banks to prevent diversion of business and consumer loans into stock markets and remains ready to take prompt policy actions.
Financial Performances: The directors are responsible for the preparation and fair presentation of financial statements in accordance with applicable financial reporting framework, laws and regulations.
Fair presentation of Financial Statements: We (the Directors) are responsible for the preparation and fair presentation of the Financial Statements of NRB Global Bank Limited. We have got prepared the said financial statements as at and for the year ended 31 December 2016 to present fairly, in all material respects, cash flows and changes in equity.
Maintenance of Proper Books of Account: Proper books of account as required by law have been kept by NRB Global Bank Limited.
Application of Accounting Policies and Accounting Estimates: Appropriate accounting policies to be consistently applied in preparation of the financial statements of the Bank and that the accounting estimates are based on reasonable & prudent judgment. Estimates and underlying assumptions are reviewed on an ongoing basis and any revisions to these are recognized in the period in which the estimate is revised and in any future period affected. The significant accounting policies applied and accounting estimates used for preparation of the financial statements of the Bank have been stated in details in notes of the Financial Statement 2016.
Preparation of Financial Statements as per BAS/BFRS and any Departure there-from: The financial statements of the Bank as at and for the year ended 31 December 2016 have been prepared under the historical cost convention & in accordance with Bangladesh Financial Reporting Standards (BFRSs), the “First Schedule” (section 38) of the Bank Companies Act 1991, as amend that by the BRPD Circular no.14 dated 25 June 2003, other Bangladesh Bank Circulars, the Companies Act 1994, the Securities and Exchange Rules 1987, Dhaka and Chittagong Stock Exchange’s listing regulations and other laws and rules applicable in Bangladesh. In certain areas of financial statements, requirement of Bangladesh Bank differs from that of the BFRS. In such cases, compliance of Bangladesh Bank has been ensured through departures from the relevant requirements of IAS/BFRS (as stated in note no.: 2.16 of the financial statements).
Going Concern of Bank’s Business: There are no significant doubts upon the Bank’s ability to continue as a going concerned. The financial statements of the Bank have been prepared on the assumption that the entity (i.e., NRB Global Bank Limited) is a going concern and will continue operation in the foreseeable future. Hence, it is assumed that NRB Global Bank Limited has neither intention nor the need to liquidate or curtail materially the scale of its operations.
Disclosure of Related Party Transactions: The related party transactions have been disclosed in details in the Financial Statements 2016.
Performance of NRB Global Bank Limited 2016: NRB Global Bank Limited started operation on 23rd October, 2013 with Corporate Slogan “Great Experience”. Taken together with the whole nation, we want to grow and prosper. The range of banking activities comprises deposit mobilization, extending credit to corporate, small and medium enterprise, retail business, foreign trade business, project financing, lease & hire purchase financing, issuance of credit cards and so forth.
38 Annual Report 2016 Deposits: Deposits are the major source of Commercial Banks. Despite introduction as one of the nine new banks commenced commercial operation in the year, 2013; we have been able to conduct a challenging task of Deposit Mobilization satisfactorily. The Bank’s procurement of total deposits stood at BDT 42,880,374,125.00 at the year end of the year 2016. Competitive interest rates, attractive deposit products deposit mobilization efforts of the Bank, superior customer services along with the confidence reposed by the customers on the Bank contributed to the notable growth in deposits. The Bank offers a number of attractive deposit scheme to cater to the requirement of small & medium savers for improving not only the quantum of deposits but also focusing on qualitative changes in future to the deposits structure.
With a view to including all inhabitants of the country into Banking Network irrespective of their classes, religions, regions, incomes, etc. along with bolster the propensity to Savings NRB Global Bank Limited has already catered some attractive scene deposit and also earned notable popularity among the mass people of the country.
Loans and Advances: The loans and advances stood at BDT 34,958,285,465.00 at the end of the year 2016. As risks is inherent and inseparable in all sorts of lending the Bank endeavors to impose its level best effort while ascertaining the risks therein. The whole credit of the Bank is segregated into four (4) functional divisions as guided by Bangladesh Bank’s Core Risk Management guideline in the Name and Style a) Credit Division, b) Credit Risk Management Division, c) Credit Administration Division and d) Monitoring and Special Asset Management Division. Marketing, relationship building along with primary risks ascertaining is the prime tasks of the Credit Division. Credit Risk Management Division is entrusted with the responsibilities of sanction or approval of the Credit from the competent authority subject to analyzing and apprising all sorts of risks involved therein. Credit Administration Division commences its duties from the next phase, after sanction of the Credit, ensures all the terms of the sanction are duly complied in addition to proper loan documentation prior to disbursement of the credit. Monitoring and Special Asset Management Division is usually engaged in supervision and monitoring to ensure that all the Credit remain as performing assets. Legal actions and affairs are also dealt by them in order to recover the Non-Performing Loans (NPL), if any.
Income and Expenditure: NRB Global Bank Limited, one of the fourth generation Banks in Bangladesh earned BDT 923,002,869.00 as operating profit during the year, 2016 having Banking activities through 37 (Thirty Seven) branches at different locations of Bangladesh. This is a remarkable achievement despite sluggish economy in this country.
Income: The Bank registered Total Income worth BDT 4,692.69 million at the end of the year 2016 brief description of which is enumerated below:
Particulars Amounts in BDT (Million) Interest, Discount and similar income 4,287.47 Investment Income 305.30 Fees, Commission and Brokerage 70.50 Other operating Income 29.42 Total 4,692.69
Annual Report 2016 39 Expenditure: The total Expenditure of the Bank stood at BDT 3,769.68 million at the end of the year 2016 and summarized as follows:
Particulars Amounts in BDT (Million) Interest, fee and commission 2,557.56 Administrative Expenses 465.93 Other Operating Expenses 605.70 Depreciation and Amortization on Banking Assets 140.49 Total 3,769.68
CAPITAL ADEQUACY RATIO (Solo Basis): In terms of section 13 (2) of the Bank Companies Act, 1991 (amended in 2013) and Bangladesh Bank BRPD circular No.: 18 dated December 21, 2014 and circular No.: 02 dated March 04, 2015, required capital of the bank at the close of business on 31 December 2016 was BDT 42,307,019,603.00 as against available Core capital of BDT 4,606,575,462.00 and supplementary capital of BDT 399,616,149.00 making a total capital of BDT 5,006,191,611.00 there by showing a surplus capital/equity of BDT 775,489,051.00 at that date. The following table depicts the Tier-1 (Core Capital) & Tier-2 (Supplementary Capital) of the Bank as per BASEL-III Capital Accord:
Particulars Amounts in BDT Paid-up Capital 4250,000,000.00 Statutory Reserve 189,374,321.00 Retained Earnings 167,201,141.00 Sub-Total (A) 4,606,575,462.00
Following is the Tier-2 (Supplementary Capital) Capital of the Bank as on December 31, 2016:
Particulars Amounts in BDT General Provision 395,572,716.00 Securities Revaluation Reserve 4,043,433.00 Sub-Total (B) 399,616,149.00 Grand Total (A+B) 5,006,191,611.00
The Capital Adequacy Ratio (CAR) stands at 11.83% as on December 31, 2016 against minimum of 10% of Risk Weighted Assets computed strictly as per guidelines provided by Bangladesh Bank.
ASSET PORTFOLIO: The total asset portfolio in the Balance Sheet as on 31 December, 2015 is worth BDT 49,266,752,168.00 The asset portfolio comprised of BDT 2,651,782,033.00 as Cash and Cash equivalents, BDT 4,864,343,617.00 as Balance with other Banks and NBFI, BDT 5,002,303,394.00 as investments, BDT 34,958,285,465.00 as Loans and Advances, BDT 630,124,182.00 as Fixed Asset and BDT 1,159,913,477.00 as Other Assets.
Review of Internal Control System: NGB has a sound system of internal controls to safeguard shareholders’ investments and the Bank’s assets. The Board retains the ultimate responsibility for its operations, though has delegated to the Audit Committee for the review of the adequacy and effectiveness of the system of internal controls. A resonant internal control system helps a bank growing in a safe and sustainable way. The design and implementation of any internal control system depends largely on a bank’s size, the mode of its operation and its risk profile. Effective control practices generally include –
40 Annual Report 2016 Control Environment of the Bank reflects the commitment of the Board of Directors and the management to an effective internal control mechanism to safeguard stakeholders’ interest. The current business model of NGB segregates its whole crew into two major groups; business segment and support services. While business segments are assigned with a set business target, support teams including the centralized operations are totally independent from the business team entrusted with checking conflicts of interest, ensuring better risk management and control practices.
Risk Assessments the identification, measurement, analysis and management of risks, both internal & external, at individual business level and for the bank as a whole. NGB has formed a Risk Management Committee (RMC) of the Board and a Risk Management Unit (RMU) as per Bangladesh Bank guidelines to oversee and monitor bank wide risk assessment, identification, measurement, analysis and mitigation activities performed by different risk management functions. RMU under supervision of RMC of the Board sets the risk appetite of the Bank.
The present Auditors of the Bank Shafiq Basak & Co., Chartered Accountants will retire at this 4th Annual General Meeting (AGM) and as per Bangladesh Bank circular No.: BCD(P)748/3/546 dated 31.03.1991 and also as per the Company Act, 1994, they are eligible for re-appointment. So, the Share-Holders of the Bank may re-appoint them for the year, 2017.
Control Activities Control Activities are those which ensure all the firewalls/checkpoints established through various policies, procedures and best practices are in order so that the Bank is exposed to surprises, financial or otherwise, to the acceptable minimum level. NGB has developed and is following appropriate policies, guidelines and best practices as well as all the regulatory guidelines to control its daily activities. For example, a loan proposal sourced by relationship manager is assessed by the Credit officers of Credit Risk Management Department, documentation and disbursement done by Credit Administration Department and collection (if it becomes classified) done by the recovery team.
On behalf of the Board of Directors
Nizam Chowdhury Chairman Board of Directors
Annual Report 2016 41 Value Added Statement
The statement shows how much value has been added and distributed by NGB in 2016 for its directors, shareholders, employees and government in the form of salaries & allowances, remuneration, duties & taxes, net profit after tax respectively and also indicates value of the use of fixed assets through depreciation.
Value created from the income from banking services and other financial services is the excess of cost of service rendered. The value added statement shows the total wealth created how it was distributed to meet certain obligations and rewards to those who have created it and portion retained for continue operation and expansion of the bank.
The Value Added Statement for the year ended 31 December, 2016
Particulars 2016 (Taka) 2015 (Taka)
Value Creation Income from Banking Services 4,692,685,126 3,124,767,935 Less: Cost of services & supplies 3,146,202,785 2,356,160,311 Value Added by Banking Services 1,546,482,341 768,607,624 Non- banking Income - - Less: Provision-Loans and Advances 130,685,774 161,188,113 Total Value Creation 1,415,796,567 607,419,511
Distributed of Value addition
Employees and Directors 482,986,405 350,471,102 To Employees as salaries & allowances 465,926,916 347,584,400 To Directors as remuneration & fees 17,059,489 2,886,702
Government To Government as income tax 383,936,063 125,826,698
Shareholders Dividend to shareholders - -
Retentation for future business growth 548,874,099 131,121,711 Depreciation & amortization 140,493,067 106,887,904 Statutory Reserve 158,463,419 30,012,101 Deferred taxation (14,630,125) 5,261,985 Retained earnings 264,547,738 (11,040,279) Total Value distributed 1,415,796,567 607,419,511
42 Annual Report 2016 Economic Value Added Statement
Economic Value Added (EVA) is the measure of financial performance of an organization. It is based on the principle that since a company’s management employs equity capital to earn a profit; it must pay for the use of this equity capital. This management tool is useful to shareholders in particular and other stakeholders in general to take decision for increasing wealth.
EVA is equal to Profit after Tax (PAT) plus the provision for loans & other assets less written off during the year minus cost of equity where cost of equity is the opportunity cost that the shareholders forego. This cost of equity is calculated by taking proxy rate i.e. average Return on Equity (ROE) of the Banking Industry as reported in Monetary Policy Statement of Bangladesh Bank.
NRB Global Bank management is deeply concerned for maximization of wealth of its shareholders and other equity providers. Report on Corporate Governance
Conceptual Framework
Corporate Governance is one of the most concentrated issues now-a-days. Bangladesh Bank and other regulatory authorities are much concerned about the compliance with corporate governance issues. It refers to the set of systems, principles and processes, by which a company is governed. It consists of guidelines as to how the company can be directed or controlled such that it can fulfill its goals and objectives in a manner that adds to the value of the company and is also beneficial for all stakeholders in the long run. In this case, stakeholders would include everyone ranging from the board of directors, management, shareholders to customers, employees, society and so on. The management of the company hence assumes the role of a trustee for all the others.
Two major objectives of corporate governance can be:
To mitigate conflicts of interest particularly among those stakeholders. To ensure effective use of assets of the company and in the best interests of its stakeholders.
Corporate Governance Practices at NRBGBL
Since inception, NRB Global Bank has taken into insight of great corporate influence drill as the central part in securing the premiums of all stakeholders. To guarantee the best practices of Corporate Governance in this bank, there is a particular fringe of powers & obligations around the Board of Directors, its Chairman and Managing Director according to the rules and regulations of Regulatory Bodies. Our foremost priority is to distinguish great Corporate Governance that empowers the Bank to create professionalism together with trust and certainty around the invested individuals, building ability to work business proficiently and making an amiable working environment inexorability to meet the tests in the advancing years.
NRBGBL operates within the legal framework of the companies Act-1994 and as a banking company, complies with the provisions of the Bank Company (Amendment) Act-2013. It also complies with the directives/guidelines/circulars/regulations issued from time to time by Bangladesh Bank and Bangladesh Securities and Exchange Commission. The Bank is responsibly managed and supervised in fulfillment of the objectives of adding value to the shareholders’ wealth and contributing to the national economy. Our Corporate Governance principles serve the goal of strengthening and consolidating our company’s position with sustained growth objectives in materializing the trust placed in the company by the shareholders, clients, employees and the general public. Fair practice, accountability, transparency, compliance, value creation and corporate social responsibility are the pillars of our corporate governance. Comprehensive frameworks of policies across all the areas of the Bank’s operations are set in place. The control mechanism is working well and has further been strengthened in the Bank. The principles of corporate governance in practice have been strengthened and are now embedded in the Bank’s overall activities. There is clear leadership and Management Structure across the entire Bank.
Annual Report 2016 43 In order to ensure corporate governance, Sustainable Finance Committee has already been formed in the Bank complying with Bangladesh Bank circular SFD Circular No. #02 dated December 01, 2016. This Committee was formed after abolishing Green Banking Unit and CSR Unit in the Bank. A Sustainable Finance Unit has also been formed to facilitate the mentioned Committee.
Structure of the Board
The key responsibility of the Board of Directors is to ensure overall governance in the Bank. The Board of Directors are held obligated for making policies and execution thereof, Risk Management, Internal Control, Internal Audit of the Bank and its compliance. The Board verifies that the Bank moves forward with high ethical standards at all level of operations and regularly reviews the Bank’s compliance with regard to corporate governance set by the Regulatory Bodies. The Board also looks after the Management’s handling of business affairs within an agreed framework complying with all related regulatory circulars and guidelines.
The Board of Directors is the body, responsible for corporate governance, devising policies and determining objectives for stewardship of Bank’s resources. The Board of Directors consists of 17 (Seventeen) Directors. The Chairman and in his absence, the Vice Chairman, presides over the meetings of the Board of Directors, Annual General Meeting and the Extra-Ordinary General Meeting.
All the Directors meet certain “fit and proper” criteria pursuant to rules and regulations of Bangladesh Bank. The Chairman directs the Board to ensure that it operates effectively and fully discharges its legal and regulatory responsibilities. There is a specific line of control between the Chairman and the Managing Director exercised by different persons.
Formation of Supporting Committees
There are no committees or sub-committee of the Board other than (1) the Executive Committee (2) the Audit Committee and (3) the Risk Management Committee. The Committees are providing necessary supports to the Board of Directors to fulfill their responsibilities for effective functioning of the Bank complying with all regulatory circulars.
Retirement and Election of the Directors
The 3rd Annual General Meeting (AGM) of NRB Global Bank was held on December 23, 2016 in the Board Room of Head Office of the Bank. As per Article 88 of the Articles of Association of the Bank, One-Third (1/3rd) of all 16 (Sixteen) Directors i.e., in round up 05 (Five) Directors retired in the same AGM. Again, 01 (One) person was elected as new Director in the Board. In addition to that, 03 (Three) more persons and 02 (Two) persons were elected as new Directors and Independent Directors respectively in the 26th Board Meeting held on December 27, 2016 complying with all regulatory guidelines and also with the regulatory approval. So, the total number of Directors including 02 (Two) Independent Directors stands at 17 (Seventeen). One-third (1/3rd) of total no. of Directors shall retire in the 4th Annual General Meeting (AGM) of the Bank to be held in 2017.
Non-Executive Directors All Directors of the Board are non-executive directors.
Independent Directors According to Section 9 of Article 15 of Bank Company (Amendment) Act, 2013, 02 (Two) Independent Directors have already been appointed in the Board as the total no. of Directors is 15 (Fifteen) in the Board of the Bank except those 02 (Two). Both Independent Directors are members of the Audit Committee among whom, 01 (One) is the Chairman of the same Committee.
Board Meeting and Attendance The Board of Directors meets regularly and exercises control over strategic, financial, operational, internal control and compliance issues. The Board takes part in strategy formulation, setting objectives and policy guidelines. The Board of Directors conducted total 06 (Six) meetings during the year, 2016 till the 3rd AGM held.
44 Annual Report 2016 The attendance records of those meetings before the 3rd AGM in 2016 are as follows:
Total No. of Status in No. of Meeting Sl. Name of Directors Meetings the Board Attended Held 1. Mr. Nizam Chowdhury Chairman 06 Vice 04 2 Mr. Belal Ahmed Chairman 3 Mr. Ghulam Mohammed Director 03 4 Mr. Mohd. Ataur Rahman Bhuiyan Director 04 5 Mr. Mohammed Shahjahan Meah* Director 06 6 Dr. Mohammed Faruque Director 06 7 Mr. Mohammad Manzoor Alam Seth* Director 04 8 Mr. Osman Gani Director 06 05 9 Mr. Rashed Uddin Mahmud Director 06 10 Mrs. Maimuna Khanam Director 03 11 Mr. Morshedul Alam Director 06 12 Mr. Md. Jahangir Hossain* Director 06 13 Ms. Sarwar Jahan Maleque Director 06 14 Mr. Moahmmad Fazlay Morshed* Director 06 15 Mr. Subrata Kumar Bhowmick* Director 06 16 Ms. Danny Chowdhury Director 02 The Directors who could not attend the meeting(s) were granted leave of absence by the Board. * Retired in the 3rd AGM held on December 23, 2016. The attendance records of Board meeting after the 3rd AGM in 2016 are as follows:
Sl. Name of Directors Status in Meeting Attendance Board 1. Mr. Nizam Chowdhury Chairman Present 2 Mr. Belal Ahmed Vice Chairman Present 3 Mr. Ghulam Mohammed Director - 4 Mr. Mohd. Ataur Rahman Bhuiyan Director - 5 Dr. Mohammed Faruque Director Present 6 Mr. Arif Ahmed* Director - 7 Mr. Osman Gani Director 26th Present 8 Mr. Rashed Uddin Mahmud Director Meeting Present 9 Mrs. Maimuna Khanam Director held on Present 10 Mr. Morshedul Alam Director December Present 11 Ms. Sarwar Jahan Maleque Director 27, 2016 Present 12 Mr. Md. Mostan Billah Adil* Director - 13 Ms. Shahana Ferdous* Director - 14 Ms. Danny Chowdhury Director - 15 Mosammat Shajada Noor Begum Director - 16 Mr. Mohammed Kutub Uddowllah** Independent - Director 17 Mr. S.A.M. Salimullah** Independent - Director The Directors who could not attend the meeting(s) were granted leave of absence by the Board. * Appointed as Directors in the 26th Board Meeting dated December 27, 2016. ** Appointed as Independent Directors in the 26th Board Meeting dated December 27, 2016. Annual Report 2016 45 Executive Committee Meeting and Attendance
The Executive Committee is one of 03 (Three) sub-committees of the Board of Directors. The Committee had 5 (Five) members. This Committee looked after different issues of the Bank. This Committee conducted 02 (Two) meetings in 2016 based on necessity.
The attendance records of Executive Committee meetings in the year, 2016 are as follows:
Total No. of No. of Sl. Name of Directors Status in the Commmittee Meetings Meetings Held in 2016 Attended 1. Mrs. Maimuna Khanam Chairperson 01 2 Mr. Belal Ahmed Member 02 3 Mr. Ataur Rahman Bhuiyan Member 02 02 4 Mr. Ghulam Mohammed Member 00 5 Mr. Mohammad Manzoor Alam Seth* Member 00
The members who could not attend the meeting(s) were granted leave of absence by the Executive Committee. * Retired in the 3rd AGM of the Bank held on December 23, 2016.
Audit Committee Meeting and Attendance The Audit Committee is one of 03 (Three) sub-committees of the Board of Directors. The Committee had 4 (Four) members. This Committee met regularly and looked after the audit related issues, discussed the Self-Assessment of Anti-fraud Internal Control reports to Bangladesh Bank, yearly/half-yearly unaudited financial statements, Inspection Reports from Internal Control & Compliance Division (ICCD) of Head Office and also from Bangladesh Bank. The Committee conducted 04 (Four) meetings during the year, 2016.
The attendance records of Audit Committee meetings in the year, 2016 are as follows:
Total No. of No. of Sl. Names Status in the Commmittee Meetings Meetings Held in 2016 Attended 1 Mr. Mohammed Fazlay Morshed* Chairman 04 2 Mr. Mohammed Shahjahan Meah* Member 03 04 3 Mr. Rashed Uddin Mahmud Member 04 4 Mr. Subrata Kumar Bhowmick* Member 03
The members who could not attend the meeting(s) were granted leave of absence by the Committee.
* Retired in the 3rd AGM of the Bank held on December 23, 2016.
The Risk Management Committee Meeting and Attendance The Risk Management Committee is one of 03 (Three) sub-committees of the Board of Directors. The Committee had 4 (four) members in 2016. This Committee met regularly and looked after the overall risk related issues focusing on mitigating risks. The Committee conducted 04 (Four) meetings during the year, 2016.
46 Annual Report 2016 The attendance records of Risk Management Committee meetings in the year, 2016 are as follows:
Total No. of No. of Sl. Names Status in the Commmittee Meetings Meetings Held in 2016 Attended 1 Mr. Belal Ahmed Chairman 03 2 Dr. Mohammed Faruque Member 04 04 3 Ms. Danny Chowdhury Member 01 4 Ms. Sarwar Jahan Maleque Member 04
The members who could not attend the meeting(s) were granted leave of absence by the Committee.
Ownership Composition As on 31 December 2016, Directors of the Bank held 64.64% and Sponsor Shareholders held 35.36% of total shares whereas, Financial Institutions and General Public are holding 0%.
Sl. Composition No. of Shares Held % of Total Shares
1 Directors 274708170 64.64% 2 Shareholders 150291830 35.36% 3 General Public 0 0% 4 Financial Institutions 0 0% Total 425000000 100%
Shareholding of MD, HoF, CS, Head of ICC
Though the bank is a public limited company, it is yet to be listed with the stock exchanges as such no one except the Directors and the shareholders hold the entire shares of the company.
Separation of Chairman and Managing Director’s Roles
In compliance with Bangladesh Bank BRPD Circular No. 11 and Circular Letter No. 18 dated 27 October 2013 and Clause 1.4 of BSEC CG Guidelines dated 07 August 2012, we report that the Chairman of the Board, Mr. Nizam Chowdhury has been elected and again, re-elected from among the Directors and there are clear and defined roles and responsibilities of the Chairman and the Managing Director, Mr. Proshanta K. Halder. The Chairman of the Board approves the agenda for the Board meetings, assisted by the Managing Director. Regular agenda items include approving credits beyond MD’s authority and aspects of the Bank’s corporate strategy, financial performance, core risks and credit policy, corporate governance, CSR and organizational structure, human resources policy, customer and services strategies, procurement policy etc. On the other hand, MD, being the Head of management team of the Bank, is accountable to the Board and its Committees to run and manage the Bank in accordance with the prescribed policies, principles and strategies established by the Board and rules, regulations and guidelines from the Central Bank, BSEC and other regulatory authorities.
Responsibilities of the Chairman of the Board
BRPD Circular No. 11 dated 27 October 2013 issued by Bangladesh Bank and Corporate Governance Notification issued by BSEC on 07 August 2012 has been taken into consideration to set out the responsibilities of the Chairman of the BoD: a. The Chairman directs the Board to confirm that it operates effectively and fully discharges its legal and regulatory responsibility.
Annual Report 2016 47 b. The Chairman does not personally possess the jurisdiction to apply policy making or executive authority and never participates in or interferes in to the administrative or operational and routine affairs of the Bank.
c. Provide overall leadership to the Board, supplying vision and imagination, working closely with the MD.
d. Take a leading role in determining the composition and structure of the Board which will involve regular assessment of the: size of the Board, Interaction, harmony and involvement of the Directors. e. Set the Board’s Agenda and plan of Board Meetings. f. Chair all Board Meetings, directing debate towards consensus. g. Ensure the Board receives appropriate, accurate, timely and clear information. h. Chair the AGM and other Shareholders’ Meetings to foster effective dialogue with Shareholders. i. Ensure that the views of shareholders are communicated to the Board as a whole. Directors’ Shareholding Status In compliance with BSEC Notifications dated 22 November 2011 and dated 07 December 2011, all the eligible directors (other than independent directors) of NGB have been holding required percentage of shares individually. Details of Shareholding by the Board of Directors/Sponsors of NRB Global Bank Ltd. Sl No. Names Represented Designation % of Shares 01 Mr. Nizam Chowdhury - Chairman 4.71 % 02 Unitex Cement Ltd. Mr. Belal Ahmed Vice 2.35 % Chairman 03 Mr. Ghulam Mohammed - Director 4.71 % 04 Mr. Mohd. Ataur Rahman Bhuiyan - Director 2.35 % 05 Dr. Mohammed Faruque - Director 2.35 % 06 Shah Amanat Prakritik Gas Co. Ltd. Mr. Arif Ahmed Director 4.24% 07 Global Trading Corporation Ltd. Mr. Osman Gani Director 8.70 % 08 Mr. Rashed Uddin Mahmud - Director 4.71 % 09 Mrs. Maimuna Khanam - Director 10.00 % 10 Chemon CR Strips Ltd. Mr. Morshedul Alam Director 3.76 % 11 Karnaphuli Prakritik Gas Ltd. Ms. Sarwar Jahan Maleque Director 3.51 % 12 Fatehabad Farm Ltd. Mr. Md. Mostan Billah Adil Director 3.77 % 13 Portman Cements Ltd. Ms. Shahana Ferdous Director 6.89 % 14 Ms. Danny Chowdhury - Director 0.24 % 15 Mosammat Shajada Noor Begum - Director 2.35% 16 Mr. Mohammed Kutub Uddowllah - Independent - Director 17 Mr. S.A.M Salimullah - Independent - Director Total Shareholding by Directors of the Bank 64.64 % 18 Mr. Md. Kamal Pasha - Shareholder 2.35 % 19 Mr. Jashim Uddin Chowdhury - Shareholder 1.18 % 20 Mr. Evan Sobhan Miah - Shareholder 0.94 % 21 Genesis Textiles Accessories & Apparels Ltd. - Shareholder 4.82 % 22 Mohammed Yousuf - Shareholder 4.71 % 23 Hasan Abasan (Pvt.) Ltd. - Shareholder 3.76 % 24 Modern Properties Ltd. - Shareholder 3.73 % 25 Prasad Paradise Resorts Ltd. - Shareholder 3.77 % 26 Royal Orchard Holdings Ltd. - Shareholder 2.35 % 27 Mr. Mohammed Shahjahan Meah - Shareholder 2.35 % 28 Bangladesh Petro Chemicals Ltd. - Shareholder 3.05 % 29 Ms. Rashnat Tarin Rahman - Shareholder 2.35 % Total Shareholding by only Shareholders of the Bank 35.36 % Total Number of Shares of the Bank 100.00 %
48 Annual Report 2016 Managing Director’s and Chief Financial Officer’s Responsibility Statement The financial statements are prepared in compliance with the Bangladesh financial reporting standards (BFRS), bank companies Act 1991, The rules and regulations issued by the Bangladesh Bank, the Company Act 1994, the securities and Exchange rules 1987 and other applicable laws and regulations. The accounting policies used in preparation of the financial statements are appropriate and are consistently applied. The board of directors and the management of the bank accept responsibility for the integrity and objectivity of these financial statements. The estimates and judgements relating to the financial statements were made on a prudent and reasonable basis, in order that the financial statements reflect in a true and fair manner and reasonably present the bank’s state of affairs. The bank has taken proper and sufficient measures to develop a system of internal control and accounting records, for safeguarding assets and for preventing and detecting frauds as well as other irregularities, which is reviewed, evaluated and updated on an ongoing basis. Our internal auditors have conducted periodic audits to provide reasonable assurance that the established policies and procedures of the bank were consistently followed.
The Audit Committee of the bank meets regularly with the internal auditors and holds meetings to review the manner in which these auditors are performing their responsibilities, and to discuss auditing, internal control and financial reporting issues.
Appointment of the External Auditors
Shafiq Basak & Co., Chartered Accountants was appointed as the external auditors of the Bank for the year, 2016 to conduct audit and hold office till conclusion of the 4th Annual General Meeting (AGM). The above auditor was appointed for the 1st term. So, there is a scope for re-appointment in the 4th AGM for the 2nd term.
Related Party Transaction
The Bank in its ordinary course of business accomplished financial transactions with some entities or persons that fail within the definition of ‘Related Party’ as contained in BAS 24 (Related Party Disclosures) and as defined in Bangladesh Bank BRPD circular 14, 2013.
Board Committees and Their Responsibilities
There are no committees or sub-committee of the Board other than (1) the Executive Committee (2) the Audit Committee and (3) the Risk Management Committee. The committees are the helping hands of the Board of Directors to fulfill their responsibilities for effective functioning of the Bank.
(1) Executive Committee (EC)
An Executive Committee consisting of 05 (Five) members of the Board has been authorized to approve specific credits and operational issues and dispose of important matters on urgent basis with recommendation of the Management. The EC also reviews budgets, plans and major organizational changes for final submission to the Board for a complete review and approval. (2) Audit Committee A separate Audit Committee comprising 05(Five) members including 02 (Two) Independent Directors of the Board is in place to oversee internal control with a view to strengthening internal and external audit activities. The committee reviews the financial reporting process, the system of internal control, Management Information System, Management of Risks, the Bangladesh Bank and Internal Audit Reports and Audit procedure and Compliance with laws and regulations and bank’s own code of business conduct. The Committee also helps the Management to perform better to achieve the objectives set by the Board. (3) The Risk Management Committee (RMC) The Board Constituted a Risk Management Committee (RMC) comprising 04 (Four) members to take effective measures to reduce the associated risks emanated from implanting the policies and procedures and work-planning approved by the Board. The Committee will justify the efficacy and effectiveness of the Bank’s risk management functions. The Committee will take steps to frame a policy for Risk Management and get them complied with and monitor the overall risk management activities on regular basis.
Annual Report 2016 49 Internal Control and Compliance Division
Organogram of ICCD: Internal Control and Compliance Division comprises of the organogram which is as follows:
Audit Committee Managing Director of the Board
Head of ICCD
Head of Audit & Head of Head of Inspection Unit Monitoring Unit Compliance Unit
The Bank stresses on both the design and operation effectiveness of its internal control system to protect the bank from possible loss that may arise from either intentional/ unintentional errors or from fraudulent activities. The Audit & Internal Control Division of the Bank is independent and able to carry out its assignments with objectivity and impartiality. The division makes a year wise risk based audit plan to carry out comprehensive audits and inspections on the banking operations in various divisions of head office and branches in order to ensure that internal control practice and procedures are in place and complied with. The Audit Committee of the Board subsequently reviews all audit/inspections reports and authorizes suggested corrective measures. The Compliance Unit of the division works as the point of contact when any regulatory inspection is carried out and ensures that corrective measures are taken and the appropriate responses are made on a timely fashion. If the regulatory authority identifies any major lapses then it notifies to the senior management and/or to the Audit Committee of the Board of Directors of the Bank.
The Monitoring Unit of the division monitors and follow-up the ethical standards through Departmental Control Function Check List (DCFCL), Loan Documentation Check List (LDCL) and Quarterly Operation Reports. On receipt of the compliance report the Monitoring Unit carefully checks the compliance status with the help of systems. It also regularly monitors branch MIS (e.g. Classification, Excess Over Limit, Overdue facilities, KYC, TP etc.) online from the systems and notifies deficiencies, if any, to the auditee management as well as to the top management and/or the Audit Committee for regularization/rectification.
Corporate Governance Compliance Report
To ensure good governance i.e. corporate governance in bank management, Bangladesh Bank (BB) issued three circulars in 2013 covering three broad areas as follows:
BRPD Circular No.11 dated 27 October 2013: Formation and responsibilities of Board of Directors (BoD)
BRPD Circular Letter No.18 dated 27 October 2013: Appointment and responsibilities of Chief Executive Officer (CEO).
BRPD Circular Letter No.19 dated 27 October 2013: Contractual appointment of Advisor and Consultant.
50 Annual Report 2016 The summary of the BB guidelines and NGB compliance thereto are presented below:
1. Formation and responsibilities of Board of Directors (BoD)
Sl. No Particulars Compliance Status Formation of BoD: Prior approval from BB to be taken Complied. As per Article 15 and Sub before appointment of new Directors, as well as dismissal, Article 9 of Bank Company 1 termination or removal of any Director from the post. (Amendment) Act’2013, Qualification and competency of Directors, maximum appointment of independent number of Directors of the Board, appointment of director was complied with the independent Directors, appointment of maximum 02 legislation of the law. (two) members from a family as Director. Appointment of New Directors: Every bank company, other than specialized banks, at the time of taking prior approval from BB while appointing Directors should 1.1 furnish the following information along with the application: a. Personal information of the nominated person Complied b. Declaration of nominated person Complied c. Declaration for confidentiality by the nominated person Complied d. In case of independent director, the approval letter from BSEC Complied e. CIB report of the nominated person Complied f. Updated list of directors Complied
1.2 Vacancy of office of a Director
The office of a Director shall be vacated as per the 1.2(a) provision of Section 108(1) of Companies Act 1994. Besides, provision of Section 17 of Bank Company Act 1991, providing false declaration at the time of appointment or No Such Case observing shortfall of qualification as a Director.
If the office of a Director is vacated as per Section 17 of Bank Company Act 1991, s/he will not be eligible to (b) become Director of that bank company or any other bank company or financial institutions within one year from the No Such Case date of repayment of the total dues to the bank. The dues can be adjusted with the shares held by the Director in that bank company and he cannot transfer his shares of that bank company until he repays his all the liabilities of that bank company or financial institutions.
BB can remove Directors or Chairman of a bank company other than the state-owned banks for doing any activity (c) that is detrimental to the interest of the banks depositors or against the public interest under Section 46 and can also No such case dissolve the Board of a bank company under Section 47 of Bank Company Act 1991.
Removal of Directors from office: With the prior approval of Bangladesh Bank, any Director of a bank company other 1.3 than specialized banks can be removed from his office for the reasons specified in its Articles of Association. The No such case reason and grounds of the dismissal/removal and the copy of such decision taken by BoD and a list of Directors shall be submitted to Bangladesh Bank. Such removal shall be effective from the date of BB’s approval.
Annual Report 2016 51 Appointment of Alternate Director: An Alternate director 1.4 can be appointed to act for a director during his absence for a continuous period of not less than three months from No such director in NGB Bangladesh by fulfilling following instructions:
Bank has to collect and properly maintain the documen- (a) tary evidences relating to departure and arrival of the Not Applicable original director while traveling abroad. If there is any exception, the CEO should immediately inform it to BB.
The copy of the decision of the BoD regarding appoint- ment of alternate director, with original director’s proba- ble returning date from abroad should be sent to BB within Not Applicable (b) 7 days of taking the decision and the director’s arrival date must be intimated to BB immediately after his/her return.
Any loan defaulter or any person who is not eligible to (c) become a director as per any relevant guiding rules & Not Applicable regulation will not be appointed as an alternate director.
As an alternate director is appointed temporarily; therefore, he/she will not be included in any kind of Not Applicable (d) committee constituted by the BoD.
The alternate director or his/her affiliated organization will not get any kind of loan facilities from the bank. In case of previous loan, enhancement of limit or extension of time period or any kind exemption or interest waiver will not be Not Applicable (e) allowed. Moreover, all restriction applicable to directors according to rules & regulations will also be applicable to the alternate director.
Director from Depositors: As per Bank Company Act, 1991 (amended in 2013) appointment of Directors from deposi- tors is no longer required. But, in compliance with the 2.0 provision of section 15(9) of Bank Company Act Not Applicable 1991(amended up to 2013), bank company may consider the tenure of existing Directors from depositors or may appoint them as the Independent Director of the compa- ny.
Information regarding Directors: Banks are advised to take 3.0 the following steps regarding directors information: Complied
(a) Every bank should keep an updated list of bank directors. Complied
(b) Banks should send a directors’ list to other banks or financial institutions immediately after the appointment or Complied release of director.
Banks should display a list of directors on the website and (c) Complied update it on a regular basis.
4.0 Responsibilities of the Board of Directors (BoD)
4.1 Responsibilities and Authorities of the BoD: Complied
(a) Work planning and strategic management
(i) The BoD shall determine the objectives and goals and to this end shall chalk out strategies and work plans on annual basis. It shall analyze/monitor at quarterly rests the development of implementation of work plans.
(ii) The BoD shall have its analytical review presented in Complied the Annual Report as regard to success/failure in achiev- ing the business and other targets as set out in its annual work plan and shall apprise the shareholders of its opinions/ recommendations on future plans and strategies. It shall set the Key Performance Indicators (KPIs) for the CEO and executives’ immediate two tiers below the CEO and have it evaluated at times.
52 Annual Report 2016 (b) Loan and Risk Management (i) The policies, procedures, strategies etc. in respect of appraisal of loan/investment proposal, sanction, disbursement, recovery, re-scheduling and write-off thereof shall be made with the BoD’s approval under the purview of the existing laws, rules and regulations. The BoD shall Partially Complied and specifically distribute the power of sanction of Noted for future compliance loan/investment and such distribution should desir ably be made among the CEO and his subordinate executives as much as possible. No director, however, shall interfere, directly or indirectly, into the process of loan approval.
(ii) The Board shall frame policies for risk management and get them complied with and shall monitor the Partially complied and noted for compliance at quarterly rests and review the concerned future compliance report of the risk management team and shall compile in theminutes of the board meeting. The BoD shall monitor the compliance of the guidelines of BB regarding key risk management. Internal Control Management (c) The Board shall be vigilant on the internal control system of the bank in order to attain and maintain satisfactory health or grade of its loan/investment portfolio. The board will Noted for future compliance establish such an internal control system so that the internal audit process can be conducted independently from the management. It shall review at quarterly rests the reports submitted by its audit committee regarding the compliance of recommendations made in internal and external audit reports and the BB inspection reports. (d) Human Resources (HR) Management and Development Complied (i) Policies relating to recruitment, promotion, transfer, disciplinary and punitive measures, human resources development are prepared
(ii) The BoD shall place special attention to the development of skills set to bank’s staff in different fields of its business activities including prudent appraisal of loan/in vestment proposals, and the adoption of modern electronic and Partially Complied and Noted for information technologies and the introduction of effective future compliance Management Information System (MIS).The BoD shall get these programs incorporated it its annual work plan.
(iii)The BoD will compose Code of Ethics for every tier of employees and they will follow it properly. The BoD will promote healthy code of conducts Noted for future compliance for developing a compliance culture. Financial Management (e) (i) The annual budget and the statutory financial statements will be prepared with the approval of the BoD. It will at Partially Complied and Noted for quarterly rests review/monitor the positions in respect of bank’s income, expenditure, liquidity, non-performing assets, future compliance capital base and adequacy, maintenance of loan loss provision and steps taken for recovery of defaulted loans including legal measures. (ii) The BoD will frame the policies and procedures for bank’s purchase and procurement activities and shall accordingly Complied approve the distribution of power.
Annual Report 2016 53 for making such expenditure. The maximum possible delegation of such power shall rest on the CEO and his subordinates. The decision on matters relating to infrastructure development and purchase of land, building etc. for the purpose of bank’s business shall, however, be taken with the approval of the BoD. (iii) The BoD will review whether an Asset-Liability Committee (ALCO) has been formed and it is Complied working according to BB guidelines.
(f) Appointment of CEO: in order to strengthen the financial base of the bank and obtain confidence of the Complied depositors, one of the major responsibilities of the BoD is to appoint an honest, efficient, experienced and suitable CEO or Managing Director. The BoD will appoint a competent CEO for the bank with the approval of BB. (g) Other responsibilities of the BoD: Complied. The BoD will do such In accordance to BB guidelines issued from time to time. when required by BB. Meetings of the Board Of Directors: Board of directors 4.2 Complied may meet once or more than once in a month upon necessarily and shall meet at least once in every three months. Executive meetings are discouraged. 4.3 Responsibilities of the Chairman of the BoD: As the Chairman of the BoD or chairman of any committee (a) formed by the BoD or any director does not personally possess the jurisdiction to apply policy making or executive authority, Complied he/she shall not participate in or interfere into the administrative or operational and routine affairs of the bank.
The Chairman may conduct on-site inspection of any (b) bank branch or financing activities under the purview of the oversight responsibilities of the BoD. He may call for any information relating to bank’s operation or ask for Complied investigation into any such affairs; he may submit such Information or investigation report to the meeting of the BoD or the executive committee and if deemed necessary, with the approval of the BoD, he shall affect necessary action thereof in accordance with the set rules through the CEO. However any complaint against the CEO shall have to be apprised to BB through the BoD along with the statement of the CEO. The Chairman may be offered an office room, a (c) personal secretary/assistant, a peon/MLSS, a telephone at the office, a mobile phone useable inside the country Complied and a vehicle in the business interest of the bank subject to the approval of the BoD. 5.0 Formation of Supportive Committees of the Board: The BoD of every Bank Company can form only Complied three supporting committees of the BoD i.e., Executive Committee (EC), Audit Committee (AC) and Risk Management Committee (RMC) Executive Committee (EC): EC is to be formed for taking 5.1 decision on urgent and day-to-day or routine activities Complied between the intervals of two BoD meetings. The EC will perform according to the terms of reference set by the BoD. The EC will be formed with the maximum of 07 (seven) members for a period of 03(three) years. The chairman of the BoD can also be the member of the EC. The company secretary of the bank shall act as the secretary of the EC.
54 Annual Report 2016 EC members, besides being honest and sincere, should have reasonable knowledge on banking business, its operations and risk management and be capable of making valuable and effective contributions in the functioning of the Committee. The Committee shall discharge responsibilities and take decisions that are specifically assigned to the full BoD by the Bank Company Act 1991 or other related laws and regulations. The decisions taken by the committee shall Complied be ratified in the next BoD meeting. Upon necessity the committee can call meeting at any time. The Committee may invite CEO, Chief Risk Officer or any executive to attend the committee meeting. 5.2 Audit Committee (AC): The AC should have maximum 05 (Five) members and 02 (Two) of them shall be Independent Directors. It should be constituted of such members who are not members of the EC of the BoD. Complied The members of the Committee may be nominated for three years and the company secretary of the bank shall act as the secretary of the Committee. 5.3 Risk Management Committee (RMC): The RMC is to be formed to mitigate, impending risks which could be arisen during implementation of BoD approved policies, procedures and strategies. This committee is entrusted to examine and review whether management is properly working on identifying and mitigation of credit risk, foreign exchange risk, internal control and compliance risk, money laundering risk, information and communication technology risk, operation risk, interest risk and liquidity risk Partially Complied and keeping adequate capital and provision against the risks identified. The RMC is to be formed with maximum 05 (Five) members who will be appointed for 03(Three) years. Each member should be capable of making valuable and effective contributions in the functioning of the Committee. The company secretary of the bank shall act as the secretary of the Committee. RMC shall review the risk management policy and guidelines of the bank at least once in a year, make necessary modifications as per requirement and submit at the same to the BoD for approval. Besides, lending limits and other limits should be reviewed at least once in a year and should be amended, if necessary. Training of the Directors: The Directors of the Board will 6.0 acquire appropriate knowledge of the banking laws and other relevant laws, rules and regulations to Noted for future compliance effectively discharge the responsibilities. Intimation of the circular to the board and related Complied 7.0 persons by CEO: The CEO will inform about this circular to the directors and other related persons. 2. Appointment and responsibilities for appointment of the CEO
SI. No. Particulars Compliance status A Rules and regulations for appointment of the CEO 1 Moral Integrity: In case of appointment to the post of CEO, satisfaction in respect of the concerned person should be ensured to the effects that: a) He has not been convicted by any Criminal Court of Law. Complied b) He has not been punished for violating any rules, Complied regulations or procedures/norms set by any regulatory authority. c) He was not associated with any such Complied company/organization; registration or licenses of which has been cancelled.
Annual Report 2016 55 Experience and Suitability : 2 a) For appointment as a CEO, the concerned person must have experience in banking profession for at least 15 (fifteen) years as an active officer and at least 02 (two) years’ experience in Complied a post immediate below the CEO of a bank. b) He must have a Master’s degree at minimum from any recognized university. Higher academic education in Complied the field of Economics, Banking and Finance or Business Administration will be treated as additional qualification for the concerned person. c) In respect of service, the concerned person should have excellent track record of performance. Complied d) Satisfaction should be ensured that the concerned person was not dismissed from service when he was Complied chairman/official of any company. e) Any director of any bank or financial institution or any person who has business interest in the concerned bank will not be Complied eligible for appointment to the post of the CEO. 3 Transparency and financial Integrity: Before making an appointment as a CEO, satisfaction should be ensured to Complied the effects that : a)The concerned person was not involved in any illegal activity Complied while performing duties in his own or banking profession. b) He has not deferred payment to creditors or has not Complied comprised with his creditors to be relieved from debts or he is not a loan defaulter. c) He is not a tax defaulter Complied d) He has never been adjudicated a bankrupt by the court. Complied Age limit: No person crossing the age of 65 years shall hold Complied 4 the post of CEO of a bank. Tenure: The tenure of the CEO shall not be more than 03 5 (Three) years, which is renewable. If the candidate has Complied less than 3 years left to attain 65 years, he/she can be appointed for that shorter period. Guidelines in fixing the salary and allowance : Banks are 6 required to follow the guidelines stated below while determining the salary and allowances of the CEO and submitting such proposal to BB : a. In fixing the salary and allowances of the CEO, financial Complied condition, scope of operation, business-volume and earning capacity of the bank : qualifications, achievement of the candidate in the past, age and experience and the remuneration paid to the persons occupying same positions in the peer banks shall have to be taken into consideration. Complied b.Total salary shall be comprised of direct salary covering ‘Basic Salary’ and ‘House Rent’ and allowances as ‘Others’. The allowances (e.g., provident fund, utility bill, leave fare assistance) in ‘others’ head should be specified in amount/ceiling. Besides, other facilities (e.g., Car, fuel, driver etc.) Complied c. Without improving the bank’s major financial indicator Complied like-CAMELS, annual salary increment will not be payable. d. Terms of salary-allowance and other facilities as specified in the terms and conditions of the appointment cannot be changed during the tenure. In case of renewal, proposal may be made for re-fixation of the salary considering the work performance of the current CEO.
56 Annual Report 2016 e. The CEO so appointed shall not get any other direct or indirect facilities (e.g. dividend, commission, club expenses etc.) other Complied than salary allowances and other facilities as enumerated in clause (b) above. f. The bank shall not pay any income tax for the CEO, i.e. the CEO Complied so appointed shall have to pay it. Incentive Bonus: The CEO will get incentive bonus subject to 7 applying incentive bonus to all executives/officers/workers of Complied the bank and the said bonus amount will not exceed BDT 1,000,000 in a year. Honorarium for attending the Board Meeting: Being a salaried 8 executive, CEO will not get any honorarium for attending the Board Complied Meeting or Board Formed Committee meeting. Evaluation Report: For reappointment of the CEO, the Chairman Not applicable yet 9 of the bank shall have to submit a Board approved evaluation report to BB. Prior Approval from Bangladesh Bank: Prior approval from 10 Bangladesh Bank is mandatory before appointing CEO as per Complied section 15(4) 7 (5) of Bank Company Act 1991 (amended up to 2013). For processing such approval, along with the proposal signed by the Chairman of the BoD, the selected person’s complete resume, offer letter (mentioning the direct & indirect remuneration and facilities) and copy of Board’s approval must be submitted to BB. The selected person must also submit declarations as per Annexure A & Annexure B to BB. Decision of Bangladesh Bank is final: The decision of 11 Bangladesh Bank for appointment of the CEO will be treated as final and the CEO such appointed cannot be terminated, No such incidence in NGB released or removed from his/her office without prior approval from BB. Responsibilities and authorities of the CEO : The CEO of the bank, whatever name called, shall discharge and exercise B the authorities as follows: a) In terms of the financial, business and administrative authorities vested upon him by the BoD, the CEO shall Complied discharge his own responsibilities. He shall remain accountable for achievement of financial and other business targets by means of business plan, efficient implementation thereof and prudent administrative and financial management. b) The CEO shall ensure compliance of the Bank Company Act Complied 1991 and other relevant laws and regulations in discharging of routine functions of the bank.
c) The CEO shall include clearly any violation from Bank Company Complied Act 1991 and/or other relevant laws and regulations in the ‘Memo” presented to the meeting of the BoD or any other Committee(s) engaged by the BoD.
d) The CEO shall report to Bangladesh Bank of issues in Complied violation of the Bank Company Act 1991 or of other laws/regulations.
e) The recruitment and promotion of all staffs of the bank except those in the two tiers below him/her shall rest on the Complied CEO. He/she shall act in such cases in accordance with the approved service rules on the basis of the human resources policy and approved delegation of employees as approved by the BoD.
Annual Report 2016 57 f) The authority relating to transfer of and disciplinary measures against the staff, except those at two tiers below the CEO, Complied shall rest on him/her, which he/she shall be happy in accordance with the approved service rules. Besides, under the purview of the human resources policy as approved by the BoD, he/she shall nominate officers for training etc.
3. Contractual appointment of Advisor and consultant SI. No. Particulars Compliance status
A Rules and regulations for appointment of an Advisor 1 Experience and Suitability: For appointment as Advisor, the concerned person will have to fulfill the following Complied requirements with regard to experience and qualifications: a. Experience in Banking or Administration for at least 15 (fifteen) years or have a long experience in social activities. b. Higher academic education in the field of Economics, banking and Finance or business Administration will be Complied treated as additional qualification for the concerned person. c. Satisfaction should be ensured that the concerned person was not dismissed from his service when he was Complied Chairman/Director Executive of any company. d. The person who is working in any bank or financial Institution or who has business interest in that bank will not Complied be eligible for appointment to the post of advisor. e. Satisfaction should be ensured that the concerned person is not a loan defaulter or tax defaulter and has never been Complied adjudicated a bankrupt by the Court. 2 Responsibilities of the Advisor: The roles and responsibilities of the Advisor should be defined specifically. The Advisor can advise the Board of Directors or CEO only on those matters Complied specified in the appointment letter. The routine and general activities of the bank will not be included in his terms of reference. He will not be entitled to exercise any power or involved himself in the decision making process of financial, administrative, operations or other activities of the bank. 3 Prior Approval from Bangladesh Bank: Prior approval from BB is mandatory before appointing an Advisor. For such appointment, the justifications of the post of Advisor, Complied responsibilities or terms of reference, complete resume of the concerned person, terms of appointment (mentioning remuneration and facilities) and copy of BoD’s approval shall be submitted to BB. The nominated person has to make a declaration as per Annexure A. This declaration shall also be submitted to BB. 4 Remuneration and other facilities of Advisor: The post of Advisor is not fixed or substantive post in the bank’s organization structure. Advisor will not be entitled to salaries and allowances as regular employee except gross amount of Complied remuneration, transport and telephone facilities. Remuneration is consistent with the terms of reference of the advisor will not be considered as acceptable to BB. 5 Tenure of Advisor: The tenure of the advisor shall be maximum 01 (one) year, which is renewable. An evaluation Complied & Noted for Future report (By the chairman that is approved by the BoD) of previous tenure should be submitted to BB along with Compliance the re-appointment proposal.
58 Annual Report 2016 Appointment of Ex-executive: For ensuring good 6 governance, any former Director, CEO or any other Executive No such case in NGB of the bank will not be eligible to become an Advisor in the same bank immediately after their retirement or resignation, he/she will be eligible for appointment as Advisor. B Rules and regulations for appointment of a consultant No such Consultant in NGB Terms of Reference of Consultant: Consultant can be appointed for specialized tasks like tax, law and legal 1 Not Applicable procedures, engineering and technical works, information technology etc. Consultants’ appointment should be avoided as much as possible for those works that could be done by regular employees of the bank. Responsibilities of a consultant: The responsibilities or terms 2 of reference of a consultant should be specified. He/she should Not Applicable not be involved in any activities beyond his/her terms of references and he/she cannot exercise any kind of power in bank operation or cannot participate in the decision making process. 3 Appointment of a consultant: A consultant can be appointed with the approval of the BoD. After such an appointment, the Not Applicable bank shall send the consultant’s complete resume, terms of reference and details of remuneration to BB immediately. Tenure of a Consultant: The tenure of a consultant should be consistent with the terms of reference, but would not exceed 02 4 (Two) years. Generally, the consultant will not be eligible for re-appointment. But to complete the unfinished tasks, his contract Not Applicable may be extended for maximum period of 1(one) year with the approval of BB. The Chairman of the bank upon approval of the BoD shall have to submit the extension proposal to BB with the evaluation report of his previous tenure. Remuneration/honorarium of a consultant: The Consultant’s Not Applicable 5 remuneration should be in the form of monthly or single lump-sum payment, and he is not entitled to any other facilities. Appointment of Ex-executive: For ensuring good governance, any former Director, CEO or any other Executive of the bank will 6 Not Applicable not be eligible for appointment as a consultant in the same bank immediately after their retirement or resignation. However, after one year from such retirement or resignation, he/she will be eligible for appointment as a consultant.
BSEC guidelines for Corporate Governance: Our Compliance Status
The Bangladesh Securities and Exchange Commission (BSEC) issued Corporate Governance (CG) Guidelines in 2012 which is being followed by on ‘comply’ basis. Status of compliance by NGB with the said CG guidelines issued by BSEC through Notification No.: SEC/CMRRCD /2006-158/134/admin/44 dated 07 August 2012 issued under section 2cc of the Securities and Exchange Ordinance, 1969 is as follows:
(Report under condition No: 7.00)
Annual Report 2016 59 Compliance Status Condition (Put √ in the Title appropriate column) Remarks No. (if any) Complied Not Complied 1.0 Board of Directors 1.1 Board’s Size: Board members shall not be less than √ 5 (Five) and more than 20 (twenty) Appointment of Independent Director was 1.2 Independent director done complying with Article 15 and Sub Article 9 of Bank Company (Amendment) Act, 2013. 02 (Two) Independent Directors 1.2(i) Independent Director: At least 1/5th shall be Independent Director √ were appointed accordingly as per Bank Company Act, 2013.
1.2(ii) For the purposes of the clause “Independent Director” means a director: √ 1.2(ii) a) Independent Directors do not hold any share or hold less than one Independent Directors do not percent (1%) share of total paid up capital. √ hold any share of the Company. Independent Director are not connected with the companies Sponsor 1.2(ii) b) √ Or Director Or Shareholders who hold 1% or more shares. Independent Directors do not have any other relationship, whether pecuniary 1.2(ii) c) Not Applicable or otherwise, with the company or its Subsidiary/Associated Companies. √ 1.2(ii) d) Independent Director is not the Members, Directors or Officers of any member of stock Exchange. √ Not Applicable 1.2(ii) e) Independent Director is not the Shareholders, Directors or Officers of any member of stock Exchange or an Intermediary of the capital market. √ Not Applicable 1.2(ii) f) Independent Director are/were not the partners or executives during preceding 3(three) years of concerned company’s Statutory audit Firm. √ Not Applicable
1.2(ii) g) They shall not be the independent directors more than 03 (Three) Not Applicable listed Companies. √ They are not convicted by a Court of competent jurisdiction as a 1.2(ii) h) defaulter in payment of any loan to a Bank or a Non-Bank Financial √ Not Applicable Institution(NBFI)
1.2(ii) i) They have not been convicted for a criminal offence involving moral √ Not Applicable turpitude.
1.2(iii) The Independent Directors shall be appointed by the Board of √ Directors and approved by the Shareholders in the AGM. 1.2(iv) No such vacancy The post Independent Director cannot remain vacant for more than 90 days. N/A created. 1.2(v) The Board shall lay down a Code of Conduct of all Board Members √ Not Applicable and Annual Compliance of the Code to be recorded. 1.2(vi) The tenure of office of an Independent Director shall be for a period of 03 (Three) years which may be extended for 1 (one) Term only. √ 1.3 Qualification of Independent Director (ID) 1.3(i) Independent Director shall be knowledgeable individual with integrity. √ 1.3(ii) The Independent Director must have at least 12 (Twelve) years of √ corporate management/professional experiences. 1.3(iii) In special cases above qualification may be relaxed by the Commission No such deviation N/A occurred. Separate Chairman and CEO and their clearly defined roles and 1.4 √ responsibilities. 1.5 Directors Report to Shareholders 1.5(i) Industry outlook and possible future developments in the industry √ 1.5(ii) Segment-wise or product-wise performance √ 1.5(iii) Risk and concerns √
60 Annual Report 2016 Discussion on cost of goods sold, gross profit margin and net profit 1.5(iv) margin √ 1.5(v) Discussion of continuity of any Extra- Ordinary gain or loss. Not Applicable Basis for related party transactions - a statement of all related party 1.5(vi) √ transactions should be disclosed in the annual report. 1.5(vii) Utilization of proceeds from public issues, right issues and/or through any other instruments. Not Applicable 1.5(viii) An explanations if the financial results deteriorate after the company goes for IPO, RPO, Rights Offer, Direct Listing etc. Not Applicable If significant variance occurs between quarterly Financial performance 1.5(ix) and Annual Financial about the variance on their Annual Report. Not Applicable 1.5(x) Remuneration to directors including independent directors. √ 1.5(xi) The financial statements prepared by the management of the issuer company present fairly its state of affairs, the results of its operation, √ cash flow and changes in equity. 1.5(xii) Proper books of account of the issuer company have been maintained. √ Appropriate accounting policies have been constantly applied in 1.5(xiii) preparation of the financial statements and that the accounting √ estimates are based on reasonable and prudent judgment. International accounting standards (IAS)/ Bangladesh Accounting 1.5(xiv) Standards (BAS)/International Financial Reporting Standards (IFRS)/Bangladesh Financial Reporting Standards (BFRS), as √ applicable in Bangladesh, have been followed in preparation of the financial statements and any departure there-from has been adequately disclosed. 1.5(xv) The system of internal control is sound in design and has been effectively implemented and monitored. √ There are no significant doubts upon the issuer company’s ability to 1.5(xvi) continue as a going concern. If the issuer company is not considered √ to be a going concern, the along with reason there of should be disclosed.
1.5(xvii) Significant deviations from the last year’s operating of the result issuer company issuer company shall be highlighted and the reasons Not Applicable thereof should be explained. 1.5(xviii) Key operating and financial data of at least preceding 5(five) years Not Applicable shall be summarized. 1.5(xix) If the issuer company has not declared dividend (cash or stock) for the year, the reasons thereof shall be given. √ The number of board meetings has during the year and attendance 1.5(xx) √ by each director shall be disclosed. 1.5(xxi) The pattern of shareholding shall be reported to disclose the aggregate number of shares (along with name wise details where stated below) held by:
1.5(xxi) a) Parent/Subsidiary/Associated Companies and other related parties (name wise details); √ Directors, Chief Executive Officer, Company Secretary, Chief 1.5(xxi) b) Financial Officer, Head of Internal Audit and their spouses and √ minor children (name wise details) 1.5(xxi) c) Executives √ Shareholders holding ten percent (10%) or more voting interest in 1.5(xxi) d) √ the company (name wise details) 1.5 (xxii) In case of appointment/re-appointment of a Director of the company shall disclose the following information to the shareholders: 1.5 (xxii) a) A brief resume of the director; √ 1.5 (xxii) b) Nature of his/her expertise in specific functional areas. √ 1.5 (xxii) c) Name of companies in which the person also holds the directorship √ and the membership of committees of the board.
Annual Report 2016 61 2.0 Chief Financial Officer, Head of Internal Audit & Company Secretary Appointment of CFO, Head of Internal Audit and Company Secretary 2.1 and their clearly defined roles, responsibilities and duties. √
Attendance of CFO and the Company Secretary at Board of Directors √ 2.2 meeting 3 Audit Committee: The Company shall have an Audit Committee as a sub-committee of 3 (i) √ the Board of Directors. The Audit Committee shall assist the Board of Directors in ensuring 3 (ii) that the financial statements reflects true and fair view of the state of affairs of the company and in ensuring a good monitoring system √ within the business. The Audit Committee shall be responsible to the Board of Directors. 3 (iii) The duties of Audit Committee shall be clearly set forth in writing. √ 3.1 Constitution of Audit Committee 3.1 (i) The Audit Committee shall be composed of at least 3 (three) members. √ Constitution of Audit Committee with Boards Member including one 3.1 (ii) √ Independent Director. All members of the Audit Committee should be “financially literate” 3.1 (iii) and at least 1 (one) member shall have Accounting or related √ financial management experience. 3.1 (iv) Casual vacancy of the Audit Committee fill up immediately N/A There was no such vacancy 3.1 (v) The Company Secretary shall act as the secretary of the committee. √ 3.1 (vi) The quorum of the Audit Committee meeting shall not constitute √ without at least 1 (one) independent director. 3.2 Chairman of the Audit Committee 3.2 (i) Chairman of the Audit Committees shall be an Independent Director √ 3.2 (ii) Chairman of the Audit Committee shall remain present in the Annual √ General Meeting (AGM) 3.3 Role of Audit Committee 3.3 (i) Oversee the financial reporting process √ 3.3 (ii) Monitor choice of accounting policies and principles. √ 3.3 (iii) Monitor Internal Control risk management process. √ 3.3 (iv) Oversee hiring and performance of external auditors. √ 3.3 (v) Review along with the management, the annual financial statements √ before submission to the board for approval. 3.3 (vi) Review along with the management, the quarterly and half yearly √ Financial Statements before submission to the Board for approval. 3.3 (vii) Review the adequacy of internal audit function. √ Review statement of significant related party transactions submitted 3.3 (viii) by the management. √ Review management Letters/Letter of Internal Control weakness 3.3 (ix) √ issued by statutory auditors. When money is raised through Initial Public Offering (IPO)/ Report 3.3 (x) No such event occurred Public Offering (RPO) Rights Issue the company shall disclose to N/A the Audit Committee about the uses/applications marketing in NGB expenses, working capital, etc.), on a quarterly basis, as a part of their quarterly deflation of financial results. 3.4 Reporting of the Audit Committee 3.4.1 Reporting to the Board of Directors 3.4.1 (i) The Audit Committee shall report on its activities to the Board of Directors. √ 3.4.1 (ii) The Audit Committee shall immediately report to the Board of Directors on the following findings, if any:
62 Annual Report 2016 N/A No such event found. 3.4.1 (ii) a) Report on conflicts of Interests 3.4.1 (ii) b) Suspected or presumed fraud or irregularity or material defect in the N/A No such event found. internal control system. 3.4.1 (ii) c) Suspected infringement of laws, including securities related laws, rules No such event found. N/A and regulation. 3.4.1 (ii) d) Any other matter which shall be disclosed to the Board of Directors immediately. N/A No such event found. 3.4.2 Reporting of anything having material financial impact to the Commission. N/A No such event found. 3.5 Reporting to the shareholders and General Investors. N/A No such event found. 4 External/Statutory Auditors: 4 (i) Appraisal or Valuation services or fairness opinions √ 4 (ii) Financial Information system design and implementation √ 4 (iii) Book-keeping or other services related to the accounting records or √ financial statements 4 (iv) Broker-dealer services √ 4 (v) Actuarial services √ 4 (vi) Internal audit services √ 4 (vii) Any other services that the Audit Committee determines √ 4 (viii) No partner or employees of the external audit firms shall possess any share of the company they audit at least during the tenure of their audit √ assignment of that company 4 (ix) Audit/certification services on compliance of corporate governance as √ required under clause (i) of condition No. 7 5 Subsidiary Company 5 (i) Provision relating to the composition of the Board of Directors of the Not Applicable holding company shall be made applicable to the composition of the Board of Directors of the subsidiary company. 5 (ii) At least 1 (one) independent director on the Board of Directors of the Not Applicable holding company shall be a director on the Board of Directors of the subsidiary company. 5 (iii) The minutes of the respective Board meeting of the subsidiary company shall be Not Applicable placed for review at the following Board meeting of the holding company. 5 (iv) The minutes of the respective Board meeting of the holding company shall Not Applicable state that they have reviewed the affairs of the Subsidiary company also. 5 (v) The Audit Committee of the holding company shall also review the Not Applicable Financial Statement, in particular the investments made by the Subsidiary Company. 6 Duties of Chief Executive Officer (CEO) and Chief Financial Officer (CFO) They have reviewed financial statement for the years and that to the best 6 (i) √ of their knowledge and belief. These statements do not contain any materially untrue statement or omit 6 (i) a) √ any material fact or contain statement that might be misleading. These statements together present a true and fair view of the company’s 6 (i) b) √ affairs and are in compliance with existing accounting standards and applicable laws. 6 (ii) There are, to the best of knowledge and belief, no transactions entered into the company during the year which are fraudulent, illegal or violent of the √ company’s code of conduct. 7 Reporting and Compliance of Corporate Governance: 7 (i) The company shall obtain a Certificate from a Professional Not Applicable Accountant/Secretary (CA/CMA/CS) regarding compliance of conditions of Corporate Governance Guidelines of the Commission and shall send the same to the shareholders along with the Annual Report on a yearly basis. 7 (ii) The Directors of the company shall state, in accordance with the √ Annexure attached, in the directors’ report whether the company has complied with these conditions. Compliance Report on BRPD Circular In compliance of BRPD Circular letter No.: 02 dated 16.01.2014 of Bangladesh Bank, the Bank furnished the follwoing information related to usage and operating expenditures of motor-vehicle fleet for the year 2016 for perusal and review of the honorable shareholders: Sl. No. Particulars Amount (in BDT) 01 Fuel 42,54,617.31 02 Repairs & Maintenance 19,18,399.33 03 Depreciation 1,49,04,509.00 04 Road Tax & Fitness 1,29,188.00 05 Insurance 28,13,165.00 Total 2,40,19,878.64
Annual Report 2016 63 REPORT ON CORPORATE SOCIAL RESPONSIBILITY
Corporate Social Responsibility (CSR) is an integral and have categorized it as different sectors such as, part of today’s businesses. For long term sustainable Education, Health, Disaster Management, strategy, it has now emerged as a growing practice Infrastructural Development, Environmental Issues, in the present banking sector in Bangladesh. The Sports and Arts & Culture. As a part of banking role of business worldwide and particularly in the sectors we are considered as a part of the affluent developed economies has evolved over the last few section of the society. To contribute more decades from classical ‘profit maximizing’ approach meaningfully towards of the betterment of the to a social responsibly approach, where businesses society, we are generating employment, are not only responsible to its stockholders but also providing primary education, financing for medical to all of its stakeholders in a broader inclusive sense. sector, contributing to infrastructure development CSR movement has gathered great momentum over like schools and addressing environmental the past number of years and is now considered as concerns. The art & culture of our country being at this most omnipresent. CSR is presently one of the most discussed topics by government, by embodies the social changes that have transformed non-government and by business itself. Apart from the country through history. So we believe in the benevolent social services conducted by banks. assisting towards development of our cultural and They have some responsibilities towards the welfare recreational activities for advancement and of the society. Earlier the researchers said that CSR wellbeing of underprivileged population segments practices are found in government, non-government along with promotion of health, education and and business sectors. Now the banking sectors are promotion of environment friendly projects, not out of the area of business world because it has Humanitarian & disaster relief. direct or indirect relationship to the government, non-government and business sectors. Disaster Management
CSR is being seen as the source of new competition Bangladesh has a long tradition of coping with edge for the banking sectors of Bangladesh. At natural disasters, both individually and through present, the banking sectors, especially private collective efforts. Within the wide range of CSR at commercial banking sectors are very competitive. To NRB Global Bank Ltd., we have focused on get this competitive advantage from their rival, CSR involvement in natural disaster management within is one of the main instruments. Especially the private the wide range of CSR. Our contribution may be commercial banks of Bangladesh practices CSR not mentioned like donation to Prime Minister’s Relief only to improve community relations but also as Welfare Fund and financing for house renovation source of significant commercial benefit. The 4th due to fire incident. generation banks are also aware about CSR. Since inception as a visionary bank, NRB Global Bank Report on Green Banking Limited is focusing on CSR activities to build a corporate reputation in the banking sector. We are Green Banking or Sustainable Banking as a concept working on to stimulate CSR as our routine work. In is not very new around the world. Global warming, terms of direct monetary expenditure, engagement unusual weather pattern, rising greenhouse gas etc. in CSR initiatives are increasing gradually at has always urged the business world to take some NRBGBL. responsibilities in safeguarding the planet. Consequently, environment friendly banking We are committed to our community practices emerged in many western countries. In keeping with global drive, NRB Global Bank However, in our country, the central bank of Limited has been conscious about CSR from the Bangladesh, Bangladesh Bank has taken Bank has very beginning of its operation in 2013. Through taken the real initiative to make the financial industry CSR we are prioritizing on community development more environment friendly and responsible by by establishing connection between bank and formulating a detail Green Banking Policy Guideline community. At NRBGBL, we believe in doing on February 27, 2011. corporate social responsibilities where we find it vital
64 Annual Report 2016 Global warming, which is one of the most burning and NRB Global Bank Limited started its journey in discussed issues, has the worst impact on the climate September 2013 and within a very short period of time, of the planet as a whole. Due to unusual weather the bank achieved a very good reputation in the pattern, rising greenhouse gas, declining air quality etc. industry. From the commencement, sustainable society demands that business also take responsibility development was the focus of all banking activities of in safeguarding the planet. the bank. As a responsible corporate citizen the Our Bank has come up with real initiatives to introduce Green Banking is one of the revolutionary concepts in Green Banking in the organization. By this time the today’s business world which basically refers to as bank has formulated a Green Banking Cell (GBC), sustainable banking, socially responsible banking or incorporated the Environmental Risk Management ethical banking that endorse environment-friendly Guidelines into the Core Risk Management Guidelines practices and reducing carbon footprint from banking and prepared an indicative Green Banking Policy and activities. The main objective of Green Banking is to instructed employees accordingly. ensure the use of organizational resources in favour of the environment and society. Green banking as a However, although the Management Committee of the concept is proactive and smart way of thinking with a NRB Global Bank Limited is conscious about the vision for future sustainability of our only Spaceship environmental responsibilities of a financial institution earth. So in a very specific way, Green Banking means but it thinks that taking all the initiatives as instructed by banking practices that foster environmentally Bangladesh Bank is not possible. For example: there is responsible financing practices as well as using a lack of real initiatives of the bank in developing Green environmentally sustainable internal processes. Products like Green Credit Cards or Green Deposit Accounts both of which associates some environmental Although the theoretical idea of Green Banking is not features. The management thinks that providing such very old; some practices can be traced from the ancient products will initially increase the charges from banking & financial practices. During the 16th century customers and there is also a lack of willingness and religious ethics, the environment and local community awareness of clients about environmental provided the main framework for both life and economy responsibilities. Another important issue is that, and therefore influence businesses and the financial virtualization of all the banking products like different sector as well. Besides, during the 19th century credit kinds of memos, forms, documents, bills etc. and unions and financial cooperatives worked on the criteria banking services like online facilities for running that were used as sustainability criteria later. different kinds of accounts is very difficult. The reason is that most of the clients don’t have access to internet for Bangladesh is identified by climate change experts as running virtual accounts. Besides, clients demand being among the countries more severely challenged printed documents as evidence of their banking by climate change threat with correspondingly high activities. Besides, the management is focusing that urgency of preparedness with mitigated and adoptive guidelines of in-house environment management responses. The government and the central bank of should be adopted in all branches. But the MANCOM Bangladesh is fully conscious about this issue and have also thinks that it will take time. Location creates a big played a proactive role in this regard. As being realized problem in transforming existing materials into more that bank as a responsible financial institution has a energy efficient one. significant role to play in these game changing developments, Bangladesh Bank, the central bank of As per BRPD Circular No. 2 of Bangladesh Bank, the Bangladesh has taken the first initiative to make NRB Global Bank Limited has formulated its own Green activities of the financial institutions of Bangladesh Banking Policy on December 27, 2011. Recently Green more environmentally responsible at the beginning of Banking Unit and CSR Unit have been abolished and the year 2011. Green Banking as a concept of on 30 March, 2017 a Sustainable Finance Committee sustainable banking practices was formally introduced and Sustainable Finance Unit in NRB Global Bank Ltd. in Bangladesh on February 2011 with the development has been formed and formulated complying with of an indicative Green Banking Guideline for Banks and Bangladesh Bank guidelines/circulars as an Financial Institutions by Bangladesh Bank. The main independent entity. To ensure better coordination and objective of this guideline is to give a detail and proper monitoring of environmental friendly banking indicative advice to all the commercial banks of and CSR activities, this unit will help our Bank to earn Bangladesh to adopt environment friendly financing more outcomes and achieve expertise in maintaining policies as well as to take appropriate initiatives to sustainable banking in accordance with Government’s make internal operations more energy efficient and agenda to attain United Nation’s Sustainable environment conscious. Development Goals (SDG).
Annual Report 2016 65 Report on Sustainable Finance 2011 with the development of an indicative Green Green Banking or Sustainable Banking as a concept is Banking Guideline for Banks and Financial Institutions not very new around the world. Global warming, unusual by Bangladesh Bank. The main objective of this weather pattern, rising greenhouse gas etc. has always guideline is to give a detail and indicative advice to all the urged the business world to take some responsibilities in commercial banks of Bangladesh to adopt environment safeguarding the planet. Consequently environment friendly financing policies as well as to take appropriate friendly banking practices emerged in many western initiatives to make internal operations more energy countries. However, in our country, the central bank of efficient and environment conscious. Bangladesh, Bangladesh Bank has taken the real The NRB Global Bank Limited started its journey in initiative to make the financial industry more September 2013 and within a very short period of time environment friendly and responsible by formulating a the bank achieved a very good reputation in the industry. detail Green Banking Policy Guideline in February 27, From the commencement sustainable development was 2011. the focus of all banking activities of the bank. As a Global warming, which is one of the most burning & responsible corporate citizen the Our Bank has come up discussed issues, has the worst impact on the climate of with real initiatives to introduce Green Banking in the the planet as a whole. Due to unusual weather pattern, organization. By this time the bank has formulated a rising greenhouse gas, declining air quality etc. society Green Banking Cell (GBC), incorporated the demands that business also take responsibility in Environmental Risk Management Guidelines into the safeguarding the planet. Core Risk Management Guidelines and prepared an indicative Green Banking Policy and instructed Green Banking is one of the revolutionary concepts in employees accordingly. today’s business world which basically refers to as sustainable banking, socially responsible banking or NRB Global bank has come into the agreement with the ethical banking that endorse environment-friendly central bank as on July 01, 2015 as the participatory practices and reducing carbon footprint from banking financial institution for the refinance scheme on activities. The main objective of Green Banking is to Renewable Energy & Environment Friendly Financeable ensure the use of organizational resources in favour of Sector. the environment and society. Green banking as a In view of the challenges envisaged, NRB Global Bank concept is proactive and smart way of thinking with a has Institutionalize Green Banking across the Bank vision for future sustainability of our only Spaceship through formulation of the appropriate policy and earth. So in a very specific way Green Banking means strategy in line with the regulatory guidelines and banking practices that foster environmentally focusing on the following major aspects: responsible financing practices as well as using i. Green Products and Services environmentally sustainable internal processes. ii. Financial inclusion Although the theoretical idea of Green Banking is not iii. In-house green environment very old; some practices can be traced from the ancient iv. Training, awareness, campaigns and events banking & financial practices. During the 16thcentury v. Governance religious ethics, the environment and local community vi. ERM in Credit Risk Management provided the main framework for both life and economy vii. Green financing & Climate Risk Fund and therefore influence businesses and the financial viii. Disclosure and reporting sector as well. Besides, during the 19thcentury credit unions and financial cooperatives worked on the criteria Promotion of sustainable environment friendly initiatives that were used as sustainability criteria later following the Policy of the Bank: a) Creation of a business relationship with its existing and Bangladesh is identified by climate change experts as potential clients facilitating towards a working platform being among the countries more severely challenged by for green banking. climate change threat with correspondingly high urgency b) Encouraging employees and other stakeholders to of preparedness with mitigated and adoptive responses. develop practice and promote development of green The government and the central bank of Bangladesh is practices, products and technology. fully conscious about this issue and have played a c) Integration of Corporate Social Responsibilities (CSR), proactive role in this regard. As being realized that bank green banking and financial inclusion initiatives for as a responsible financial institution has a significant role maximizing the desired goals of the Policy. to play in these game changing developments, d)Contributing to the national/global environmental Bangladesh Bank, the central bank of Bangladesh has initiatives through establishment of environment friendly taken the first initiative to make activities of the financial banking business system and channeling funds to institutions of Bangladesh more environmentally appropriate projects/businesses and initiatives which responsible at the beginning of the year 2011. Green adhere to environmental protection and sustainable Banking as a concept of sustainable banking practices development. was formally introduced in Bangladesh on February
66 Annual Report 2016 Risk Management Report (Economy 2016)
Development Partners of the country has predicted in all branches, But the MANCOM also thinks that it GDP growth within 6% to 6.5%, which is higher than will take time. Lovcation creates a big problem in last five years’ average. According to Bangladesh Bank transforming existing materials into more energy Monetary Policy for the second half of fiscal year efficient one. 2015-16, they have estimated that the GDP growth will range from 6.5% to 7% due to reasonable performance As per BRPD Circular No. 2 of Bangladesh Bank, the of RMG and trading sector in the fiscal year. In such NRB Global Bank Limited has formulated its own circumstances, we assume that the recovery largely Green Banking Policy at December 27, 2011. depends on political constancy, macroeconomic Recently, Green Banking Unit and CSR Unit have strength, country’s competitiveness in the international been abolished and then, a Sustainable Finance market, and confidence of investors. Though, export Committee and a Sustainable Finance Unint in NRB situation seems under control, some signs like Global Bank Ltd. have been formed and formulated cancellation of orders triggered by industrial accidents, complying with Bangladesh Bank guidelines/circulars fire incidents etc. were very much there, though as an independent entity. Alliance and Accord are doing good job saying only 2% of the Garments Factories are vulnerable. To ensure better coordination and proper monitoring of environmental friendly banking and CSR activities, Political situation and slow improvement of this unit will help our Bank to earn more outcomes infrastructure are more liable for non-investment or and achieve expertise in maintaining sustainable slow investment, according to economists of the banking in accordance with Government’s agenda to country. Consequently, bigger local players are now attain United Nation’s Sustainable Development trying to invest in other countries rather than Goals (SDG). and may crowd out private sector Bangladesh, such as Ha-Meem Group, Beximco, investments. Mohammadi Group etc. Monetary policy for the second half of fiscal year Investment in private sector went down mainly due to 2015-16 pursued disciplined inflation and moderate lack of confidence and uncertainty in politics as well as growth to be 6 % around. The achievement of owing to infrastructure deficiency. Government’s target monetary policy depends on the favorable political for assembling of revenue may fall short since environment and step-up of private sector collection of direct revenue enhancement and value investment. added taxation could not reach target amid slowing down of internal trade & business organization Issues in 2017 The core of banking business is to take risks. We activities. Dependency on borrowing from banking pursue to contain and mitigate risks within our sector by the government might increase appetite set by the Board of Directors and price for adequate compensation against risks taken in due However although the management committee of the course of business. Risks by nature are uncertain. NRB Global Bank Limited is conscious about the Good judgment and prediction of future prospect with environmental responsibilities of a financial institution greater accuracy are fundamental for risk but it thinks that taking all the initiatives as instructed by management. Some principal uncertainties the bank Bangladesh Bank is not possible. For example: there ia may expect is given below. These should not be a lack of real initiatives of the bank in developing Green considered as a complete and comprehensive Products like Green Credit Cards or Green Deposit statement of all risks and uncertainties that the bank Accounts both of which associates some environmental may experience. features. The managemental responsibilities. Another important issue is that, virtualization of all the banking Principal issues products like online facilities for running different kinds . Declining Macroeconomic Conditions of accounts is very difficult,. The reason is that most of Stumbling macroeconomic conditions lead to the clients don’t have access to internet for running lower GDP growth that may affect personal virtual accounta. Besides, clients demand printed income and consumption pattern, demand and documents as evidence of their banking activities. saving tendency. But positive GDP growth and Besides, the management is focusing that guidelines of favorable macroeconomic conditions are showing in-house environment management ahould be adopted silver lining at the edge of the cloud.
Annual Report 2016 67 Response . Natural Calamity Bank’s risk policies and controls are being tread with Natural calamities like flood and cyclone may cause closely monitoring the economic and market trends and disruption of our customer business including continuously reviewing the suitability of arisk factors. damage of inventory.
. Change in regulatory policies and compliance Response Changes in economic policies, laws and regulations Insurance of inventory is widely used to mitigate such may contradict with Bank’s strategic policies. risks. Foretelling the effect of such changes is incomprehensive and could be sensible to the bank Risk Management depending on the situation. The existence of accurate methods of bank risk management practice increases shareholder’s returns Response and allows the risk-taking behavior of the bank to be Key regulatory developments are analyzed in order to more closely aligned with strategic objectives. Risk anticipate changes and their potential influence on our management practice should target to enhance the performance. drivers of shareholder’s value such as:- Growth . International Politics Risk adjusted performance measurement We may face a risk from the international political Consistency of earnings ; and tensions or conflict in countries where we or our Quality and transparency of management customers have business interest. It could influence trade flows, customers’ repayment ability The important steps of the effective framework of and our ability to continue business. banking concern should ensure that all risks are recognized, prioritized, quantified, controlled and Response managed in order to attain an optimal risk-reward We monitor the social, economic, political and profile. We accept risks if fits with the business policy, diplomatic situation in major trading countries of aided by sensible decision-making procedure and Bangladesh to predict any potential impact on our management efficacy. The risk framework of the bank is customers who trade products with these countries. designed within the scope of Bangladesh Bank guidelines on Risk management. It was issued on 15th . Fraud & Criminal Activities February 2012 vide DOS circular-02 and other The risk of fraud and other criminal activities is a guidelines on core risks: credit, foreign exchange, asset growing concern for the bank. Criminals become liability management, internal control, ICT and more sophisticated and as they take advantage of anti-money laundering. Risk management is the the growing use of technology in discipline at the core of our society. organization. It includes all the activities that affect its risk profile. The framework involves identification, Response measurement, monitoring, and controlling risks to Risk controls are being implanted in our policies and ensure that: procedures across the range of bank’s activities. Individuals who take or manage risks clearly understand it; . Uncertainty in Political fronts The organization’s risk exposure is within the limits Political uncertainties disrupt production, established by the Board; distribution, and movement of goods of our custom Risk taking decisions are explicit and clear; ers and destroys their investment and repay ment Risk taking decisions are in line with the business capacity, though it has been decreasing in the last strategy and objectives set by the Board; one year, though general election will be held in two The expected payoffs compensate for the risks is year time. taken; and Sufficient capital as a buffer is available to take risk. Response We are monitoring political changes owing to upcoming general election and keep contact with the customers to assess potential effects and the way out.
68 Annual Report 2016 Risk Management Committees Committees Objectives Represented by Board Risk Management To ensure managing risks of Mr. Belal Ahmed, Vice Chairman in the Board is Committee the bank following the risk the Chairman of the committee. strategies complying with Other Members of the Committee from the concerned circulars/ Board are as follows: guidelines of the regulatory 1. Mrs. Sarwar Jahan Maleque authority and appetite 2. Mrs. Danny Chowdhury and established by the Board of 3. Dr. Mohammed Faruque Directors.
Bank Risk Management To monitor activities of the Mr. Kazi Mashiur Rahman Jayhad, Deputy Committee bank for integrated risk Managing Director is the Chief Risk Officer of the management across the Bank. bank. Other Members of the Committee are as follows: 1. Mr. Mohammad Enamul Islam Khan, EVP, Member 2. Mr. Zulfiker Ahmed Khan, EVP, Member 3. Mr. Md. Zillur Rahman, SVP, Member-Secretary 4. Mr. Deen Mohammad Khan, SVP, Member 5. Mr. Mohammad Mahmud Alam, SVP, Member 6. Mr. Mohammad Kamrul Hossain, VP, Member 7. Mr. Md. Azizur Rahman, AVP, Member and 8. Mr. Yaqub Hossain, SPO, Member.
Asset Liability To optimize bank’s financial Mr. Proshanta Kumar Halder, Managing Director Management strength retaining liquidity risk is the chairman of the committee. Committee (ALCO) and interest rate risk of the Other Members of the Committee are as follows: bank at the desired level. 1. Mr. Md. Golam Sarwar, AMD. 2. Mr. Kazi Mashiur Rahman Jayhad, DMD. 3. Mr. Mohammad Shamsul Islam, DMD. 4. Mr. Ataus Samad, SEVP. 5. Mr. Mohammad Enamul Islam Khan, EVP. 6. Mr. Zulfikar Ahmed Khan, EVP 7. Mr. Md. Zillur Rahman, SVP. 8. Mr. Deen Mohammad Khan, SVP and Member-Secretary. 9. Mr. S.M. Mizanur Rahman, VP and 10. Mr. Mohammad Kamrul Hossain, VP.
Management of Credit Risk
Credit risk is the risk of loss that may occur from the failure of any counter party to make required payments in accordance with agreed terms and conditions and/or deterioration of credit worthiness. Credit risk may arise from both the banking and trading book. Credit risk is managed through a structure set by policies and procedures established by the Board. The responsibility is clearly separated between origination of business transaction and approval of the transaction.
Lending Guidelines
NRB Global Bank considers the following general principles for lending funds to customers. It is consistent with the global operational objectives and business policies of the bank:
Annual Report 2016 69 The Bank shall provide appropriate credit services and products for the markets in which it functions; Loans shall normally be supported from customers deposit and not out of transitory funds or borrowing from other Banks; Credit facility will be allowed in a manner, which will in no way compromise with Banks standards of excellence; All Credit extension must comply with the requirements of Bank’s Memorandum and Articles of Association, Banking Companies Act 1991 as amended from time to time/ Bangladesh Bank’s directions and other applicable rules and regulations; A prudent banker should always observe the following principles of lending funds to the customer;
o Background, character and capability of the borrowers o Purpose of the facility o Term of facility o Safety o Security o Profitability o Source of repayment o Diversity of portfolio
Assessment of Credit Proposal
We conduct a thorough Credit and Risk assessment for all types of credit proposals. The result of the assessment is presented in the approved Credit Appraisal Form originated from the Branches and then is forwarded to Credit Division along with their recommendations. After proper analysis, Credit Division places the credit proposal as received from the branches as per standard format with their necessary observation/ recommendation before the management for consideration to approve and/ or to place the same before the EC/ Board for approval.
Credit Risk Grading Process
Credit Risk Grading (CRG) is conducted to evaluate the risk. The concerned Credit Officer clearly indicates the risk grade (as per the finding) in the specific column of credit appraisal form. This is done so that the authority can take decision on the matter. No grading model for retail and SME (small) borrowers are currently in exercise. Borrowers are evaluated against pre-approved criteria outlined in Product Program Guidelines (PPG) approved by the Board of Directors.
Credit Risk Mitigation and Control
The bank obtains security against its credit exposure wherever possible as secondary option to the borrowers. Primary option remains being the cash flow of the business. The dependence on these mitigates is carefully assessed in light of issues such as legal certainty and enforceability, market valuation, and counter party risk of the guarantor. Collateral is held to mitigate credit risk exposures and risk mitigation policies determine the eligibility collateral types.
Collateral types that are eligible for risk mitigation include: cash and bank deposits; residential, commercial and industrial property; fixed assets such as motor vehicles, aircraft, plant and machinery; marketable securities; commodities; bank guarantees; and standby letters of credit. Regular valuation collateral is required in accordance with banks credit risk policy, which prescribes both the process of valuation and the frequency of valuation for different collateral types. The valuation frequency is driven by the level of price volatility of each type of collateral and the nature of the underlying product or exposure. Physical security is required to be insured against most relevant risks, keeping the bank loss payee under the insurance policy.
70 Annual Report 2016 When guarantees are used as credit risk mitigation the creditworthiness of the guarantor is assessed and established using the credit approval process in addition to that of the obligor or main counter party. The main types of guarantees include bank guarantees, non-banking financial institutions, parent companies, and shareholders.
Management of Liquidity Risk
Liquidity Risk
Liquidity Risk is the potential for loss to a bank arising from either its failure to meet its commitments as they fall due or to fund growth of assets without incurring unacceptable cost or losses. Liquidity risk is often caused by the consequences of other financial risks such as credit risk, interest rate risk, foreign exchange risk, etc.
Liquidity Risk Control
Sound liquidity risk management engaged in measuring, monitoring and controlling liquidity risk is critical to the survival of the bank. Our liquidity risk management procedures are widespread and holistic. Responsibility of managing and controlling liquidity of the bank lies with Asset Liability Committee (ALCO). The committee meets at least once in every month. Asset and Liability Management (ALM) desk of the treasury function closely monitors and controls liquidity requirements on a daily basis by appropriate coordination of funding activities. They are primarily responsible for management of liquidity in the bank. A monthly projection of fund flows is reviewed in ALCO meeting regularly.
We have identified several key liquidity risk indicators, which are monitored on a regular basis to endure healthy liquidity position. These are:
Statutory Liquidity Requirement Cash Reserve Ratio Asset to Deposit Ratio Structural Liquidity Profile Maximum Cumulative Outflow Medium Term Funding Ratio Volatile Liability Dependency Ratio Liquid Asset to Total Deposit Ratio Liquid Asset to Short Term Liabilities Liquidity Coverage Ratio
Maturity ladder of cash inflows and outflows are effective tool to define bank’s cash position. A maturity ladder estimates a bank’s cash inflows and outflows and thus net shortage or surplus both on a day to day basis and over a series of specified time periods. A structural maturity ladder or profile is prepared periodically following guidelines of the Bangladesh Bank DOS circular no. 02 dated 29 March 2011.
Management of Market Risk
Market Risk
Market Risk is the risk of potential losses in the balance sheet and off balance sheet positions of a bank arising from adverse movements in market rates or prices such as interest rates, foreign exchange rates, equity prices, credit spreads, and /or commodity prices. Market Risk can be subdivided into three categories relying upon risk variables:
I. Interest Rate Risk II. Foreign Exchange Risk III. Equity Price Risk
Annual Report 2016 71 The primary objective of the market risk management is to ensure that bank’s activities which are exposed to various market risks are creating optimum return, and risks are in control and within the limit of decided appetite.
Interest Rate Risk
Interest Rate Risk has a potential impact on a bank’s earnings and net asset value due to changes in market interest rate. In simple words, interest rate risk arises when bank is obliged to pay more interest for liabilities but can’t charge more on assets. Such risk can’t be eliminated as re-pricing period of assets and liabilities are different.
Other than re-pricing issue, sources of interest risk are: yield curve risk, basis risk, and embedded options. The immediate impact of a variation in interest is on the bank’s net interest income, while a long term impact is on bank’s net worth since monetary value of banks assets liabilities and off balance sheet exposures are affected.
The techniques for measuring bank’s interest rate risk exposure begin with a maturity/ re-pricing schedule that distributes interest sensitive assets, liabilities, and off balance sheet positions into a certain number of predefined time bands according to their maturity or time remaining to their next re-pricing. Those liabilities lacking definitive re-pricing intervals are assigned to re-pricing bands according to the judgment and past experience of the bank.
Gap Analysis
To evaluate earnings exposure, interest rate sensitive liabilities (ISL) in each time band are subtracted from the corresponding interest rate sensitive assets (ISA) to produce a re-pricing “gap” for that time band. A negative or liability sensitive gap occurs when ISL exceed ISA in a given time band. This gap implies that an increase in market interest rates could cause a decline in net interest income. Conversely, a positive or asset-sensitive gap occurs when ISA exceeds ISL in a given time band. This gap implies that a decrease in market interest rates could cause a decline in net interest income. From Gap schedule mentioned above, the bank calculates an estimate of changes in bank’s net interest income given changes in interest rates. The gap for particular time band can be multiplied by a hypothetical change in interest rate to obtain an approximate change in net interest income.
Duration Analysis:
Duration in the time-weighted average maturity of the present value of the cash flows from assets, liabilities and off-balance sheet items. It measures the relative sensitivity of the value of these instruments to changing interest rates, and therefore reflects how changes in interest rates will affect the bank’s economic value, that is the present value of equity. In this context, the maturity of an investment is used to provide an indication of interest rate risk. Generally, the longer the term to maturity of an investment and the smaller the payments that occurs before maturity, the higher the duration. Higher duration implies that a given change in the level of interest rates will have a larger impact on economic value.
Interest Rate Risk Control
Bank’s interest rate risk management involves the application of following basic elements in the management of assets, liabilities, and Off-Balance sheet instruments. The Principles of interest rate risk management include:
• Appropriate board and senior management oversight • Adequate risk management policies and processes • Appropriate risk measurement, monitoring, and control functions; and • Comprehensive internal controls and independent audits
The Bank has developed and implemented effective and comprehensive procedures and information systems to manage and control interest rate risk in accordance with its interest rate risk policies. Internal inspections/ audits are a key element in managing and controlling interest rate risk management program.
Management of Foreign Exchange Risk
Foreign Exchange Risk or exchange rate risk is a form of financial risk that arises from the potential change in the exchange rate of one currency in relation to another. Banks foreign exchange risk may arise from following activities:
72 Annual Report 2016 Trading in foreign currencies as a market maker or position taker including the un-hedged positions arising from customer driven foreign exchange transactions: I. Holding foreign currency position in the banking book in the form of loans in foreign currency. II. Engaging in derivative transactions that are denominated in foreign currency for trading or hedging purpose. III. Settlement risk due to default of counter parties. IV. Time-zone risk, which arises out of time lags in settlement of one currency in one center and settlement of another currency in another center located at different time zone. Bank’s foreign exchange risk management policies and procedure include:
I. Accounting to measure and monitor foreign exchange positions, foreign exchange risk and foreign exchange gains or losses. II. Governing the management of foreign currency activities. III. Independent inspections or audits.
The bank has an effective accounting system in place that accurately and frequently records and measures its foreign exchange exposure and the impact of potential exchange rate changes on the bank. At a minimum, the bank monitors and reports:
I. The net spot and forward positions in each currency or pairings of currencies in which the bank is authorized to have exposure. II. The aggregate net spot and forward positions in all currencies. III. Transactional and transactional gains and losses relating to trading and structural foreign exchange activities and exposures.
Foreign Exchange Risk Control
The key elements of foreign exchange control program are well defined procedures governing: a) Organizational control to ensure that there exists a clear and effective segregation of duties between those persons who initiate foreign exchange transactions and those persons who are responsible for operational functions. Such functions include arranging prompt and accurate settlement, and timely exchanging and resolution of confirmations, or account for foreign exchange activities. b) Procedural controls to ensure that: I. Transactions are fully recorded in the records and accounts of the bank. II. Transactions are promptly and correctly settled. III. Unauthorized dealing is promptly identified and reported to management c) Control to ensure that foreign exchange activities are monitored frequently against the bank’s foreign exchange risk, counter party and other limits and that excesses are reported.
Moreover, bank ensures that employees conducting foreign exchange trading activities on behalf of the bank do so within a written code of conduct governing foreign exchange dealings. Such a code of conduct should include guidance respecting trading with related parties and transactions in which potential conflicts of interest exists.
Management of Equity Price Risk
Equity price risk is the risk that one’s investment will depreciate because of stock market dynamics initiating on to lose money. Equity price risk is systematic or unsystematic. The former refers to sensitivity of portfolio’s value to changes in overall level of equity prices. The latter is related with price instability that is determined by organization specific features.
One may get dividend-which are payable at the preference of management and one may get capital appreciation in the form of a rising share price. Whether the payment of dividends is an option for management is directly dependent on the company’s performance; and a rising share price depends on the market’s valuation of the company’s performance. So, the value of investment rides on the company’s ability to be successful and profitable.
Annual Report 2016 73 Equity Price Risk Control
The bank has formulated investment policy and minimizes the equity price risk by portfolio diversification as per investment policy. As per the policy, Bank follows market valuation in valuing investment portfolio of the bank. Mark-to-market valuation is done against a predetermined cut loss limit.
Management of Operational Risk
Operation Risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. It is a very broad concept which focuses on the risk arising from the people, systems and processes through which a company is operated. It also includes other categories such as fraud risks, legal risks, physical or environmental risks.
Operational risk is different as there is no advantage of this risk and the risk can’t be taken for direct reward. Thus objective of the management of operational risk is to minimize the risk in cost effective manner, if elimination is not possible.
Operational Risk Control
The bank’s Board of Directors and Senior Management have established an organizational culture. It places a high priority on effective operational risk management and adherence to sound operating controls. Senior management transforms the strategic direction given by the Board through operational risk management policy.
Management of Money Laundering Risk
Money laundering risk is defined as the risk of direct and indirect losses incurred by the bank due to lack of diligence in applying appropriate KYC procedure. These losses could probably have been evaded and damage to the bank’s reputation significantly diminished had the bank maintained effective KYC program. The bank has appointed officials such as Chief Anti Money Laundering Compliance Officer (CAMLCO) and Deputy Anti Money Laundering Compliance Officer (DAMLCO) as well as Branch wise Branch Anti Money Laundering Officer (BAMLCO). This team will arrange conference every year and train up bank employees through in-house experts and also hire experts from BB. The core roles and responsibilities of the teams are:
• Ensure compliance of the Bank’s Anti-Money Laundering (AML) & Countering Financing of Terror-ism Policy and review & update the policy as and when necessary. • Set strategy and program for combating Money Laundering and Terrorist Financing. • Ensure appropriate training for the employees on AML issues so that employees are aware of the regulatory issues to discharge their responsibilities effectively and efficiently. • Examine and analyze the STR report received from branches and if required, report the same to Bangladesh Bank. • Address any query from Bangladesh Financial Intelligence Unit (BFIU) for any account of a customer. • Freeze/mark” no debit “or withdrawal option as instructed by BFIU.
Management of Internal Control & Compliance Risk
The bank complies with all rules and regulations set by the regulatory bodies. All guidelines received from the regulatory authorities are properly circulated among the Divisions and Branches. We regularly monitor the implementation status of regulatory guidelines.
According to the Central Bank’s guideline, the bank has formed separate internal control and compliance department for an effective internal control system. This department ensures that bank complies with all regulatory requirements of the legislative bodies in conducting its business. It also maintains liaison with the regulatory bodies and informs the other divisions/department of the bank regarding regulatory changes. Internal audit are also conducted by the same department to monitor the operational performance of different branches of the bank and department.
74 Annual Report 2016 Management of Information Technology and Communication Risk
Information Technology and Communication (ICT) risk is defined as risk of direct or indirect loss resulting from (a) Unacceptable use of the ICT system by or through staff, contractors, partners and former employees, (b) breaches in established defenses, poor/changes to configuration without risk analysis, (c) System lifecycle management, poor requirements definition, poor system design and inadequate testing, and (d) inadequate resilience, poor business continuity management.
In this era, information is treated as the most valuable as well as vulnerable asset and needs to be suitably protected. It ensures business continuity, minimizes business risk, maximizes return on investment and can help business to gain a competitive edge and opportunities.
We protect and secured our data in various ways. Data is kept in secured place prescribed by the Bank’s policy. IT Division takes necessary initiatives to conduct training courses for the bank’s employees. Training is being conducted time to time enabling the employees to handle the IT risk in an efficient manner.
Management of Reputational Risk
Reputational Risk may arise from the possibility that negative publicity regarding the bank and its business practices, in the territory or elsewhere through related entities, and whether accurate or not will adversely impact the operations and positions of the bank.
Reputation risk is difficult to measure and manage. Qualitative statements are agreed as below:
• Under no circumstances bank’s reputation to be compromised by revenue generating activities. • Bank shall always avoid potential brand damaging issues. • Bank shall avoid anti-environment and anti-social elements in its business.
Management of Human Capital Risk
Risk may arise within the bank from the following factors: failure to recruit the right people in the right place, inappropriate means of recruitment, failure to provide feedback to the employees on performance, over-reliance on key personnel, inappropriate training and development, inappropriate payments made to the staff through fraud or error etc. To minimize the above-mentioned risks arising from human capital, the bank has formulated and adopted a Bank Service Rules Policy focusing on the following key areas: a) Recruitment Procedures b) Pay and Benefits for the employees c) Training and Development d) Disciplinary and Grievance etc.
This policy of the bank has been framed having a strategic imperative for recruiting the best people from the society, as we have the intention to achieve comparative advantage by utilizing our human asset efficiently.
Management of Risks under BASEL ACCORD
The Bank places great importance to Basel II and III. It views Basel II and III as a bank-wide initiative that will ensure that the bank continues to meet international best practices for the bank’s credit, market, operational and liquidity risk management practices. By adopting Basel II and III, the group will be able to enhance and implant sound risk management practices within the Group and be equipped with the risk management discipline, practices, processes and system.
For Basel II Pillar 1, we are currently in compliance with the regulatory standards that took effect from1st January 2008. We are progressively employing advance risk measurement in the respective business. The bank is preparing for the Internal Capital Adequacy Assessment Process which is the bank’s self-assessment of the level of capital that is needed to hold as per Pillar 2 of Basel II. Pillar 3 of Basel II is related to market discipline and disclosure requirements, and the bank provides the disclosure under a separate Pillar 3 section. In addition to that we have formed a well designated team which will aid to adopt Basel II and Basel III accord successfully.
Annual Report 2016 75 Products and Services (Consumer, SME and NRB)
Regular Deposit Scheme General Credit NGB Current Project Loan NGB Savings NGB Junior Working Capital NGB Queen NGB Perfect Mode of Finance Syndication and NGB Freshers Structured Finance NGB Salary Account Refinance Scheme of Central Bank Term Deposit & Special Benefit Scheme NGB DPS Credit Products NGB Double Benefit Scheme Term Loan NGB Fixed Deposit Continuous Loan NGB Monthly Benefit Plan Demand Loan Work Order Finance Loan Products Import Finance Export Finance Retail Loan Products ECC/PC NGB Executive Loan Guarantees (Payment/Performance) NGB Professionals Loan Acceptance NGB Adhoc Loan BTB LC NGB Marriage Loan NGB Travellers Forex & Fund Management NGB Festivals Loan SWIFT NGB Home Loan Bangladesh Electronic Fund Transfer Network (BEFTN) NGB Auto Loan Issuing and Enchasing Foreign Drafts Inter-Branch Money Transfer SME Loan Products NGB Uddom (SME Business Loan) Others services NGB Kishan (Agri Loan) Green Financing NGB Proshar (Loan for Women Entrepreneurs) SMS Banking NGB Nandini (Linkage Finance) ATM Service (through VISA, QCash, NPSB, AMEX) VISA Debit Card/Credit Card Specizlized products for NRBs Western Union Money gram Deposit Products Electronic Fund Transfer NGB NRB Executive Loan Merchant Discounts (through NGB Cards) Loan Products NRB Home Loan Value Added Services NRB Health Support Loan Locker Service NRB Migration Loan Insurance Coverage Deposit Scheme NRB Shohayota Loan NRB Student Education Loan Scheme Upcoming Products and Service NRB Utshoho Loan Call Center Internet Banking Agent Banking
76 Annual Report 2016 Market Discipline Disclosures on Risk Based Capital (Basel-III)
Market Discipline:
Disclosures on Risk Based Capital (Basel-III)
1. Introduction
The detailed qualitative and quantitative disclosures of NRB Global Bank Limited as on December 31, 2016 are provided in accordance with Guidelines on Risk Based Capital Adequacy by Bangladesh Bank. The Basel accords are a series of recommendations on banking laws and regulations issued by the Basel Committee on Banking Supervision (BCBS). The Basel Committee on Banking Supervision (BCBS) issued Basel III: A global regulatory framework for more resilient banks and banking systems” in December 2010. The objective of the reforms was to improve the banking sector’s ability to absorb shocks arising from financial and economic stress, whatever the source, thus reducing the risk of spillover from the financial sector to the real economy. Through its reform package, BCBS also aims to improve risk management and governance as well as strengthen banks’ transparency and disclosures. It effectively exploits the new frontiers of risk management. It seeks to give impetus to the development of a sound risk management system which hopefully will promote a more efficient, equitable and prudent allocation of resources. Both internationally and within Bangladesh, the implementation of Basel-III has gripped a lot of interest. To cope with the international best practices and to make the bank’s capital more risk sensitive as well as more shock resilient, ‘Guidelines on Risk Based Capital Adequacy (RBCA) for Banks ‘have been introduced by Bangladesh Bank with an action plan for implementing a new Capital Adequacy framework in line with Basel-III. A Basel-III implementation Committee has been formed in NRB Global Bank Limited and the Bank has effectively implemented Basel-III and submitted the quarterly report to Bangladesh bank on time. The disclosure framework (i.e. Pillar-III) is designed to increase the transparency of banker’s risk profile by requiring it to give details of its risk management and risk distributions.
2. Disclosure Policy
The detail qualitative and quantitative disclosures are provided in accordance with Bangladesh Bank rules and regulations on risk based capital adequacy under Basel-III issued through Guidelines on Risk Based Capital Adequacy (RBCA) December 2014. The purpose of these requirements is to complement the capital adequacy requirements and the Pillar-II: Supervisory Review Process. These disclosures are intended for market participants to assess key information about the bank’s exposure to various risks and to provide a consistent and understandable disclosure framework for easy comparison among banks operating in the market. The Bank follows following approaches for calculating Risk Weighted Asset (RWA) as per Basel-III guidelines stated in BRPD Circular No.18 dated December 21, 2014 of Bangladesh Bank: a) Standardized Approach for Credit Risk b) Standardized approach for Market Risk and c) Basic Indicator Approach for Operational Risk.
2.1 The major highlights of Bangladesh Bank regulations:
> To maintain Capital to Risk-weighted Assets Ratio (CRAR) at a minimum of 10% of risk weighted assets as per BRPD Circular No.18 dated December 21, 2014 of Bangladesh Bank. > To adopt the standardized approach for credit risk > To adopt standardized approach for market risk and basic indicator approach for operational risk. > To submit capital adequacy report to Bangladesh Bank on a quarterly basis. > To adopt better risk management policy
Annual Report 2016 77 2.3 Disclosure framework:
According to the revised Risk Based Capital Adequacy Guidelines the Bank requires general qualitative disclosure for each separate risk area (e.g. Investment, market, operational, banking book interest rate risk, equity). The Bank must describe their risk management objectives and policies, including:
• Strategies and processes; • The structure and organization of the relevant risk management function; • The scope and nature of risk reporting and/or measurement systems; • Policies for hedging and/or mitigating risk and strategies and processes for monitoring the continuing • effectiveness of hedges/mitigations.
The following components set out in tabular form are the disclosure requirements:
A) Scope of Application B) Capital Structure C) Capital Adequacy D) Credit Risk E) Equities: Disclosures for Banking Book Positions F) Profit Rate Risk in Banking Book (PRRBB) G) Market Risk H) Operational risk
3. Scope of Application:
Qualitative disclosure:
a) The name of the top corporate entity in the group to which this guidelines applies.
b) An outline of differences in the basis of consolidation for accounting and regulatory purposes, with a brief description of the entities within the group (a) that are fully consolidated; (b) that are given a deduction treatment; and (c) that are neither consolidated nor deducted (e.g. where the investment is risk-weighted).
The NRB Global Bank Limited ("the Bank") was incorporated as a public limited company in Bangladesh under Companies Act, 1994 with the registered office at Khandker Tower, 94 Gulshan Avenue, Gulshan-1, Dhaka-1212. The Bank commenced banking operation on 23 October 2013 by obtaining license from Bangladesh Bank on 05 August 2013 under section 32(1) of the Bank Company Act 1991(amendment up to 2013).The number of branches of the Bank was 37 (Thirty Seven) located in different areas of Dhaka, Chittagong, Khulna, Rajshahi and Sylhet as on 31 December 2016. Currently the Bank does not have any Off-shore Banking Unit (OBU) and subsidiary company. The principal activities of the Bank are to provide all kinds of commercial services to its customers through its branches.
The bank has applied Basel-III on “Solo” basis.
c) Any restrictions, or other major impediments, on transfer of funds or regulatory capital within the group.
Not applicable Quantitative Disclosure:
d) The aggregate amount of surplus capital of insurance subsidiaries (whether deducted or subjected to an alternative method) included in the capital of the consolidated group. Not applicable
78 Annual Report 2016 4. Capital Structure
Qualitative disclosure: a) Summary information on the terms and conditions of the main features of all capital instruments, especially in the case of capital instruments eligible for inclusion in CET 1, Additional Tier 1 or Tier 2.
The terms and conditions of the main features of all capital instruments have been segregated in terms of eligibility criteria set forth vide BRPD circular No. 18 dated 21 December 2014 and other relevant instructions given by Bangladesh Bank from time to time. The main features of the capital instruments are as follows:
Common Equity Tier-1 of NRB Global Bank Limited comprises of Paid up capital, Statutory Reserve, General Reserve and Retained Earnings. The Bank does not have any additional Tier 1 capital. Tire-2 capital comprises of General Provision (on Unclassified Loans + Off Balance Sheet Exposure), Revaluation Reserves for securities Up to 50%.
Quantitative Disclosure: (Figure in Crore)
Total Eligible Capital Amount
b)The amount of Common Equity Tier-1 capital, with separate disclosure of:
Common Equity Tier-1:
Paid up capital 425.00
Statutory reserve 18.94
General reserve 0.00
Retained earnings 16.72
Total Common Equity Tier-1Capital (A) 460.66
c) The amount of additional Tier-1 capital
Non-cumulative irredeemable preference shares 0.00
Instruments issued by the banks that meet the qualifying criteria for AT1 0.00
Minority Interest 0.00
Total additional Tier-1 capital (B) 0.00
Total Common Equity Tier 1 capital 460.66
d) Tier-2 Capital:
General Provision 39.56
Revaluation Reserves for Securities up to 50% 0.67
Subordinated debt 0.00
Total Tier-2 Capital (C) 40.23
e) Regulatory Adjustments/Deductions from capital (D)
Revaluation reserve for fixed assets ,securities & equity securities @40% .27
Total Tier-2 Capital Available 39.96
Total eligible capital (A+B+C-D) 500.62
Annual Report 2016 79 4.1 Conditions for maintaining regulatory capital
The calculation of Common Equity Tier-1 capital, Additional Tier-1 capital and Tier-2 capital shall be subject to the following conditions:
(a) Additional Tier-1 capital can be admitted maximum up to 1.5% of the total RWA or 33.33% of CET1 capital, whichever is higher.
(b) Tier-2 capital can be admitted maximum up to 4.0% of the total RWA or 88.89% of CET1, whichever is higher
(c) General provisions/general loan-loss reserve eligible for inclusion in Tier 2 will be limited to a maximum 1.25 percentage points of credit risk-weighted assets calculated under the standardized approach.
5. Capital Adequacy
Qualitative disclosure: a) Summary discussion of the bank’s approach to assessing the adequacy of its capital to support current and future activities.
The Bank has adopted Standardized Approach (SA) for computation of capital charge for credit risk and market risk and Basic Indicator Approach (BIA) for operational risk. The Bank strictly follows the guidelines of Bangladesh Bank regarding capital adequacy. The Bank has Capital to Risk-weighted Assets Ratio of 11.83% as against the minimum regulatory requirement of 10%. Common equity Tier-1 capital adequacy ratio is 10.89% against the minimum regulatory requirement of 4.5%. The Bank’s policy is to manage and maintain its capital with the objective of maintaining strong capital ratio and high rating. Due to sustainable growth in all aspects including advance of Tk. 3,495.83 Crore, deposit of Tk.4,288.04 crore, the Bank was able to maintain eligible capital with surplus of Tk. 77.55 Crore. The Bank also ensures that the capital level comply with regulatory requirements and satisfy the external rating agencies and other stakeholders including depositors. To ensure adequate capital for sustainable growth the Management of NRB Global Bank Limited has already taken well planed initiatives which includes but not limited to the followings:
(a) Consistently encouraging existing corporate clients to complete external credit rating in a view to assess counterparty Credit Risk status and to reduce capital requirement.
(b) Improving and enhancing eligible collaterals, by way of collateral optimization
(c) Booking new clients are taking into considerations their risk profile and credit rating.
The Bank’s Capital adequacy ratio is periodically assessed and reviewed by the respective department and reported to Bangladesh Bank respectively. The composition of capital in terms of Common Equity Tier-1, Additional Tier-1 and Tier- 2 are also analyzed to ensure capital stability and to reduce volatility in the capital structure.
Quantitative Disclosure: (Figure in Crore)
5.2 Capital Adequacy Amount
Capital requirement for Credit Risk 402.57
Capital requirement for Market Risk .56
Capital requirement for Operational Risk 19.94
Total and Tier 1 capital ratio: 0.00
- For the consolidated (%) 0.00
- For stand alone 11.83%
Capital Conservation Buffer .625%
Available Capital under Pillar 2 Requirement
80 Annual Report 2016 6. Credit Risk:
Qualitative Disclosure: a) The general qualitative disclosure requirement with respect to credit risk, including
Credit risk is the risk of financial loss resulting from failure by a client or counterparty to meet its contractual obligations to the Bank. Credit risk arises from the bank’s dealings with or lending to corporate, individuals, and other banks or financial institutions. NRB Global Bank Limited is managing Credit Risk through a robust process that enables the bank to proactively manage loan portfolios in order to minimize losses and earn an acceptable level of return for shareholders. i) Definitions of Past Due and impaired (for accounting purpose)
As per relevant Bangladesh Bank guidelines, depending on type of the loans, it is considered past due after certain time from the expiry date. ii) Description of approaches followed for specific and general provisions and statistical methods
Particulars Rate
General provision on unclassified Small and Medium Enterprise (SME) financing. .25% General provision on unclassified loans and advances/ investments other than Consumer Financing, 1% Loans to Brokerage House, Merchant Banks, Stock Dealers etc., SMA as well as SME Financing).
General provision on off-balance sheet exposures (Provision has been made on the total exposure and 1% amount of cash margin & value of eligible collateral were not deducted while computing off-balance sheet exposure).
General provision on unclassified loans and advances/ investments for housing finance, loans for 2% professionals to set-up business under consumer financing scheme.
General provision on the unclassified loans to Brokerage House, Merchant Banks, Stock Dealers, etc. 2%
General provision on unclassified amount for Consumer Financing 5%
General provision on outstanding amount of loans kept in Special Mention Account (SMA) will be at the same respective rate as stated above (0.25% to 5%) as per BRPD Circular No. 05 dated 29.05.2013.
Specific provision on Sub-Standard loans and advances. 20% Specific provision on Doubtful loans and advances. 50% Specific provision on bad / loss loans and advances 100%
iii) Credit Risk Management system
Credit risk regulatory capital requirements are computed based on the standardized approach prescribed by Bangladesh Bank. In The Standardized Approach, credit risk is measured in a standardized manner supported by external credit assessments. Under this approach, risk weightings are mapped to exposure types. The standardized approach is applied for risk weighting of exposure as per directive of regulatory body. It requires banks to use risk assessments prepared by External Credit Assessment Institutions (ECAIs) to determine the risk weightings applied to rated counterparties. NRB Global Bank Limited has been continuously collaborating with nominated ECAIs for ratings of its exposures and the working progress is in satisfactory level.
Annual Report 2016 81 (IV) Credit Risk Mitigation
The bank has the guidelines on the acceptability of specific classes of collateral or credit risk mitigation, and determines suitable valuation parameters. Such parameters are expected to be conservative, reviewed regularly and supported by empirical evidence. Taking collateral is the most common way to mitigate credit risk. The Bank generally takes collaterals in the form of pledges of sufficient eligible marketable securities, mortgages over the property etc. All of the collaterals taken do not necessarily qualify for availing capital relief under the capital adequacy framework. To ensure with a high degree of certainty that the collateral value will cover the exposure, discounts (“haircuts”) are generally applied to the current market value.
(V) Policies and Processes for Credit Risk Management
The goal of credit risk management is to maximize the risk-adjusted rate of return of the bank by maintaining credit risk exposure within acceptable parameters. For transparency in the operation, the bank has established separate active departments & unit. These are i) Credit Risk Management Department ii) Credit Administration Department iii) Legal and Recovery Department iv) Internal Control & Compliance Department and v) Risk Management Unit. The board of the Bank approves the credit policy keeping in view relevant Bangladesh Bank guidelines to ensure best practice in credit risk management and maintain quality of assets. Authorities are properly delegated for ensuring check and balance in credit operation at every stage i.e. screening, assessing risk, identification, management and mitigation of credit risk as well as monitoring, supervision and recovery of loans with provision for early warning system. There is a separate credit risk management division for dedicated credit risk management. There is a separate credit administration division for ensuring perfection of securities and credit monitoring and recovery division for monitoring and recovery of irregular loans. Internal control & compliance division independently assess quality of loans and compliance status of loans at least once in a year. Adequate provision is maintained against loans as per Bangladesh Bank guidelines. Status of loans is regularly reported to the Board/Executive Committee of the Board. The bank has also established separate Risk and Credit Control Department which looks after Loan Review Mechanism and also helps in ensuring credit compliance with the post-sanction processes / procedures laid down by the bank from time to time. Risk department also monitors various credit concentration limits. Maximum counterparty / group exposures are limited to 15 percent (funded) of the bank’s capital base as stipulated by Bangladesh Bank where a higher limit is required for projects of national importance subject to prior approval of Bangladesh Bank. Quantitative Disclosure:
b) Total gross credit risk exposures broken down by major types of credit exposure
Particulars Outstanding
Loans, cash credits, overdrafts etc. 2,677.11 Term loan 178.41 General Loans Payment Against Documents (PAD) Trust Receipts 44.55 Lease Finance House Building Loan 11.65 Staff/ Employee Loan 13.25 Loans and Advances -Offshore Banking Unit Loan by subsidiaries Cash Credit 1,504.30 Overdraft 907.36 Other Loans and Advances 17.59 Bills purchased and discounted 818.72 Payable in Bangladesh 815.66 Payable outside Bangladesh 3.06 Total 3,495.83
82 Annual Report 2016 c) Geographical distribution of exposures, broken down in significant areas by major types of credit exposure
(Figure in Crore)
Urban Outstanding
Dhaka Division 1375.40 Chittagong Division 1858.24 Khulna Division 3.59 Rajshahi Division 2.06 Barisal Division - Sylhet Division 1.20 Rangpur Division - Sub-Total 3,240.48
Rural Outstanding
Dhaka Division 36.28 Chittagong Division 219.07 Khulna Division 0.00 Rajshahi Division 0.00 Barisal Division 0.00 Sylhet Division 0.00 Sub-Total 255.35 Grand Total 3,495.83 d) Industry or counterparty type distribution of exposures, broken down by major types of credit exposure
(Figure in Crore)
Particulars Outstanding
Agriculture 21.70 Capital Market Institutions 0.00 Commercial Real Estate Financing 6.54 Construction 58.66 Consumer Finance 7.22 Residential real estate financing 9.31 Transport, storage and communication 18.03 Retail Loan 121.83 Commercial and trading Services 2,691.33 Ready Made Garments-RMG 113.85 Small and Medium Enterprise Loans 104.24 Textiles industries 142.99 Staff/ Employee Loan 13.25 Other Manufacturing Industry 186.88 Total 3,495.83
Annual Report 2016 83 e) Residual maturity breakdown of the whole portfolio, broken down by major types of credit exposure
(Figure in Crore)
Particulars Outstanding
On Demand 0.08 Not more than three months 1594.73 More than three months but less than one year 1524.20 More than one year but less than five year 326.17 More than five year 50.65 Total 3,495.83
f) By major industry or counterparty type:
i) Amount of impaired loans and if available, past due loans, provided separately:
(Figure in Crore)
Particulars Outstanding
Substandard (SS) 1.94 Doubtful (DF) 4.07 Bad Loss (BL) 8.62 Total 14.63
ii) Specific and general provisions; and (Figure in Crore)
Particulars Outstanding
Provision on classified loans and advances 1.93 Provision on unclassified loans and advances 34.52 Provision on Off-balance sheet exposures 5.03 Provision for diminution in value of investments. 0.00 Total 41.48
iii) Charges for specific allowances and charge-offs during the period
(Figure in Crore)
Particulars Outstanding
Provision on classified loans and advances (2.23) Provision on unclassified loans and advances 13.58 Provision on Off-balance sheet exposures 3.42 Provision for diminution in value of investments. (1.71) Total 13.06
84 Annual Report 2016 (Figure in Crore)
Particulars Outstanding
Non-Performing Assets ( NPAs) to Outstanding Loans & advances 0.42% Movement of Non-Performing Assets ( NPAs) Opening balance 13.24 Additions 7.09 Reductions (5.70) Closing Balance 14.63 Movement of specific provisions for NPAs Opening balance 4.17 Provisions made during the period 0.00 Write-off 0.00 Write-back of excess provisions (2.23) Closing Balance 1.93
7. Equities: Disclosures for Banking Book Positions
Qualitative Disclosure:
(a) The general qualitative disclosure requirement with respect to equity risk, including:
Differentiation between holdings on which capital gains are expected and those taken under other objectives including for relationship and strategic reasons; and
Investment in equity securities are broadly categorized into two parts: i. Quoted Securities (Common or Preference Shares & Mutual Fund) that are traded in the secondary market (Trading Book Assets). ii. Unquoted securities include shares of Central Depository Bangladesh Limited (CDBL), investment in SWIFT and Market Stabilization Fund (MSF).
Discussion of important policies covering the valuation and accounting of equity holdings in the banking book. This includes the accounting techniques and valuation methodologies used, including key assumptions and practices affecting valuation as well as significant changes in these practices
The primary aim is to investment in these equity securities for the purpose of capital gain by selling them in future or held for dividend income. Dividends received from these equity securities are accounted for as and when received. Both Quoted and Un- Quoted equity securities are valued at cost and necessary provisions are maintained if the prices fall below the cost price.
Quantitative Disclosure:
Sl No. Particulars At cost At market value
Value disclosed in the balance sheet of investments, as well as the fair b) value of those investments; for quoted securities, a comparison to publicly 0.00 0.00 quoted share values where the share price is materially different from fair value.
Annual Report 2016 85 Sl No. Particulars At cost
c) The cumulative realized gains (losses) arising from sales and liquidations in the reporting Nil period.
Total unrealized gains (losses) Nil d) Total latent revaluation gains (losses) Nil Any amounts of the above included inTier-2 capital. Nil
Capital requirements broken down by appropriate equity groupings, consistent with the bank’s methodology, as well as the aggregate amounts and the type of equity investments subject to any supervisory provisions regarding regulatory capital requirements (10% on market e) value).
Specific Market Risk 0.00 General Market Risk 0.00 8. Interest Rate Risk in the banking book (IRRBB): Qualitative Disclosure: The general qualitative disclosure requirement including the nature of IRRBB and key assumptions, including assumptions regarding loan prepayments and behaviour of non-maturity deposits, and frequency of IRRBB measurement. Interest rate exposure is generally described as the risk of a reduction in a projected or anticipated measure of net interest income (target measure) resulting from changes in market interest rates. (i) Reprising risk-which arises from mismatches in interest rate periods (ii) Yield curve risk- which is caused by changes in the slope and shape of the yield curve. (iii) Basis risk- which arises from an imperfect correlation in the adjustment of the rates earned and paid on different products with otherwise similar reprising characteristics. A maturity mismatch approach is used to measure NRB Global Bank’s exposure to interest rate risk. A positive mismatch means that more assets than liabilities are repriced in a given period. With a positive mismatch, a rise in market interest rates will have a positive effect on the bank's earnings. On the other hand, a negative mismatch, where more liabilities are repriced than assets in a given period, means a drop in earnings if interest rates had increased. NRB Global Bank Limited has been exercising the Stress Testing using the Duration GAP for measuring the Interest Rate Risk on its banking book for estimating the impact of the net change in the market value of equity on the Capital Adequacy Ratio (CAR) due to change in interest rates. Bank periodically computes the interest rate risk on the banking book that arises due to re-pricing mismatches in interest rate sensitive assets and liabilities. Details relating to re-pricing mismatches and the interest rate risk thereon are placed to the ALCO on regular basis with proposal for corrective action if necessary. Quantitative Disclosures: The increase (decline) in earnings or economic value (or relevant measure used by management) for upward and downward rate shocks according to management’s method for measuring IRRBB, broken down by currency (as relevant).
(Figure in Crore)
Particulars Up to 3 months 3 to 6 months 6 to 12 months
Rate Sensitive Assets 1973.35 1013.81 873.34 Rate Sensitive Liabilities 1907.3 874.35 856.94
< 3months <6 months <12 months Cumulative Gap 66.05 139.46 16.40
Minor-1% Moderate-2% Major-3% Net Interest Income impact 2.22 4.44 6.66
86 Annual Report 2016 9. Market Risk
(a) Qualitative Disclosures
9.1 Views of BOD on trading/investment activities
Market Risk is the risk that the fair value of future cash flows of the financial instruments will fluctuate due to changes in different market variable/factor, namely i) Interest rate factor: Likelihood that interest rate will change. ii) Currency factor : Likelihood that Foreign exchange rate will change iii) Equity factor: Likelihood that stock price will change iv) Commodity factor: Likelihood that Commodity price will change
The bank has a comprehensive Treasury Risk Policy which inter alia covers assessment, monitoring and management of all the above mentioned market risks. The Board approves all policies related to market risk, sets limits and reviews compliance on a regular basis. The objective is to provide cost effective funding to finance asset growth and trade related transactions.
9.2 Methods used to measure Market risk
Standardized approach has been used to measure the Market risk. The total capital requirement in respect of market risk is the aggregate capital requirement calculated for each of risk sub-categories. For each risk categories minimum capital requirement is measured in terms of two separately calculated capital charges for “specific risk” and “general market risk”.
9.3 Market risk management system
The Treasury Department manages market risk covering liquidity, interest rate and foreign exchange risks with oversight from Asset-Liability Management Committee (ALCO) comprising senior executives of the bank. ALCO is chaired by the Managing Director. ALCO meetings are held at least once in a month.
9.4 Policies and process for mitigating Market risk
There are approved limits for credit deposit ratio, liquidity asset to total asset ratio, maturity mismatch, commitments for both on-balance sheet and off-balance sheet items and borrowing from money market and foreign exchange position. The limits are monitored and enforced on a regular basis to protect against market risks. The exchange rate committee of the bank meets on daily basis to review the prevailing market condition, exchange rate, foreign exchange position and transaction to mitigate foreign exchange risks. Foreign exchange risk is computed on the sum of net short positions or net long positions, whichever is higher of the foreign currency positions held by the Bank. The Bank adopts maturity method in measuring interest rate risk in respect of securities in trading book.
Quantitative Disclosure
(b) The capital requirements for (Figure in Crore)
Particulars Outstanding
Interest Rate related instruments 0.00 Equities 0.00 Foreign Exchange Position 0.56 Commodity Risk 0.00 Total 0.56
87 10. Operational Risk:
(a) Qualitative Disclosures
10.1 Views of BOD on system to reduce Operational Risk
Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems (for example failed IT systems, or fraud perpetrated by a NRBGBL employee), or from external causes, whether deliberate, accidental or natural. It is inherent in all of the Bank’s activities. The policy for operational risks including internal control and compliance risk is approved by the Board taking in to account relevant guidelines of Bangladesh Bank. Audit Committee of the Board directly oversees the activities of the respective division to protect against all operational risk.
10.2 Performance Gap of Executives and Staffs
NRBGBL always tries to be the best pay master in the sector and ensure best workplace safety for its employees to avoid inconsistent employment practices and unsound workplace safety by way of discrimination regarding employee’s compensation, health and safety. NRBGBL strong brand image plays an important role in employee motivation. As a result there is no significant gap.
A half yearly and yearly performance appraisal practices are in place to review achievements based on which rewards and recognition decisions are made. Internal control and compliance (ICC) is continuously monitoring to minimize any potential brand damaging performance gap by employees especially fraud-forgery, misuse of power of attorney, weak customer services, weak internal and regulatory compliance etc.
However, our learning and development strategy puts special focus on continuous professional development to strengthen individual’s skill level by removing the weakness to perform the assigned job with perfection. We have a wide range of internal and external training programs to enhance capabilities to minimize performance gap and to continuous more to bottom line.
10.3 Potential External Events
The bank invests heavily in IT infrastructure for better automation and online transaction environment. The bank also has huge investment on network links to avoid business description and system failure. The Bank’s IT system does not allow any kind of external access to avoid external fraud by way of theft/ hacking of information assets, forgery etc.
10.4 Policies and process for mitigation operational risk
The policy for operational risks including internal control & compliance risk is approved by the Board taking in to account relevant guidelines of Bangladesh Bank. The preparation of Policy guidelines on risk based internal audit system is under process. According to the guideline the branches will rate in terms of their risk status. It is the policy of the bank to put all the branches of the bank under any form of audit at least once in a year. To reinforce operational risk by identifying, assessing, monitoring, controlling and mitigating the risk, rectifying operational risk events, and implementing any additional procedures required for compliance with central bank requirements.
10.5 Approach for calculating capital charge for operational risk
The Banks operating in Bangladesh shall compute the capital requirements for operational risk under the Basic Indicator Approach (BIA). Under BIA, the capital charge for operational risk is a fixed percentage, denoted by ‘α (alpha)’ of average positive annual gross income of the bank over the past three years. Figures for any year in which annual gross income is negative or zero, should be excluded from both the numerator and denominator when calculating the average. The capital charge may be expressed as follows:
K = [(GI 1 + GI2 + GI3) a]/n
88 Annual Report 2016 Where-
K = the capital charge under the Basic Indicator Approach GI = only positive annual gross income over the previous three years (i.e., negative or zero gross income if any shall be excluded) a = 15% n = number of the previous three years for which gross income is positive. Gross income: Gross Income (GI) is defined as “Net Interest Income” plus “Net non-Interest Income”.
It is intended that this measure should: i) be gross of any provisions; ii) be gross of operating expenses, including fees paid to outsourcing service providers; iii) exclude realized profits/losses from the sale of securities held to maturity in the banking book; iv) exclude extraordinary or irregular items; v) exclude income derived from insurance.
Quantitative Disclosure (C) The Capital requirement for: Operational Risk (Figure in Crore)
Year Gross Income (GI) Average Gross Income Capital Charge @ (AGI) 15 % of AGI
2016 215.49 2015 124.82 132.96 19.94 2014 58.57
11.00 Liquidity Ratio
Qualitative disclosure:
11.1 Views of BOD in system to reduce liquidity Risk
Liquidity Risk is the potential for loss to a bank arising from either its inability to meet its obligations as they fall due or to fund increases in assets without incurring unacceptable cost or losses. Liquidity Risk is often triggered by the consequences of other financial risks such as credit risk, interest rate risk, foreign exchange risk, etc.
Liquidity Risk governance:
The intensity and sophistication of liquidity risk management processes depend on the nature, size and complexity of a bank’s activities. Sound liquidity risk management employed in measuring, monitoring and controlling liquidity risk is critical to the viability of the bank. Our liquidity risk management procedures are comprehensive and holistic.
Responsibility of managing and controlling liquidity of the bank lies with Asset Liability Committee (ALCO) and ALCO committee is approved by the Board of Directors of the bank through approval of ALM Policy Guidelines and the committee meets at least once in every month. Asset Liability Management (ALM) desk of the treasury function closely monitors and controls liquidity requirement on a daily basis by appropriate coordination of funding activities and they are primarily responsible for management of liquidity in the bank. A monthly
Annual Report 2016 89 projection of fund flows is reviewed in ALCO meeting regularly. At the same time committee takes permission from the Board of Directors for its any change of interest rates due considering liquidity risk.
11.2 Methods used to measure Liquidity risk
At a very basic level, liquidity measurement involves assessing all of a bank’s cash inflows against its outflows to identify the potential for any net shortfalls going forward. This also includes funding requirements for off balance sheet commitments.
An important aspect of measuring liquidity is making assumptions about future funding needs. While certain cash inflows and outflows can be easily calculated or predicted, bank also make assumptions about future liquidity needs, both in the very short-term and for longer time periods. One important factor to consider is the critical role a bank’s reputation plays in its ability to access funds readily and at reasonable terms.
We have identified several key liquidity risk indicators, which are monitored on a regular basis to ensure healthy liquidity position. These ratios are:
i. Statutory Liquidity Requirement; ii. Cash Reserve Ratio; iii. Asset to Deposit Ratio; iv. Structural Liquidity Profile; v. Maximum Cumulative Outflow; vi. Medium Term Funding Ratio; vii. Volatile Liability Dependency Ratio; viii. Liquid Asset to Total Deposit Ratio; ix. Liquid Asset to Short Term Liabilities; x. Liquidity Coverage Ratio (LCR)
11.3 Liquidity risk management system
In order to develop comprehensive liquidity risk management framework, we have Contingency Funding Plan (CFP), which is a set of policies and procedures that serves as a blueprint for the bank to meet its funding needs in a timely manner and at a reasonable cost.
For day-to-day liquidity risk management, CFP ensures that the bank is best prepared to respond to an unexpected problem. In this sense, a CFP is an extension of ongoing liquidity management and formalizes the objectives of liquidity management by ensuring:
a) A reasonable amount of liquid assets are maintained; b) Measurement and projection of funding requirements during various scenarios; and c) Management of access to funding sources.
CFP also provides directions for plausible actions in distress and emergency situations. In case of a sudden liquidity stress, it is important for the bank to be seemed organized, can did, and efficient to meet its obligations to the stakeholders. Since such a situation requires a spontaneous action, CFP will put the bank in better position to address the liquidity problem more efficiently and effectively. CFP ensures that bank management and key staffs are ready to respond to any distress situations.
90 Annual Report 2016 Maturity ladder of cash inflows and outflows are effective tool to determine banks cash position. A maturity ladder estimates a bank’s cash inflows and outflows and thus net deficit or surplus (GAP) both on a day to day basis and over a series of specified time periods. A bucket wise (e.g. call, 2-7 days, 1 month, 1-3 months,3-12 months, 1-5 years, over 5 years) maturity profile of the assets and liabilities is prepared to understand mismatch in every bucket. A structural maturity ladder or profile is prepared periodically following guidelines of the Bangladesh Bank DOS circular no. 02 dated 29 March 2011.
11.4 Policies and processes for mitigating liquidity risk
Managing the Liquidity risk of our bank attracts much more attention of the regulators and supervisors to comply the regulatory issues are issued by them time to time. The outcome of this concern was well reflected in the activities of the Basel Committee for Banking Supervision while formulating the Basel 2.5 and finally in Basel III documents. NRB Global Bank Limited (NRBGBL) also formulating & submitting Liquidity (LCR and NSFR) and leverage ratios those are primarily meant to address the above risks. For this Bangladesh Bank has already declared the Roadmap for the implementation of Basel III in the banking sector and our bank is also following these plans & roadmaps very strictly. The Liquidity Ratios are already implemented as a prudential requirement since September 2015 & our bank is doing so on. On the other hand, as per BB instruction after final adjustment by BB in 2017, Leverage Ratio requirements will become a separate supplementary pillar-1 capital standard for banks from January 2018 & NRBGBL is also ready follow & welcome the above outcomes as and when required considering its liquidity threads and risks to be mange.
(b) Quantitative Disclosure
(i) Liquidity Coverage Ratio 626.29% (ii) Net Stable Funding Ratio (NSFR) 06.56% (iii) Stock of High quality liquid assets 713.68 (iii) Total net cash outflows over the next 30 calendar days 113.95 (iv) Available amount of stable funding 4,386.41 (v) Required amount of stable funding 4,116.19
12.00 Leverage Ratio
Qualitative disclosure:
12.1 Views of BOD in system to reduce liquidity Risk
The BOD should have the overall responsibility is to monitor overall activities of the bank. The Board should decide the strategy, policies and procedures of the bank to manage leverage ratio in accordance with the risk tolerance/limits as per the guidelines. The risk tolerance should be clearly understood at all levels of management.
The Board should also ensure that it understands the nature of the leverage ratio. BOD must periodically reviews information necessary to maintain this understanding, establishes executive-level lines of authority and responsibility for managing the bank’s leverage ratio. Bank’s top management should be responsible for ensuring adherence to the risk tolerance/limits set by the Board as well as implementing the risk management strategy of the bank in line with bank’s decided risk management objectives and risk tolerance.
12.2 Policies and processes for managing
The LR playing a key role in avoiding such adverse developments in the future. The LR is a non-risk-based capital measure and is defined as Tier 1 capital over a bank’s total exposure measure, which consists of both on and off-balance sheet items. 3 It is widely expected that the LR will become a Pillar 1 requirement for banks under Basel III.
Annual Report 2016 91 12.3 Approach for calculating exposure:
At its highest level, the leverage ratio can be summarized as a measure of capital as a proportion of total adjusted assets. More specifically, it has been defined as the average of the monthly leverage ratio over the quarter based on Tier 1 capital (the capital measure) and total exposure (the exposure measure). The minimum ratio is currently calibrated at 3%.
b) Quantitative Disclosure
Components Amount
Leverage Ratio 8.86% On balance sheet exposure 4,926.68 Off balance sheet exposure 490.88 Total exposer 5147.56
13.00 Remuneration Qualitative disclosure:
(a). Information relating to the bodies that oversee remuneration:
> Name of the bodies that oversee remuneration. Under supervision and direction of the Senior Management of the Bank, the Human Resources Management Division oversees the 'remuneration' in line with its Human Resources Management policy.
> Composition and Mandate of the main body overseeing remuneration.
The Managing Director along with other Senior Executives of the Corporate Head Office is the main body of overseeing the remuneration. The Senior Management is the prime organ for overseeing the Bank’s remuneration. It assesses the status of remuneration and related matters and recommends to the Board for approval of its reformation, reorganization and alteration matching with the industry practices.
> External consultants whose advice has been sought, the body by which they were commissioned, and in what areas of the remuneration process.
No External Consultant is employed regarding remuneration and its process.
> A description of the scope of the bank's remuneration policy (e.g. by regions, business line), including the extent to which it is applicable to foreign subsidiaries and branches.
The Bank does not have any differentiated Pay Structure and employee benefits by regions/ business line/ activity. The Bank had no foreign subsidiaries and branches outside Bangladesh as on 31 December 2016.
> A description of the types of employees considered as material risks takers and as senior managers, including the number of employees in each group.
The bank reckons the members of the senior management, branch managers and the employees engaged in different functional divisions at Head Office and branches (except the employees involved in internal control & compliance and risk management) as the material risk takers of the Bank.
92 Annual Report 2016 (b) Information relating to the design and structure of remuneration process:
> An overview of the key features and objectives of the remuneration policy.
The purpose of the Bank's remuneration policy is to establish a framework for attracting, relating and motivating employees, and creating incentives for delivering long-term performance with established risk limits.
The Bank targets a fair human resources management by using a performance based system. Remuneration and other associated matters are guided by the Bank’s Employees’ Service Rule as well as direction & supervision from the Board from time to time in line with the industry practices.
> Whether the remuneration committee reviewed the banks' remuneration policy during the past year, and if so, an overview of any changes that was made.
The Senior Management under direct supervision and guidance of the Board of Directors reviewed the Banks' remuneration in 2015 by overseeing the Banks remuneration position in the Banking industry especially salary and other benefits of the employees.
> A discussion of how the bank ensures that risk and compliance employees are remunerated independently of the business they oversee.
The risk and compliance employees are carrying out the activities independently as per job assigned to them. Human Resources Management Division does not make any difference with other regular employees regarding remuneration of the risk and compliance employees and sets the remuneration as per the existing service rule of the Bank.
(c) Description of the ways in which current and future risk are taken into account in the remuneration processes:
> An overview of the key risks that the bank takes into account when implementing remuneration measures.
The business risk including credit risk, compliance, reputational, financial and liquidity risk are mostly considered when implementing the remuneration measures.
> An overview of the nature and type of the key measures used to take account of these risks, including risks difficult to measure.
Different set of measures are in practice based on the nature & types of business segments etc. These measures are primarily focused on the business goals set for each area of operation, branch vis-à-vis the actual results achieved as of the reporting date. The most vital tools & indicators used for measuring the risks are the asset quality (NPL ratio), Net Interest ratio, cost-income ratio, growth of net profit as well as the non-financial indicators namely the compliance status with the regulatory norms, instructions has been brought to the notice of all concerned of the Bank regularly.
Annual Report 2016 93 > A discussion of the ways in which these measures affect remuneration.
All the financial and non-financial indicators as per pre-determined set criteria are considered while evaluating the performance of each employee annually. Accordingly, the result of the performance differs from one to another affecting the remuneration.
> A discussion of how the nature and type of these measures has changed over the past year and reasons for the change, as well as the impact of changes on remuneration.
No material change has been made during the year 2016.
(d). Description of the ways in which the bank seeks to link performance during a performance measurement period with levels of remuneration:
> An overview of main performance metrics for bank, top level business lines and individuals.
Performance Appraisal Report is set by the Board while approving the business target/ budget for each year for the Bank and business lines/ segment. Appropriate tools, techniques and strategic planning is undertaken by the Management with the approval of the Board to achieve those targets. The most common performance indicators are the achievement of loan, deposit and profit target, yield on loans liquidity position, cost-income ratio, cost of fund etc.
> A discussion of how amounts of individual remuneration are linked to bank-wide and individual performance.
Salary increment, Employee house building loan facilities, Employee Car facilities, promotion and yearly incentive bonus are directly linked with individual performance of the employees.
> A discussion of the measures the bank will in general implement to adjust remuneration in the event that performance metrics are weak. This should include the banks' criteria for determining "weak" performance metrics.
Various Performance facilities i.e. yearly incentive bonus, salary increment, Employee house building loan facilities, Employee car facilities and promotion are determined by the outcome of scorecard in prescribed Performance Appraisal Report.
(e). Description of the ways in which the bank seeks to adjust remuneration to take account of longer-term performance:
> A discussion of the bank's policy on deferral and vesting of variable remuneration and, if the fraction of variable remuneration that is deferred differs across employees or groups of employees, a description of factors that determine the fraction and their relative importance.
Incentive compensation is delivered to Employees in the form of cash awards subject to performance based on Performance Appraisal Report.
94 Annual Report 2016 > A discussion of the bank's policy and criteria for adjusting deferred remuneration before vesting and (if permitted by national law) after vesting through claw back arrangements.
Not Applicable
(f). Description of the different forms of variable remuneration that the bank utilizes and the rationale for using these different forms:
A summary of Short-term and Long-term compensation packages of the Bank are as follows:
Short-Term Incentives/ Rewards
> Yearly incentive bonus; > Yearly Increment; > Special Increment for especial achievement; > Car, fuel and care maintenance allowance for executives; > Festival bonuses > Boisakhi allowance
Long-Term Incentive/ Rewards
> Provident fund > Gratuity; > Employee’s welfare Fund > Employees House Building loan facilities > Provident Fund loan > Periodically salary review (enhancement) > Employee Car facilities etc. > Leave fare assistance
Others Form: > Study leave > Foreign training etc.
Quantitative Disclosure
(g). Number of meetings held by the main body overseeing remuneration during the financial year and remuneration paid to its member:
Usually, meetings for overseeing remuneration by main body held when required. No additional remuneration is paid to the members for meetings.
Annual Report 2016 95 (h) Number of employees having received a variable remuneration award during the financial year:
The following Number of Employees were received a variable remuneration during the year 2016:
Particulars Number
Number of employees having received a variable remuneration award during the year 2016. Nil
Particulars Number
h.1 Number and total amount of guaranteed bonuses awarded during the financial year Nil
Particulars Number
h.2 Number and total amount of sign-on awards made during the financial year. Nil
Particulars Number
h.3 Number and total amount of severance payments made during the financial year Nil
i) Total amount of outstanding deferred remuneration, split into cash, shares and Nil share-linked instruments and other forms:
i.1 Total amount of deferred remuneration paid out in the financial year. Nil
(j) Breakdown of amount of remuneration awards for the financial year to show: Breakdown of Remuneration for the year- 2016 is as under:
(Figure in Crore)
Sl. No. Particulars Amount
01 Basic Salary 12.94 02 Allowances 21.40 03 Festival Bonus 2.70 04 Incentive Bonus 1.86 05 Provident fund contribution 1.22 06 Gratuity 0.48 07 Consolidated Salary 4.57 08 Total 45.17
(k) Quantitative information about employees' exposure to implicit (e.g. fluctuations in the value of shares or performance units) and explicit adjustments (e.g. claw backs or similar reversals or downward revaluations of awards) of deferred remuneration and retained remuneration:
k.1 Total amount of outstanding deferred remuneration and retained remuneration exposed to ex post explicit and / or implicit adjustment. Not Applicable
k.2 Total amount of reductions during the financial year due to ex post explicit adjustments. Not Applicable
k.3 Total amount of reductions during the financial year due to ex post implicit adjustments Not Applicable ex post explicit adjustments.
96 Annual Report 2016 Expansion of Branch Network of the Bank
Panthapath Mahila Branch of NRB Global Bank was inaugurated on February 22, 2016. Mr. Nizam Chowdhury, the honorable Chairman was present as the chief guest in the occasion.
Shindurpur Branch of NRB Global Bank was inaugurated on July 17, 2016. Mr. Nizam Chowdhury, the honorable Chairman was present as the chief guest in the occasion.
Nawabpur Road Branch of NRB Global Bank was inaugurated on December 22, 2016. Mr. Nizam Chowdhury, the honorable Chairman was present as the Chief Guest in the Occasion.
Annual Report 2016 97 98 Annual Report 2016 Annual Report 2016 99 NRB Global Bank Limited Balance Sheet As at 31 December 2016
Amount in Taka Particulars Notes 2016 2015 PROPERTY AND ASSETS Cash 3 Cash In hand (including foreign currencies) 315,266,932 209,627,510 Balance with Bangladesh Bank and its agent bank (s) (including foreign currencies) 2,336,515,101 1,655,781,448 2,651,782,033 1,865,408,958 Balance with other banks and financial institutions 4 In Bangladesh 4,765,147,247 3,219,026,038 Outside Bangladesh 79,196,370 40,741,542 4,844,343,617 3,259,767,580 Money at call and short notice 5 20,000,000 230,000,000 Investments 6 Government 4,573,728,394 3,101,960,269 Others 428,575,000 524,279,792 5,002,303,394 3,626,240,061 Loans and advances 7 Loans, cash credits, overdrafts, etc. 26,770,994,107 13,974,075,381 Bills purchased and discounted 8,187,291,357 6,872,055,245 34,958,285,465 20,846,130,626 Fixed assets including premises, furniture and fixtures 8 630,124,182 532,047,421 Other assets 9 1,159,913,477 1,070,435,322 Non - banking assets 10 - - Total assets 49,266,752,168 31,430,029,968 LIABILITIES AND CAPITAL Liabilities Borrowings from other banks, financial institutions and agents 11 757,085,065 48,807,071 Deposits and other accounts 12 Current deposits and other accounts 1,716,672,837 1,123,072,706 Bills payable 144,609,092 60,351,751 Savings bank deposits 1,549,816,494 743,974,875 Fixed deposits 39,466,980,543 24,757,839,736 Bearer certificate of deposit - - Other deposits 2,295,159 1,839,931 42,880,374,125 26,687,078,999 Other liabilities 13 1,012,837,413 483,527,868 Total liabilities 44,650,296,603 27,219,413,937 Capital / Shareholders' equity Paid up capital 14.1 4,250,000,000 4,250,000,000 Share premium - - Statutory reserve 15 189,374,321 30,910,902 Revaluation reserve 16 9,880,103 27,051,726 Surplus/(deficit) in profit and loss account 17 167,201,141 (97,346,597) Total shareholders' equity 4,616,455,565 4,210,616,031 Total liabilities and shareholders' equity 49,266,752,168 31,430,029,968
100 Annual Report 2016 NRB Global Bank Limited Balance Sheet As at 31 December 2016
Amount in Taka Particulars Notes 2016 2015 OFF - BALANCE SHEET EXPOSURE Contingent liabilities Acceptances and endorsements 18.1 813,190,583 268,553,728 Letters of guarantee 18.2 3,860,949,742 929,792,581 Irrevocable letters of credit 18.3 234,691,928 292,781,141 Bills for collection - - Other contingent liabilities - - 4,908,832,253 1,491,127,450
Other contingent liabilities - - Value of travelers cheques on hand - - Value of Bangladesh Sanchaya Patra on hand - -
Other commitments Documentary credits and short term trade-related transactions - - Forward assets purchased and forward deposits placed - - Undrawn note issuance and revolving underwriting facilities - - Undrawn formal standby facilities, credit lines and other commitments - - Liabilities against forward purchase and sale - - - - Total off-balance sheet items including contingent liabilities 4,908,832,253 1,491,127,450
These financial statements should be read in conjunction with the annexed notes.
Chairman Director Director Managing Director
28-Mar-17 Shafiq Basak & Co. Date:Dhaka Chartered Accountants
Annual Report 2016 101 NRB Global Bank Limited Profit and Loss Account For the year ended 31 December 2016
Amount in Taka Particulars Notes 20162016 20152015
Interest income 20 4,287,463,739 2,827,780,425 Interest paid on deposits and borrowings, etc. 21 2,557,559,670 1,876,519,837 Net interest income 1,729,904,069 951,260,588 Investment income 22 305,296,458 217,363,422 Commission, exchange and brokerage 23 70,500,747 48,901,002 Other operating income 24 29,424,182 30,723,086 Total operating income (A) 2,135,125,456 1,248,248,098
Salary and allowances 25 455,046,916 337,447,303 Rent, taxes, insurance, electricity etc. 26 280,830,460 215,072,045 Legal expenses 27 761,547 776,498 Postage, stamp, telecommunication etc. 28 13,176,307 10,993,433 Stationery, printings, advertisements etc. 29 13,526,511 27,610,018 Managing Director's salary and fees 30 10,880,000 10,137,097 Directors' fees 31 17,059,489 2,886,702 Auditors' fees 32 316,250 287,500 Charges on loan losses - - Depreciation and repair of Bank's assets 33 140,493,067 109,476,578 Other expenses 34 280,032,040 222,312,306 Total operating expenses (B) 1,212,122,587 936,999,480 Profit / (loss) before provision (C=A-B) 923,002,869 311,248,618 Provision for loans and advances 35 Specific provision (22,338,007) 41,677,700 General provision 135,886,833 98,514,998 Provision for off-balance sheet items 34,249,896 3,882,467 Provision for diminution in value of investments (17,112,948) 17,112,948 Other provisions - - Total provision (D) 130,685,774 161,188,113 Total profit / (loss) before taxes (C-D) 792,317,095 150,060,505 Provision for taxation 36 Current tax 383,936,063 125,826,698 Deferred tax (14,630,125) 5,261,985 369,305,938 131,088,683 Net profit/(loss) after taxation 423,011,157 18,971,822 Retained earnings brought forward from previous years (97,346,597) (86,306,318) 325,664,560 (67,334,496)
102 Annual Report 2016 NRB Global Bank Limited Profit and Loss Account For the year ended 31 December 2016
Amount in Taka Particulars Notes 2016 2015
Appropriations: Statutory reserve 158,463,419 30,012,101 General reserve - - Dividends etc. - - 158,463,419 30,012,101 Retained surplus/(Deficit) 17 167,201,141 (97,346,597)
Earnings per share (EPS) 41 1.00 0.04
These financial statements should be read in conjunction with the annexed notes
Chairman Director Director Managing Director
Auditors' report to the Shareholders See our annexed report of event date
28-Mar-17 Shafiq Basak & Co. Date:Dhaka Chartered Accountants
Annual Report 2016 103 NRB Global Bank Limited Cash Flow Statement For the year ended 31 December 2016
Amount in Taka Particulars Notes 2016 2015
A) Cash flows from operating activities Interest receipts in cash 4,544,068,114 3,002,806,805 Interest payments (2,438,558,169) (1,729,615,405) Dividend receipts 17,031,390 15,909,722 Fees and commission receipts in cash 70,500,748 48,901,002 Recoverable on loans previously written-off - - Cash payments to employees (465,926,916) (347,584,400) Cash payments to suppliers (13,526,511) (27,610,018) Income tax paid (152,429,042) (71,189,900) Receipts from other operating activities 37 29,424,182 30,723,086 Payments for other operating activities 38 (530,387,498) (414,917,160) Cash generated from operating activities before changes in operating assets and liabilities 1,060,196,299 507,423,732 Increase / (decrease) in operating assets and liabilities Statutory deposits - - Purchase of trading securities (1,488,830,648) (2,888,670,914) Loans and advances to other banks - - Loans and advances to customers (14,112,154,839) (10,607,932,116) Other assets 28,968,596 (134,009,631) Deposits from other banks 39 2,400,000,000 (1,450,000,000) Borrowing from Bangladesh bank and other banks 708,277,995 9,320,158 Deposits from customers 13,674,293,625 14,083,247,922 Other liabilities account of customers - - Trading liabilities - - Other liabilities 29,317,833 15,168,643 40 1,239,872,562 (972,875,938) Net cash from/used in operating activities 2,300,068,861 (465,452,206) B) Cash flows from investing activities Proceeds from sale of securities 404,279,792 - Payment for purchase of securities (308,575,000) - Purchase / sale of subsidary - - Purchase of property, plant and equipment (234,715,441) (151,378,542) Proceeds from sale of property, plant and equipment - - Net cash used in investing activities (139,010,649) (151,378,542) C) Cash flows from financing activities Receipts from issue of sub-ordinated bond - - Receipts from issue of ordinary share - - Payment for redumption of loan capital and debt security - - Dividend paid - - Net cash flows from financing activities - -
104 Annual Report 2016 NRB Global Bank Limited Cash Flow Statement For the year ended 31 December 2016
Amount in Taka Particulars Notes 2016 2015
D) Net increase / (decrease) in cash and cash equivalents (A+ B + C) 2,161,058,212 (616,830,748) E) Effects of exchange rate changes on cash and cash equivalents - - F) Cash and cash equivalents at beginning of the year 5,355,719,338 5,972,550,086 G) Cash and cash equivalents at end of the year (D+E+F) 7,516,777,550 5,355,719,338 Cash and cash equivalents at end of the year Cash in hand (including foreign currencies) 315,266,932 209,627,510 Money at call and short notice 20,000,000 230,000,000 Reverse repo - - Prize bonds 651,900 542,800 Balance with Bangladesh Bank and its agent bank (s) (including foreign currencies) 2,336,515,101 1,655,781,448 Balance with other banks and financial institutions 4,844,343,617 3,259,767,580 7,516,777,550 5,355,719,338
Chairman Director Director Managing Director
Annual Report 2016 105
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106 Annual Report 2016 a l 2 1 7 0 4 4 2 7 8 - k 3 0 1 0 9 6 8 7 6 , 9 , 1 , 6 , 0 , 3 , 4 , 1 , 4 , 1 6 5 3 0 3 5 4 3 2 T o t a 6 1 4 0 0 8 2 1 5 , 2 , 5 , 3 , 0 , 3 , 2 , 1 , 9 , 7 5 6 4 0 2 8 0 9 6 1 3 4 2 0 5 3 5 6 3 6 o u n t i T a 865,209,578 , 3 , 8 , 0 , 9 , 1 , 2 2 4 5 4 1 9 1,012,837,414 4,616,455,565 3 4 757,085,065 42,015,164,547 44,650,296,603 A m
- - - - 0 4 2 4 3 3 r s 5 0 5 6 4 1 a - , 4 , 8 , 2 , 4 , 9 , 9 e 4 3 6 3 3 1 0 6 8 4 9 9 y , 6 , 5 , 5 , 5 , 1 , 4 5 0 9 6 0 1 8 t o r e 6 1 0 2 8 8 c 5 5 2 198,998,203 , 1 , 4 2 3 1,856,809,634 2,288,760,442 1,199,731,472 232,952,605.01 A b o v
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t t b d a m a
i s o m 20,000,000 A u l 315,266,932
175,910,651 389,742,145 833,957,799 463,965,391 660,000,000 103,825,150 531,395,051 f 5,990,279,129 6,772,361,357 q 7,657,726,997 8,189,122,047 o i 121,540,489.57
U p t o 1 G s L i
s y B l a t o r R n c A N ( D i r e r s u l a n : r t i c ) a a B P - A i r m ( p a g C h a y i t i d u : ) l i q B : t ) ( e s A n ( i e s e t i l t : i v e s t b s s i e : l a u t s l i a l a i l t e m a a b s t t Cash in hand Balance with Bangladesh Bank and its agent bank (s) (including foreign currencies) Balance with other banks and financial institutions Money at call and short notice Investments Loans and advances Fixed assets including premises, furniture and fixtures Other assets Non banking assets Borrowings from Bangladesh Bank, other banks, financial institutions and agents Deposits Other accounts Provision and other liabilities u i a o o T C L A s T
Annual Report 2016 107 NRB Global Bank Limited Notes to the Financial Statements As at and for the year ended 31 December 2016
1. The Bank and its activities
1.1 NRB Global Bank Limited ("the Bank") was incorporated as a public limited company in Bangladesh under Companies Act, 1994 with the registered office at Khandker Tower, 94 Gulshan Avenue, Gulshan-1, Dhaka-1212. The Bank commenced banking operation on 23 October 2013 by obtaining license from Bangladesh Bank on 5 August 2013 under section 32(1) of the Bank Companies Act 1991(amendment up to 2013).The number of branches of the Bank was 37 (Thirty Seven) located in different areas of Dhaka , Chittagong,Khulna, Rajshahi and Sylhet as on 31 December 2016. Currently the Bank does not have any Off-shore Banking Unit (OBU) and subsidiary company.
The principal activities of the Bank are to provide a comprehensive range of financial products (loans and deposits) and services, personal and commercial banking, trade services, cash management, treasury, securities and custodian services. There have been no significant change in the nature of the principal activities of the bank during the reporting period.
2. Significant accounting policies and basis of preparation of financial statements
2.1 Presentation and basis of financial statements The financial statements of the Bank comprise of Balance Sheet, Profit and Loss Account, Cash Flow Statement, Liquidity Statement, Statement of Changes in Equity and relevant explanatory notes and disclosures.
The financial statements of the Bank as at and for the year ended have been prepared under the historical cost convention except for Government Securities which are stated at fair value and in accordance with the Bank Companies Act 1991 (Amendment upto 2013), BRPD circular no.14 dated 25 June 2003, the Companies Act 1994 and other rules regulations and laws applicable for the Bank.
The financial statements of the Bank have been prepared in accordance with the measurement and recognition criteria of International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) adopted by the Institute of Chartered Accountants of Bangladesh (ICAB) as Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS).
2.2 Basis of measurement The financial statements have been prepared on the historical Cost basis except for the following material items: - Government Treasury Bills and Bonds designated as ''Held for Trading (HFT)'' at present value using marking to market concept with gain credited to revaluation reserve but loss charged to Profit and Loss Account; - Government Treasury Bills and Bonds designated as ''Held to Maturity (HTM)'' at present value using amortization concept.
2.3 Use of estimation and judgement The preparation of the financial statements of the Bank in conformity with BFRSs require management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis considering business realities. Revisions of accounting estimates are recognized in the period in which the estimate is revised and in any future period(s) affected.
Key estimates include the following: - Loan loss provision - Deferred tax assets/liabilities
108 Annual Report 2016 2.4 Materiality, aggregation and offsetting The Bank aggregates each material class of similar items and presents separately which are dissimilar in nature or function those are immaterial. The Bank did not offset assets and liabilities or income and expense unless required or permitted by BAS/BFRS.
2.5 Assets and basis of their valuation
2.5.1 Cash and cash equivalents Cash and cash equivalents includes notes and coins in hand and at ATM, unrestricted balances held with Bangladesh Bank and its agent bank, balance with other banks and financial institutions, money at call and short notice and prize bond which are not ordinarily susceptible to change in value.
Foreign currency Foreign currency transactions have been converted into equivalent Taka currency at the ruling exchange rates on the respective date of such transactions as per BAS 21 “The Effects of Changes in Foreign Exchange Rates”.
Assets and liabilities in foreign currencies as at 31 December 2016 have been converted into Taka currency at the average of the prevailing buying and selling rates of the relevant foreign currencies at that date except balances with other banks and financial institutions which have been converted as per directives of Bangladesh Bank vide its circular no. BRPD (R) 717/2004-959 dated 21 November 2004.
Differences arising through buying and selling transactions of foreign currencies on different dates of the year have been adjusted by crediting/debiting exchange gain or loss account respectively.
2.5.2 Investments Investments have been initially recognised at cost, including acquisition charges associated with the investment. Premiums have been amortised and discounts accredited, using the effective or historical yield method. Government Treasury Bills and Bonds (categorized as HFT or/and HTM) are accounted for as per Bangladesh Bank DOS circular letter no. 05 dated 26 May 2008 and DOS circular no. 05 dated 28 January 2009.
Government securities
Held to Maturity (HTM)
Investments which are intended to be held to maturity are classified as “Held to Maturity”. These are measured at amortised cost at each year end by taking into account any discount or premium in acquisition. Amortised amount of such premium are booked into Profit and Loss Account or discount is booked to reserve until maturity/disposal.
Held for Trading (HFT)
Investments primarily held for selling or trading are classified in this category. After initial recognition, investments are marked to market on weekly basis. Decrease in the book value is recognised in the Profit and Loss Account and any increase is transferred to revaluation reserve account. The Bank did not have any HFT securities during the reporting period.
Annual Report 2016 109 Value of investments has been enumerated as follows:
Initial Measurement after Investment class recognition initial recognition Recording of changes
Loss to Profit and Loss Account (P&L), gain to Govt. Treasury Bill / Bond (HFT) Cost Market value revaluation reserve till maturity.
Govt. Treasury Bill / Bond (HTM) Cost Amortised value Increase in value to equity and decrease in value to Profit & Loss
Debenture Face value None None
Prize bond Cost None None
Lower of cost and Any loss is charged in P&L; Shares Cost market value Unrealized gain not recognized in accounts
Investment in listed securities
These securities are bought and held primarily for the purpose of selling them in future or held for dividend income. These are reported at cost. Unrealised gains are not recognised in the Profit and Loss Account as per BAS 18 "Revenue".
In accordance with BRPD circular no.14 dated 25 June 2003, provisions should be made for any loss arising from the diminution in value of investments. Subsequently as per DOS circular no. 04 dated 24 November 2011, provisions may be made for any loss arising from the diminution in value of investments after netting of gain.
Investment in un-listed securities
Investment in unlisted securities is reported at cost under cost method.
2.5.3 Loans and advances Loans and advances are stated at gross amount. General provisions on unclassified loans and contingent assets as well as specific provisions for classified loans and interest suspense thereon are shown under other liabilities. Provision against classified loans and advances is made on every quarter end and as per instructions contained in BRPD circular no. 14 dated 23 September 2012, BRPD circular no. 19 dated 27 December 2012, BRPD circular no. 05 dated 29 May 2013, BRPD circular no. 16 dated 18 November 2014 and other instructions from time to time. The rate for provisions are as follows:
General provision Specific provision Total loans and advances UC SMA SS DF BL
House building and professionals to setup 2% 2% 20% 50% 100% business Consumer Other than housing finance & professionals 5% 5% 20% 50% 100% to setup business Loan to brokerage house, merchant banks, 2% 2% 20% 50% 100% stock dealers
Short-term agri-credit and micro credit 2.5% 2.5% 5% 5% 100%
Small and medium enterprise finance 0.25% 0.25% 20% 50% 100%
Other advances 1% 1% 20% 50% 100%
Off balance sheet items 1% - - - -
110 Annual Report 2016 2.5.4 Fixed assets Recognition and measurement of fixed assets
Fixed assets except land are stated at cost less accumulated depreciation as per BAS-16 "Property, Plant and Equipment".
The cost of an item of fixed assets is recognized as an asset if it is probable that future economic benefits associated with the item will flow to the entity, and the cost of the item can be measured reliably.
The cost of an item of fixed assets comprises: - its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates; - any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management; and - the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.
Subsequent costs
Subsequent costs are capitalized only when it is probable that the future economic benefits associated with the costs will flow to the entity and cost can be measured reliably. The carrying amount of the replaced portion is derecognized. The costs of day to day servicing of fixed assets i.e. repairs and maintenance is charged to profit and loss account as expense when incurred.
Depreciation
Depreciation is charged at the rates stated below on all fixed assets on the basis of estimated useful lives as determined in the fixed asset policy of the Bank. In all cases depreciation is calculated on the straight line method. Depreciation on addition of fixed assets is charged when the assets is available for use and ceases at the month when the assets are disposed. No depreciation is charged on building under construction until the usage of the assets. Depreciation rates used for each type of fixed assets are as follows:
Rate of depreciation/ Particulars of fixed assets amortisation (per annam) Estimated useful lives (Years)
Buildings 2.50% 40
Furniture and Fixtures 10.00% 10
Machineries and equipment 20.00% 5
Computer and peripherial 20.00% 5
Motor vehicle 20.00% 5
ATM 20.00% 5
Library books and journals 20.00% 5
Software 20.00% 5
Annual Report 2016 111 Derecognition of fixed assets
The carrying amount of an item of fixed assets is derecognized on disposal or when no future economic benefits are expected from its use or disposal. The gain or loss arising from derecognition of an item of fixed assets is to be recorded in profit or loss when the item is derecognized.
Leased assets
Fixed assets which are procured under finance lease arrangement (under which substantially all the risks and rewards incidental to ownership are transferred to the lessees i.e. NRBGBL) are reported as leased assets as per BAS 17 “Leases”.
These assets held under finance lease are recognized as assets of the bank at an amount equal to the lower of their fair value and the present value of minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Any initial direct costs incurred are added to the amount recognized as leased asset.
These assets are depreciated fully over the shorter of the lease terms and their useful lives.
Intangible assets
Intangible asset is an identifiable non-monetary asset without physical substance. An intangible asset is recognized if it is probable that the future economic benefits that are attributable to the assets will flow to the entity and the cost of the asset can be measured reliably in accordance with BAS 38: "Intangible Assets".
Subsequent expenditure on intangible asset is capitalized only when it increases the future economic benefits embodied in the specific assets to which it relates. All other expenditure is expensed as incurred.
The core banking software used by NRBGBL represent the value of computer application software licensed for the use of the bank. Software is carried at cost less accumulated amortization . Initial cost comprises license fees paid at the time of purchase and other directly attributable costs incurred for customizing the software for its intended use. Software is amortized using the straight line method over the estimated useful life of 5 (five) years commencing from the month at which the application software is made available for use.
2.5.5 Other assets Other assets includes advance for operating and capital expenditure, stocks of stationary and stamps, security deposits to government agencies etc. As per BRPD circular no. 14 dated 25 June 2003, Income & Non-income-generating other assets item(s) have been shown separately in the note-09 to the financial statements.
2.5.6 Non-banking assets Non-banking assets are acquired on account of the failure of a borrower to repay the loan in time after receiving the decree from the court regarding the right and title of the mortgaged property. Currently, the bank has no non-banking assets.
2.5.7 Impairment of assets An asset is impaired when its carrying amount exceeds its recoverable amount as per BAS 36 “Impairment of Assets”. The Bank assesses at the end of each reporting period whether there is any indication that an asset may be impaired and/or whenever events or changes in circumstances indicate that the carrying value of the asset may not be recovered. If any such indication exists, the Bank make an estimate of the recoverable amount of the assets. The carrying amount of the asset is reduced to its recoverable amount, if the recoverable amount is less than its carrying amount and impairment losses are recognized in the profit and loss account. However, impairment of financial assets are guided by the relevant BB circulars/instructions and BAS 39 "Financial Instruments: Recognition and Measurement" .
112 Annual Report 2016 2.6 Capital, reserve, liabilities and provision and basis of their valuation
Share capital and reserves
2.6.1 Authorized and issued capital The authorized capital of the Bank is the maximum amount of share capital that the Bank is authorized by its Memorandum and Articles of Association to issue (allocate) among shareholders. Part of the authorized capital can (and frequently does) remain unissued. This number can be changed by shareholders' approval upon fulfillment of related provisions of Companies Act 1994. The part of the authorized capital which has been issued to shareholders is referred to as the issued share capital of the bank.
2.6.2 Paid-up capital The paid-up capital represents the amount of Bank’s capital that has been contributed by ordinary shareholders. The holders of ordinary shares are entitled to receive dividend as recommended by the Board and subsequently approved by the shareholders from time to time in the Annual General Meeting (AGM).
2.6.3 Statutory reserve In compliance with the provision of Section 24 of Bank Company Act 1991 (Amendment upto 2013), the Bank transfers at least 20% of its profit before tax to “Statutory Reserve Fund” each year until the sum of statutory reserve and share premium equal to the paid up capital of the bank.
2.6.4 Assets revaluation reserve When an assets carrying amount is increased as a result of revaluation the increased amount is credited directly to equity under the heading of assets revaluation reserve as per BAS 16 "Property, Plant and Equipment". The revaluation reserve for the Treasury Bonds and Bills are booked as per Bangladesh Bank DOS circular letter no. 05 dated 26 May 2008 and DOS circular no. 05 dated 28 January.
Liabilities and provisions
2.6.5 Borrowings from other banks, financial institutions and agents Borrowings from other banks, financial institutions and agents include interest bearing borrowings which are stated in the financial statements at principal amount of the outstanding balance. Interest payables on such borrowings are reported under other liabilities.
2.6.6 Deposits and other accounts Deposits and other accounts include non-interest bearing current deposits redeemable at call, interest bearing short-term deposits, savings deposits and fixed deposits which are initially measured at the consideration received. These items are subsequently measured and accounted for at the gross value of the outstanding balance in accordance with the contractual agreements with the counterparties.
2.6.7 Provision for taxation Income tax represents the sum of current tax and deferred tax.
Current tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Bank's liability for current tax is calculated using tax rates that have been enacted or sustantively enacted by the balance sheet date.
Provision for current income tax has been made at a rate of 40% on the accounting profit made by the Bank after considering taxable allowances and disallowances as per income tax laws applicable for the Bank.
Annual Report 2016 113 Deferred tax
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and are accounted for using the balance sheet method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that is probable that taxable profits will be available against which deductible temporary differences, unused tax losses or unused tax credits can be utilised. Such assets and liabilities are not recognised if the temporary differences arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint-ventures, except where the Bank is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised, based on tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited to the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the company intends to settle its current tax assets and liabilities on a net basis.
The impact on the account of changes in the deferred tax assets and liabilities has also been recognized in the Profit and Loss Account as per BAS 12 "Income Taxes".
2.6.8 Other liabilities Other liabilities comprise items such as provision for loans and advances, provision for taxes, interest payable on borrowing, interest suspense and accrued expenses etc. Individual item-wise liabilities are recognized as per the guidelines of Bangladesh Bank and Bangladesh Financial Reporting Standards (BFRS).
2.6.9 Dividend payable Final dividend is recognized when it is approved by the shareholders in AGM. Interim dividend is recognized when it is paid to shareholders.
2.6.10 Provision for loans and advances Provision for loans and advances is made on the basis of quarter end review by the management and instructions contained in BRPD circular no. 14 dated 23 September 2012, BRPD circular no. 05 Dated 29 May 2013 , BRPD circular no. 19 dated 27 December 2012 and BRPD circular no. 08 dated 02 August 2015.
2.6.11 Provision for off-balance sheet exposures In compliance with Bangladesh Bank guidelines, contingent liabilities have been disclosed under off-balance sheet items. As per BRPD circular no. 14 dated 23 September 2012 and related earlier circulars, the bank has been maintaining provision @1% against certain off-balance sheet exposures.
2.6.12 Provision for nostro account As per instruction contained in the circular letter no. FEPD (FEMO)/01/2005-677 dated 13 September 2005 issued by Foreign Exchange Policy Department of Bangladesh Bank, Provision is to be maintained on the unreconciled debit balances running unreconciled for more than 03 months as on the reporting date. Since there is no unreconclied entries which are unreconciled for more than 03 months, no provision has been made in this regard.
114 Annual Report 2016 2.6.13 Provision for other assets Provision for other assets is made as per the guidelines mentioned (100% provision is required on other assets which are outstanding for one year and above) in the BRPD circular no. 14 dated 25 June 2001.
2.6.14 Provision for liabilities and accrued expenses In compliance with BAS 37, provisions for other liabilities and accrued expenses are recognized in the financial statements when the Bank has a legal or constructive obligation as a result of past event, it is probable that an outflow of economic benefit will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
2.6.15 Contingent liabilities Contingent liabilities which include certain guarantees and letters of credit pledged as collateral are possible obligations that arise from past events whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not within the control of the Bank. Contingent liabilities are not recognized in the financial statements as per BAS 37 “Provisions, Contingent Liabilities and Contingent Assets”. However, disclosure on contingent liabilities have been made on the face of balance sheet under “Off-balance Sheet Items” as per the guidelines of BRPD circular no. 14 dated 25 June 2003.
2.7 Revenue recognition
2.7.1 Interest income Interest on unclassified loans and advances is accounted for as income on accrual basis, interest on classified loans and advances is credited to interest suspense account with actual receipt of interest there from credited to income as and when received as per instruction contained in BRPD 14 dated 23 September 2012 & BRPD 19 dated 27 December 2012 of Bangladesh Bank.
2.7.2 Fees and commission income Fees and commission income arises on services provided by the Bank and recognized as and when received basis. Commission charged to customers on letters of credit, letters of guarantee and acceptance are credited to income at the time of effecting the transactions.
2.7.3 Dividend Income Dividend Income from investment is recognised at the time when it is decleared, ascertained and right to receive the payment is established.
2.7.4 Interest income from investments Interest income on investments in Government and other securities, debentures and bonds is accounted for on accrual basis.
2.7.5 Interest paid on borrowings and deposits Interest paid on borrowings and deposits are calculated on 360 days basis (except for some treasury instruments which are calculated on 364 days basis) in a year and recognized on accrual basis.
2.7.6 Management and other expenses Expenses incurred by the Bank are recognised on actual and accrual basis.
2.7.7 Retirement benefits The retirement benefits accrued for the employees of the Bank during the reporting period have been accounted for in accordance with the provisions of BAS 19 "Employee Benefit". The retirement benefit schemes operated by the Bank are outlined below:
2.7.7.1 Provident Fund Provident fund benefits are given to the permanent employees of the Bank in accordance with Bank's service rules. Accordingly a trust deed and provident fund rules is to be prepared. All confirmed employees of the Bank are contributing 10% of their basic salary as subscription to the Fund. The Bank also contributes equal amount of the employees' contribution. Interest earned from the investments is credited to the members' account on yearly basis.
Annual Report 2016 115 2.7.7.2 Gratuity fund The Bank operates an unfunded gratuity fund on "Closed Plan Basis", in respect of which provision has made annually covering all its permanent eligible employees.
2.7.8 Earnings per share The Bank presents basic and diluted Earnings Per Share (EPS) data for its ordinary shares as per BAS 33 “Earnings Per Share”. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the bank by the weighted average number of ordinary shares outstanding during the period.
2.8 Cash flow statement Cash flow statement has been prepared in accordance with BAS 7 "Statement of Cash Flows" and under the guideline of Bangladesh Bank BRPD circular no.14 dated 25 June 2003. The Statement shows the structure of changes in cash and cash equivalents during the financial year.
2.9 Liquidity statement The liquidity statement has been prepared in accordance with remaining maturity grouping of Assets and Liabilities as at the close of the year as per following bases:
Particulars Basis of Use
Cash, Balance with other banks and financial Stated maturity/ observed behavioral trend institutions, money at call and short notice etc.
Investments Residual maturity term Repayment/maturity schedule and behavioral trend Loans and advances (non-maturity products) Fixed assets Useful life
Other assets Realization/amortization basis Borrowings from other banks and financial Maturity/repayment term institutions Deposits and other accounts Maturity and behavioral trend (non-maturity products)
Other long term liability Maturity term
Provision and other liability Settlement/adjustment schedule basis
2.10 Statement of changes in equity Statement of Changes in Equity has been prepared in accordance with BAS 1 “Presentation of Financial Statements” and following the guidelines of Bangladesh Bank BRPD circular no.14 dated 25 June 2003.
2.11 Related party transactions Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence.
Related party transaction is a transfer of resources, services or obligations between related parties, regardless of whether a price is charged as per BAS 24 ''Related Party Disclosures'', Bangladesh Bank & BSEC guidelines. Details of the related party transactions have been disclosed in Note - 44.
2.12 Reconciliation of books and accounts Books of account in regard to inter-bank (in Bangladesh and outside Bangladesh) as well as inter-branches are reconciled at regular intervals to keep the unreconciled balances within non-material level.
2.13 Events after the reporting period All the material events after the reporting period have been considered and appropriate adjustments/disclosures have been made in the financial statements as per BAS 10 “Events after the Reporting Period”.
116 Annual Report 2016 2.14 Information about business and geographical segments
Business segment Business segments report consists of products and services whose risks and returns are different from those of other business segments. These segments comprise Conventional Banking, Islamic Banking and investment. Business segments report are shown in Annexure-B.
Geographical segments Geographical segments report consists of products and services within a particular economic environment where risks and returns are different from those of other economic environments. Geographical segments report are shown in Annexure-B.
Inter-segment transactions are generally based on inter-branch fund transfer measures as determined by the management. Income, expenses, assets and liabilities are specifically identified with individual segments. Based on such allocation, segmental balance sheet as on 31 December 2016 and segmental profit and loss account for the year ended 31 December 2016 have been prepared.
2.15 Compliance report on Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS)
The Institute of Chartered Accountants of Bangladesh (ICAB) is the sole authority for adoption of International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) as Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS). While preparing the financial statements, NRB Global Bank applied all of the BAS and BFRS applicable and relevant. Details are as follows:
Name of the BAS BAS no. Status
Presentation of Financial Statements 1 Applied(1) Inventories 2 Applied Statement of Cash Flows 7 Applied(1) Accounting Policies, Changes in Accounting Estimates and Errors 8 Applied Events after the Reporting Period 10 Applied Construction Contracts 11 N/A Income Taxes 12 Applied Property, Plant and Equipment 16 Applied Leases 17 Applied Revenue 18 Applied Employee Benefits 19 Applied Accounting for Government Grants and Disclosure of Government Assistance 20 N/A The Effects of Changes in Foreign Exchanges Rates 21 Applied Borrowing Costs 23 N/A Related Party Disclosures 24 Complied Accounting and Reporting by Retirement Benefit Plans 26 N/A Separate Financial Statements 27 N/A Investments in Associates and Joint Ventures 28 N/A Interests in Joint Ventures 31 N/A Financial Instruments: Presentation 32 Applied(1) Earnings Per Share 33 Applied Interim Financial Reporting 34 Applied Impairment of Assets 36 Applied(1) Provisions, Contingent Liabilities and Contingent Assets 37 Applied(1) Intangible Assets 38 Applied(1) Financial Instruments: Recognition and Measurement 39 Applied(1) Investment Property 40 N/A Agriculture 41 N/A
Annual Report 2016 117 Name of the BFRS BFRS No. Status
First-time Adoption of International Financial Reporting Standards 1 N/A Share Based Payment 2 N/A Business Combinations 3 N/A Insurance Contracts 4 N/A Non-Current Assets Held for Sale and Discontinued Operations 5 N/A Exploration for and Evaluation of Mineral Resources 6 N/A Financial Instruments: Disclosures 7 Applied(1) Operating Segments 8 Applied Consolidated Financial statements 10 N/A Joint Arrangements 11 N/A Disclosure of interests in other Entities 12 N/A Fair Value Measurement 13 Applied(1) 1. Applied with departure as mentioned in Note - 2.16
2.16 Details of departures from BAS and BFRS for the sake of Bangladesh Bank compliance Although the financial statements of the Bank is prepared complying the provisions of International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) as adopted by the Institute of Chartered Accountants of Bangladesh (ICAB), as a primary regulator, requirement of Bangladesh Bank in this regard has to be complied as well. In certain areas of financial statements, requirement of Bangladesh Bank differs from that of the BFRS. In such cases, compliance of Bangladesh has been ensured through departures from the relevant requirements of IAS/IFRS. Some of the material issues are as follows:
Investment in shares and securities BFRS: As per requirements of BAS 39 investment in shares and securities generally falls either under “at fair value through profit and loss account” or under “available for sale” where any change in the fair value at the reporting date is taken to profit and loss account or revaluation reserve respectively.
Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003 investments in quoted shares and unquoted shares are revalued at the reporting date at market price and as per book value of last audited balance sheet respectively. Provision should be made for any loss arising from diminution in value of investment on portfolio basis.
Revaluation gain/loss on government securities
BFRS: As per requirement of BAS 39 where securities will fall under the category of "Held for Trading (HFT)", any change in the fair value of held for trading assets is recognized through profit and loss account. Securities designated as "Held to Maturity (HTM)" are measured at amortized cost method and interest income is recognized through the profit and loss account.
Bangladesh Bank: HFT securities are revalued on the basis of mark to market and any gains on revaluation of securities which have not matured as at the balance sheet date are recognized in other reserves as a part of equity and any losses on revaluation of securities which have not matured as at the balance sheet date are charged in the profit and loss account. Interest on HFT securities including amortization of discount are recognized in the profit and loss account. HTM securities which have not matured as at the balance sheet date are amortized and gains or losses on amortizations are recognized in other reserve as a part of equity.
Provision on loans and advances BFRS: As per BAS 39 an entity should start the impairment assessment by considering whether objective evidence of impairment exists for financial assets that are individually significant. For financial assets that are not individually significant, the assessment can be performed on an individual or collective (portfolio) basis.
118 Annual Report 2016 Bangladesh Bank: As per BRPD circular no. 14 dated 23 September 2012, BRPD circular no. 19 dated 27 December 2012 ,BRPD circular no. 05 dated 29 May 2013 and nd BRPD circular no. 08 dated 02 August 2015 a general provision at 0.25% to 5% under different categories of unclassified loans (good/standard loans) has to be maintained regardless of objective evidence of impairment. Also provision for sub-standard loans, doubtful loans and bad/losses has to be provided at 20%, 50% and 100% respectively for loans and advances depending on the duration of overdue. Again as per BRPD circular no. 10 dated 18 September 2007 and BRPD circular no. 14 dated 23 September 2012, a general provision at 1% is required to be provided for all off-balance sheet exposures. Such provision policies are not specifically in line with those prescribed by BAS 39.
Recognition of interest in suspense BFRS: Loans and advances to customers are generally classified as "loans and receivables" as per BAS 39 and interest income is recognised through effective interest rate method over the term of the loan. Once a loan is impaired, interest income is not recognised in the financial statements.
Bangladesh Bank: As per BRPD circular no.14 dated 23 September 2012, once a loan is classified, interest on such loans are not allowed to be recognised as income, rather the corresponding amount needs to be credited to an interest suspense account, which is presented as liability in the balance sheet.
Other comprehensive income
BFRS: As per BAS 1 Other Comprehensive Income is a component of financial statements or the elements of Other Comprehensive Income are to be included in a Single Comprehensive Income (OCI) Statement.
Bangladesh Bank: Bangladesh Bank has issued templates for financial statements which are required to be followed by all banks. The templates of financial statements issued by Bangladesh Bank do not include Other Comprehensive Income nor are the elements of Other Comprehensive Income allowed to be included in a Single Comprehensive Income (OCI) Statement. As such the company does not prepare the other comprehensive income statement. However elements of OCI, if any, are shown in the statements of changes in equity.
Financial instruments – presentation and disclosure In several cases Bangladesh Bank guidelines categorize, recognize, measure and present financial instruments differently from those prescribed in BAS 39. As such some disclosure and presentation requirements of BFRS 7 and BAS 32 cannot be made in the accounts.
Repo transactions
BFRS: When an entity sells a financial asset and simultaneously enters into an agreement to repurchase the asset (or a similar asset) at a fixed price on a future date (REPO or stock lending), the arrangement is accounted for as a deposit as opposed to a sale, and the underlying asset continues to be recognized in the entity’s financial statements. Such transactions do not satisfy the de-recognition criteria specified in BAS 39. Such transactions will be treated as loan and the difference between selling price and repurchase price will be treated as interest expense. Same rule applies to the opposite side of the transaction (Reverse REPO).
Bangladesh Bank: As per Bangladesh Bank circulars/guidelines, when a bank sells a financial asset and simultaneously enters into an agreement to repurchase the asset (or a similar asset) at a fixed price on a future date (REPO or stock lending), the arrangement is accounted for as a normal sales transactions and the financial assets are de-recognized in the seller’s book and recognized in the buyer’s book.
Financial guarantees BFRS: As per BAS 39, financial guarantees are contracts that require an entity to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument. Financial guarantee liabilities are recognized initially at their fair value, and the initial fair value is amortized over the life of the financial guarantee. The financial guarantee liability is subsequently carried at the higher of this amortized amount and the present value of any expected payment when a payment under the guarantee has become probable. Financial guarantees are included within other liabilities.
Annual Report 2016 119 Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003 financial guarantees such as letter of credit and letter of gurarantee will be treated as Off-Balance Sheet items. No liability is recognized for the guarantee except the cash margin.
Cash and cash equivalent
BFRS: As per BAS 7 cash and cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value. Therefore, some items like Balance with Bangladesh Bank on account of CRR/SLR are not part of cash and cash equivalent as those are not readily available.
Bangladesh Bank: As per Bangladesh Bank circulars/guidelines, balance with Bangladesh Bank is part of cash and cash equivalent regardless of any restriction. Furthermore, some cash and cash equivalent items such as ‘money at call and on short notice’, Treasury bills, Prize bond are not presented as cash and cash equivalent. Instead money at call and on short notice is presented as a face item in balance sheet and Treasury bills, Prize bonds are presented as investment.
Non-banking asset
BFRS: No indication of Non-banking asset is found in any BFRS.
Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003 there a face item named Non-banking asset must exist.
Cash flow statement
BFRS: Cash flow statement can be prepared either in direct method or in indirect method. The presentation is selected to present these cash flows in a manner that is most appropriate for the business or industry. The method selected is applied consistently.
Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003 cash flow is the mixture of direct and indirect method.
Balance with Bangladesh Bank: (CRR)
BFRS: Balance with Bangladesh Bank should be treated as other asset as it is not available for use in day to day operations as per BAS 7.
Bangladesh Bank: Balance with Bangladesh Bank is treated as cash and cash equivalents.
Presentation of intangible asset
BFRS: Intangible asset must be identified and recognized and the disclosure must be given as per BAS 38.
Bangladesh Bank: There is no requirement for regulation of intangible assets in BRPD circular no. 14 dated 25 June 2003.
Off-balance sheet items
BFRS: There is no concept of off-balance sheet items in any BFRS; hence there is no requirement for disclosure of off-balance sheet items on the face of the balance sheet.
Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003 off-balance sheet items (e.g. letter of credit, letter of guarantee etc.) must be disclosed separately on the face of the balance sheet.
Disclosure of appropriation of profit
BFRS: There is no requirement to show appropriation of profit in the face of statement of comprehensive income.
120 Annual Report 2016 Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003 an appropriation of profit should be disclosed in the face of profit and loss account.
Loans and advance net of provision
BFRS: Loans and advances should be presented net of provisions.
Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003 provision on loans and advances are presented separately as liability and cannot be netted off against loans and advances.
2.17 Risk Management
The possibility of losses, financial or otherwise is defined as risk. The assets and liabilities of NRB Global Bank Limited is managed with a view to reducing the risks associated with its operation to a prudently minimum level, with proper consideration to a steadily increasing flow of net interest income. the objective is accomplished through placing a planning, control and reporting process, the key objective of which is the coordinated management of the Bank's assets and liabilities, current banking laws and regulations, as well as prudent and generally acceptable banking practices.
The Risk Management of the Bank covers 6 (six) core risk areas of banking i.e. (a) Credit Risk, (b) Foreign Exchange Risk, (c ) Asset Liability Risk, (d) Money Laundering Risk, (e) Internal Control & Compliance Risk, and (f) Information amd communication Technology Security Risk as per DOS circular no. 02 dated 15 February 2012 of Bangladesh Bank.
Credit Risk
It arises mainly from lending, trade finance and treasury businesses. This can be described as potential loss arising from the failure of a counter party to perform as per contractual agreement with the Bank. The failure may result from unwillingness of the counter party or decline in his/ her financial condition. Therefore, the Bank's credit risk management activities have been designed to address all these issues.
The Bank has segregated duties of the officers/executives involved in credit related activities. A separate Division has been formed at Head Office which is entrusted with the duties of maintaining effective relationship with the customers, marketing of credit products, exploring new business opportunities, etc. Moreover, credit approval, administration, monitoring and recovery functions have been segregated. For this purpose, two separate divisions have been formed within the Credit Division. These are (a) Credit Risk Management Division and (b) Credit Administration Division. Credit Risk Management Division is entrusted with the duties of maintaining asset quality, assessing risk in lending to a particular customer, sanctioning credit, formulating policy/strategy for lending operation, etc. Adequate provision has been made on classified loans/investments.
A thorough assessment is done before sanction of any credit facility at Credit Risk Management Division. The risk assessment includes borrower risk analysis, financial analysis, industry analysis, historical performance of the customer, security of the proposed credit facility, etc. The assessment process starts by the Branch Manager/Officer at the branch level and ends at Credit Risk Management Division when it is approved/ declined by the competent authority. Credit approval authority has been delegated to the credit committee.
In determining single borrower/large loan limit, the instructions of Bangladesh Bank are strictly followed. Internal audit is conducted at periodical intervals to ensure compliance of Bank's and Regulatory polices. Loans are classified as per Bangladesh Bank's guidelines. Concentration of single borrower/large loan limit is shown in note- 7.
Foreign Exchange Risk the potential change in earnings due to change in value of currencies. The foreign exchange risk of the Bank is minimal as all the transactions are carried out on behalf of the customers against underlying L/C commitments and other remittance requirements.
Annual Report 2016 121 International Division independently conducted the foreign exchange transactions and the Mid office and the Back office of Treasury is responsible for verification of the deals and passing of their entries in the books of account. All foreign exchange transactions are revalued at Market rate as determined by Bangladesh Bank at the month end. All nostro accounts are reconciled on a monthly basis and outstanding entry is reviewed by the management for its settlement. The position maintained by the Bank at the end of day was within the stipulated limit prescribed by the Bangladesh Bank.
Asset Liability Risk
Changes in the market liquidity and or interest rate exposes Bank's business to the risk of loss, which may , in extreme cases, threaten the survival of the institution. Thus it is essential that the level of balance sheet risks are effectively managed, appropriate policies and procedures are established to control and limit these risks and proper resources are available for evaluating and controlling these risks. The Asset Liabiliti Committee (ALCO) of the Bank monitors balance sheet risks and liquidity risks of the Bank.
Asset Liability Committee (ALCO) reviews the country's overall economic position, bank's liquidity position, ALM ratios, interest rate risks, capital adequacy, deposit advance growth, cost of deposit & yield on advance, F.E. gap, market interest rate, loan loss provision adequacy and deposit and lending pricing strategy.
Money Laundering Risk
NRB Global Bank Limited considers prevention of money laundering risk not only as a compliance requirement imposed by the law of the country but also as one of its core business values. The board of directors and senior management are firmly committed to combat money laundering. Training and awareness programs are regularly held to make all employees' aware of the issue. The Bank has established an Anti-Money Laundering Policy. The purpose of the policy is to provide a guideline within which to comply with the laws and regulation regarding money laundering both at country and international levels and thereby to safeguard the Bank from potential compliance, financial and reputational risks. KYC procedures have beeen set up with address verification. Apart from monitoring account transaction, the estimated transaction profile and high value transactions are being reviewed electronically.
Internal Control & Compliance Risk
Internal Control and Compliance Division (ICCD) of the bank performs three core functions - Internal Audit, Monitoring and Compliance in order to mitigate the internal control and compliance risk. ICCD conducts Risk Based Audit and Annual Audit of the Branches. Audit of Head Office Divisions also come under ICCD. ICCD monitors compliance of Internal as well as Bangladesh Bank Audit Reports including Bangladesh Bank Special Audit Reports on Core Risks. Besides, Special Audit on some specific issues like year-end Cash Position, Security Stock verification etc. are also done by ICCD.
Information & Communication Technology Security Risk
NRB Global Bank follows the guideline stated in BRPD circular no. 14 dated 23 October 2005 regarding "Guideline on Information and Communication Technology for Scheduled Banks" and BRPD circular no. 21 dated 20 May 2010 regarding "Guideline on ICT Security". IT Division deals with IT policy documentation, internal IT audit, training and insurance.
IT operation management covers the dynamics of technology operation management including change management, asset management, operating environnment procedures management. The objective is to achieve the highest level of technology service quality by minimum operational risk.
Physical security involves providing environmental safeguard as well as controlling physical access to equipments and data. In order to ensure that information assets are protected against risk, there are controls over: a) Password control b) User ID maintenance c) Input control d) Network security e) Data encryption f) Virus protection g) Internet and e-mail
122 Annual Report 2016 The Business continuity Plan (BCP) is formulated to cover operational risks and taking into account the potential for wide area disasters, data center disaster and recovery plan. The BCP takes into account the backup and recovery process. Keeping this into consideration, this covers BCP, Disaster Recovery Plan and Back-up/ Restore Plan.
Liquidity Risk
Liquidity Risk is the potential for loss to a bank arising from either its inability to meet its obligations as they fall due or to fund increases in assets without incurring unacceptable cost or losses. The Bank is deemed to have adequate liquidity when it can obtain sufficient fund promptly and at a reasonable rate.
Market Risk
Risk Management Unit (RMU) is responsible for overall monitoring, control, and reporting of market risk while Treasury Mid Office is an integral part of market risk management which independently evaluates and monitors treasury department’s transaction from risk perspective. Overall risk parameters and exposures of the bank are monitored by RMU and periodically reported to Bank Risk Management Committee (BRMC). Market risk can be subdivided into three categories depending on risk factors: Interest Rate Risk, Foreign Exchange Risk, and Equity Price Risk.
Interest Rate Risk
Interest Rate Risk is the risk to earnings or capital of the bank arising from movement of interest rates. The movement of interest rates affects bank’s reported earnings and capital by changing: • Net interest income • The market value of trading accounts (and other instruments accounted for by market value), and • Other interest sensitive income and expenses.
To manage interest rate risk, ALCO regularly monitors various ratios and parameters. Bank deploys several analysis techniques (e.g. Rate Sensitive Gap Analysis, Duration Gap Analysis) to measure interest rate risk, its impact on Net Interest Income and takes insight about course of actions.
Equity Price Risk
Equity price risk is the risk of losses caused by changes in equity prices. These losses could arise because of changes in the value of listed shares held directly by the bank; changes in the value of listed shares held by a bank subsidiary; changes in the value of listed shares used as collateral for loans whether the loan was made for the purpose of buying the shares; and changes in the value of unlisted shares.
Operational Risk
Operational Risk is defined as the risk of unexpected losses due to physical catastrophe, technical failure, and human error in the operation of a bank; including fraud, failure of management, internal process errors and unforeseeable external events. Operational Risk Unit is primarily responsible for risk identification, measurement, monitoring, control, and reporting of operational risk. Internal Control (audit) Unit of ICCD also conducts audit at department and branch level throughout the year.
Fraud and Forgeries
NRBGBL is committed to creating a culture of honesty and high ethics inside out of the company to clearly communicate acceptable behavior and expectations of each employee. Such a culture is rooted in a strong set of core values that provides the foundation for employees as to how NRBGBL conducts its business. It also allows the company to develop an ethical framework that covers:
1. Fraudulent financial reporting; 2. Misappropriation of assets; and 3. Corruption as well as other issues.
Annual Report 2016 123 Directors set the “tone at the top” for ethical behavior within the company. Management shows its employees through words and actions that dishonest or unethical behavior will not be tolerated, even if the result of the action benefits the company. All employees are treated equally, regardless of their position and gender.
Anti-fraud program aim to outline NRBGBL’s commitment to:
- Take appropriate measures to prevent and deter fraud; - Introduce and maintain necessary procedures to detect fraud; - Encourage employees to report any suspicions action; - Investigate all instances of suspected fraud; - Take appropriate disciplinary, civil or criminal proceedings; - Report all suspected fraud to the appropriate authorities.
2.18 General
a) The financial statements of the Bank are presented in Bangladesh Taka (BDT) which is the Bank's function al currency. All financial information presented in Taka has been rounded off to the nearest integer, except when otherwise indicated. b) These financial statements of the Bank cover one calender year from 1 January 2016 to 31 December 2016. c) The expenses, irrespective of capital or revenue nature, accrued / due but not paid have been provided for in the books of the Bank. d) Figures of previous year have been rearranged whenever necessary to conform to current years presentation.
124 Annual Report 2016 Amount in Taka
2016 2015
3. Cash
Cash in hand Note 3.1 315,266,932 209,627,510
Balance with Bangladesh Bank and its agent bank(s) Note 3.2 2,336,515,101 1,655,781,448
2,651,782,033 1,865,408,958 3.1 Cash in hand
In local currency 263,576,442 182,303,623
In foreign currency 16,474,490 3,034,387
Cash at ATM (in local currency) 35,216,000 24,289,500
315,266,932 209,627,510
3.2 Balance with Bangladesh Bank and its agent bank(s)
In local currency 2,261,116,421 1,598,826,380
In foreign currency 30,212,132 20,136,331
2,291,328,553 1,618,962,711
Sonali Bank as agent of Bangladesh Bank (Local currency) 45,186,548 36,818,737
2,336,515,101 1,655,781,448 3.3 Statutory deposits
In persuence of section 33 of Bank Company Act, 1991 (Amendment upto 2013) regarding statutory deposit in liquid assets, Monetary Policy Department of Bangladesh Bank issues circular regarding Statutory Liquidity Reserve and Cash Reserve Requirement from time to time. Currently such requirements are governed by MPD circular no. 01 dated 23 June 2014 and MPD circular no. 02 dated 10 December 2013.
a) Cash reserve requirement As per MPD circular no. 01 dated 23 June 2014 of Bangladesh Bank (effective from 24 June 2014), all scheduled banks have to maintain a CRR of minimum 6.0% on daily basis and 6.5% on bi-weekly basis on its total demand and time liabilities. The Bank has followed the instructions and maintained adequate amount with an excess, details of which are as follows:
i) Daily position as on the reporting date As per Bangladesh Bank MPD circular no. 01 dated 23 June 2014 Bank has to maintain 6.0% CRR on daily basis.
Required reserve (6.0% of total time and demand liabilities) 1,994,404,108 1,421,948,772
Actual reserve maintained* 2,261,116,421 1,598,836,369
Surplus / (deficit) 266,712,313 176,887,597
ii) Fortnightly Cumulative position As per Bangladesh Bank MPD circular no. 01 dated 23 June 2014 Bank has to maintain 6.50% CRR on bi-weekly cumulative average basis.
Annual Report 2016 125 Amount in Taka
2016 2015
Required Reserve (6.5% of total time & demand liabilities) 2,160,604,450 1,540,444,503
Actual reserve maintained* 2,261,082,880 1,598,836,369
Surplus / (deficit) 100,478,430 58,391,866
* as per Bangladesh Bank statement
b) Statutory liquidity ratio As per MPD circular no. 02 dated 10 December 2013 of Bangladesh Bank (effective from 1 February 2014), all scheduled banks have to maintain an SLR not less than 13% including the excess of CRR on its total demand and time liabilities. The Bank has been following such instructions and maintained adequate amount with an excess, details of which are as follows:
SLR excluding CRR of 6.5% Required reserve 4,321,208,901 3,080,889,006 Actual reserve maintained 5,034,008,404 3,406,255,582 Surplus / (deficit) 712,799,503 325,366,575
SLR excluding CRR of 6.5% Required reserve 6,481,813,351 4,621,333,510 Actual reserve maintained 7,295,124,825 5,005,081,962 Surplus / (deficit) 813,311,474 383,748,452
c) Components of SLR
Cash in hand Note- 3.1 315,266,932 209,627,510 Balance with sonali bank Note- 3.2 45,186,548 36,818,737 Surplus of CRR 100,478,430 58,391,866 TT in transit - - Bangladesh Bank bills 90,375,782 - Govt. treasury bills Note- 6.4 1,412,323,105 379,256,975 Government bonds Note- 6.4 3,070,377,607 2,722,160,494 5,034,008,404 3,406,255,582
3.4 Maturity grouping of cash
Payable on demand 491,177,583 443,460,186 Up to 1 month - - Over 1 month but not more than 3 months - - Over 3 months but not more than 6 months - - Over 6 months but not more than 1 year - - Over 1 year but not more than 5 years - - Over 5 years 2,160,604,450 1,421,948,772 2,651,782,033 1,865,408,958
126 Annual Report 2016 Amount in Taka
2016 2015 4. Balance with other banks and financial institutions of the Bank
In Bangladesh Note- 4.1 4,765,147,247 3,219,026,038 Outside Bangladesh Note- 4.2 79,196,370 40,741,542 4,844,343,617 3,259,767,580
4.1 In Bangladesh
Current deposits EXIM Bank Limited Gulshan Branch 2,650,760 2,270,915 Trust Bank Limited Gulshan Branch 4,599,622 20,200,513 7,250,382 22,471,428 Special notice deposits First Security Islami Bank Limited Gulshan Branch 33,143,186 8,642,453 Union Bank Limited Agrabad Branch 78,760 2,131,654 First Security Islami Bank Limited Agrabad Branch 73,446 270,406 33,295,392 11,044,513 Fixed deposits Reliance Finance Limited 4,671,551,473 2,882,460,097 National Finance Limited - 100,000,000 Peoples Leasing and Financial Services Limited - 150,000,000 Phoenix Finance & Investment Limited 53,050,000 53,050,000 4,724,601,473 3,185,510,097 4,765,147,247 3,219,026,038
4.2 Outside Bangladesh (NOSTRO Accounts)
Mashreq Bank PSC, New York USA 49,363,339 15,113,187 Mashreq Bank, London 4,030,152 12,084,702 Mashreq Bank, London 6,460,318 3,025,085 United Bank. Kolkata 8,817,897 37,382 NIB Bank, Pakistan 73,200 226,256 AB Bank Limited, Mumbai, India 10,451,464 10,254,930 (See Annexure-D for detail) 79,196,370 40,741,542
4.3 Maturity grouping of balance with other banks and financial institutions
Payable on demand 7,250,382 22,471,428 Up to 1 month 382,491,763 201,786,055 Over 1 month but not more than 3 months 2,001,551,470 2,043,353,464 Over 3 months but not more than 6 months 2,400,000,000 282,477,250 Over 6 months but not more than 1 year - 656,629,383 Over 1 year but not more than 5 years 53,050,000 53,050,000 Over 5 years - - 4,844,343,615 3,259,767,580
Annual Report 2016 127 Amount in Taka
2016 2015
5. Money at call and short notice - - With banking companies - - With non-banking financial institutions Bangladesh Industrial Finance Company Limited 20,000,000 - First Finance Limited - 80,000,000 Peoples Leasing and Financial Services Limited - 150,000,000 20,000,000 230,000,000 20,000,000 230,000,000 6 Investments
Claim-wise:
Government securities Note- 6.1 4,573,728,394 3,101,960,269 Other investments Note- 6.2 428,575,000 524,279,792 5,002,303,394 3,626,240,061
Nature-wise:
Held for Trading (HFT) Note- 6.3 - - Held to Maturity (HTM) Note- 6.4 4,573,076,494 3,101,417,469 Other than those classified under HFT and HTM 429,226,900 524,822,592 5,002,303,394 3,626,240,061
6.1 Government securities
Treasury bills 1,412,323,105 379,256,975 Bangladesh Bank bills 90,375,782 - National investment bonds - - Government notes/ bonds 3,070,377,607 2,722,160,494 Prize bonds 651,900 542,800 Others - - 4,573,728,394 3,101,960,269
6.2 Other investments Subordinate bond of Reliance Finance Limited Note- 6.5 308,575,000 - Preferance Shares of Union Capital Limited 80,000,000 100,000,000 Preferance Shares of Regent Energy and Power Limited 40,000,000 50,000,000 Secondary share - 374,279,792 Gold etc. - - 428,575,000 524,279,792
6.3 Held for trading
Bangladesh Government Treasury Bonds - - Bangladesh Bank bills - - Other securities - - - -
128 Annual Report 2016 Amount in Taka
2016 2015 6.4 Held to maturity
Government Bonds 2 years Bangladesh Government treasury bonds 791,941,636 973,295,235 5 years Bangladesh Government treasury bonds 1,558,872,167 1,358,586,815 10 years Bangladesh Government treasury bonds 52,541,254 - 15 years Bangladesh Government treasury bonds 417,964,637 227,229,917 20 years Bangladesh Government treasury bonds 249,057,913 163,048,527 3,070,377,607 2,722,160,494
Treasury Bills
07 days treasury bills 50,302,283 - 14 days treasury bills 251,368,575 - - 26,672,081 28 days treasury bills 773,081,099 261,951,387 91 days treasury bills - 90,633,507 182 days treasury bills 337,571,148 - 364 days treasury bills - - 5 years treasury bills 1,412,323,105 379,256,975 90,375,782 - 30 days Bangladesh Bank bills - - Other securities 1,502,698,887 379,256,975 4,573,076,494 3,101,417,469
6.5 Reliance Finance Limited Subordinated bond
Principal 300,000,000 Add: Interest accrued during the year 24,325,000 - Less: Principal redemption during the year - - Less: Interest received during the year 15,750,000 - Redeemable value 308,575,000 -
6.6 Investment in shares
Quoted - 374,279,792 National Bank Limited - 374,279,792 6.7 Maturity grouping of investments
Payable on demand 651,900 542,800 Up to 1 month 833,305,899 400,951,873 Over 1 month but not more than 3 months 1,040,145,780 624,175,476 Over 3 months but not more than 6 months 143,821,362 277,753,328 Over 6 months but not more than 1 year 585,852,702 330,939,519 Over 1 year but not more than 5 years 1,878,961,947 1,551,598,621 Over 5 years 519,563,804 440,278,444 5,002,303,394 3,626,240,061
Annual Report 2016 129 6.8 Disclosure regarding outstanding Repo
Agreement Counter-party name Reversal date Amount date ------
Total -
6.9 Disclosure regarding outstanding Reverse Repo
Agreement Counter-party name Reversal date Amount date ------
Total -
6.10 Disclosure regarding outstanding overall transaction of Repo and Reverse Repo
Minimum Maximum Daily average Counter-party name outstanding outstanding outstanding during the year during the year during the year
Securities sold under Rep ------Total
Securities purchased under Reverse Repo ------
Total -
Amount in Taka
7. Loans and advances 2016 2015
Loans, cash credits, overdrafts etc Note- 7.1 26,770,994,107 13,974,075,381 Bills purchased and discounted Note- 7.2 8,187,291,357 6,872,055,245 34,958,285,464 20,846,130,626
7.1 Loans, cash credits, overdrafts etc. Inside Bangladesh Cash credit (Hypo) 15,042,960,377 6,454,295,299 General Term Loan 1,655,221,696 1,370,428,348 Payment against documents 87,701,197 49,142,685 Loan against trust receipts 445,530,199 385,393,922 Credit card 20,248,125 11,978,728 House building loans 116,531,744 76,465,601 Overdraft 9,073,606,627 5,379,604,852 Staff Loan 132,383,149 106,724,662 Other Loans and Advancess 196,810,993 140,041,284 26,770,994,107 13,974,075,381 Outside Bangladesh - - 26,770,994,107 13,974,075,381
130 Annual Report 2016 Amount in Taka
2016 2015 7.2 Bills purchased and discounted Payable inside Bangladesh Local bills/ documents 8,156,652,791 6,853,477,736 Foreign bills/ documents 30,638,566 18,577,509 8,187,291,357 6,872,055,245 Payable outside Bangladesh - - 7.3 Net loans and advances 8,187,291,357 6,872,055,245
Gross loans and advances Note- 7 34,958,285,464 20,846,130,626 Less: Non-performing loans and advances Note- 7.12 146,307,430 132,393,408 Interest suspense Note- 13.5 19,731,508 18,346,482 Provision for loans and advances Note- 7.14 364,574,451 251,025,625 530,613,389 401,765,515 34,427,672,075 20,444,365,111
7.4 Residual maturity grouping of loans and advances including bills purchased and discounted
Repayable on demand 808,292 - Not more than 3 months 15,947,265,095 11,957,256,540 Over 3 months but not more than 1 year 15,241,984,003 7,449,112,156 Over 1 year but not more than 5 years 3,261,641,822 868,591,936 Over 5 years 506,586,252 571,169,994 34,958,285,464 20,846,130,626
7.5 Residual maturity grouping of bills purchased and discounted
Payable within 1 month 2,518,731,920 1,151,153,933 Over 1 month but less than 3 months 1,357,933,758 1,155,072,921 Over 3 months but less than 6 months 3,340,787,705 4,563,819,083 6 months or more 969,837,974 2,009,308 8,187,291,357 6,872,055,245 7.6 Loans and advances under the following broad categories
Loans 1,655,221,696 1,370,428,348 Cash credits 15,042,960,377 6,454,295,299 Overdrafts 9,073,606,627 5,379,604,852 Others 999,205,407 769,746,882 26,770,994,107 13,974,075,381 Bills purchased and discounted Note- 7.2 8,187,291,357 6,872,055,245 34,958,285,464 20,846,130,626 7.7 Loans and advances on the basis of significant concentration a) Loans and advances to directors and allied concerns of the directors - 10,775,991 b) Loans and advances to staff Chief executive and other senior executives 83,058,868 67,094,564 Other employees 49,324,278 39,630,098 132,383,146 106,724,662
Annual Report 2016 131 Amount in Taka
2016 2015
c) Advances to industries Agriculture 217,042,775 380,859,868 Capital Market Institutions - 295,426,901 Commercial Real Estate Financing 65,405,545 238,935,201 Construction 586,631,594 1,807,056,150 Consumer Finance 72,190,908 64,736,375 Residential real estate financing 93,162,840 44,218,697 Transport, storage and communication 180,315,415 163,332,657 Retail Loan 1,218,330,197 444,997,137 Commercial and trading services 26,913,320,413 12,471,858,286 Ready Made Garments-RMG 1,138,401,817 956,743,732 Small and Medium Enterprise Loans 1,042,291,568 369,788,006 Textiles industries 1,429,922,486 1,833,288,884 Other Manufacruring Industries 1,868,886,760 1,657,388,079 34,825,902,318 20,728,629,973 34,958,285,464 20,846,130,626 d) Loans, advances and leases -geographical location-wise Inside Bangladesh Urban Dhaka Division 13,753,953,397 12,137,769,955 Chittagong Division 18,582,367,285 7,608,254,931 Khulna Division 35,883,611 5,045,922 Rajshahi Division 20,601,589 12,003,622 Barisal Division - - Sylhet Division 12,001,168 3,128,170 Rangpur Division - - 32,404,807,050 19,766,202,600
Rural Dhaka Division 362,769,423 155,458,977 Chittagong Division 2,190,708,991 924,469,049 Khulna Division - - Rajshahi Division - - Barisal Division - - Sylhet Division - - Rangpur Division - - 2,553,478,414 1,079,928,026 Outside Bangladesh - - 34,958,285,464 20,846,130,626
7.8) Sector-wise loans and advances including bills purchased and discounted Public sector - - Private sector 34,958,285,464 20,846,130,626 34,958,285,464 20,846,130,626
Annual Report 2016 132 7.9) Details of large loans and advances As at 31 December 2016 there were 07 (31 December 2015: 05) borrowers or group with whom amount of outstanding loans and advances exceeded 10% of the total capital of the Bank. Total capital of the Bank was Taka 5,006,191,611.00 as at 31 December 2016 (Taka 4,380,165,639.00 as at 31 December 2015)
Number of clients 7.00 5.00
Amount of outstanding loans and advances 6,217,951,518 2,345,352,144
Amount of classified loans and advances - -
Measures taken for recovery Not Applicable Not Applicable
Outstanding Name of clients Total Total Funded Non-funded
Nasa Group 647,861,507 - 647,861,507 676,970,143 S. Alam Steel Mills Ltd. - - - 475,800,000 Ratanpur Ship Recycling Ind. Ltd.(RSRM) 482,607,965 - 482,607,965 R.T.C 33,970,424 20,766,657 54,737,081 397,928,973 BSB Spinning Mills Ltd. 363,304,744 - 363,304,744 372,099,167 SS Power Limited - 3,483,259,200 3,483,259,200 - Shipon Trade 659,941,208 - 659,941,208 - Givensee Germents Accssories Ltd. 310,982,333 215,257,480 526,239,813 422,553,861 2,498,668,181 3,719,283,337 6,217,951,518 2,345,352,144
Amount in Taka
2016 2015 7.10) Security/collateral-wise concentration of loans and advances (including bills purchased and discounted) Collateral of movable / immovable assets 20,681,399,496 10,868,543,059 Local banks and financial institutions guarantee - - Government guarantee - - Export documents - - Fixed deposit receipts 987,166,872 448,856,557 FDR of other banks - - Government bonds - - Personal and corporate guarantee 3,275,012,889 2,976,401,130 Other securities 10,014,706,207 6,552,329,880 34,958,285,464 20,846,130,626 7.11) Particulars of loans and advances
i) Loans and advances considered good in 21,668,566,368 11,317,399,616 respect of which the Bank is fully secured.
ii) Loans and advances considered good against which the Bank holds 3,275,012,889 2,976,401,130 no security other than the debtors' personal guarantee.
iii) Loans and advances considered good secured by the personal undertaking 10,014,706,207 6,552,329,880 of one or more parties in addition to the personal guarantee of the debtors.
iv) Loans and advances adversely classified; provision not maintained there against. - - 34,958,285,464 20,846,130,626
Annual Report 2016 133 Amount in Taka
2016 2015
v) Loans and advances due by directors or officers of the banking company or any of them either separately or jointly with any other persons. 132,383,149 117,500,653
vi) Loans and advances due from companies or firms in which the directors of the Bank have interest as directors, partners or managing agents or in case of private companies, as members - -
vii) Maximum total amount of loans and advances, including temporary advances made at any time during the year to directors or managers or officers of the banking company or any of them either separately or jointly with any other person. 5,001,500 5,478,225
viii) Maximum total amount of loans and advances including temporary loans and advances granted during the year to the companies or firms in which the directors of the banking company have interest as directors, partners or managing agents or in the case of private companies, as members. - -
ix) Due from banking companies - -
x) Classified loans and advances a) Classified loans and advances on which interest has not been charged 86,181,348 74,232,781 b) Provision on classified loans and advances 19,339,693 41,677,700 c) Provision kept against loans and advances classified as bad debts 19,339,693 41,677,700 d) Interest credited to Interest Suspense Account 19,731,508 18,346,482
xi) Cumulative amount of written off loans and advances Opening Balance - - Amount written off during the year - - Amount realised against loans and advances previously written off - - The amount of written off / classified loans and advances for which law - - suits have been filed 7.12) Classification of loans and advances
Unclassified Standard (including staff loan) 34,244,098,009 20,629,051,054 Special mention accounts (SMA) 567,880,025 84,686,164 34,811,978,034 20,713,737,218
Classified Sub-standard 19,359,029 734,883 Doubtful 40,767,053 57,425,744 Bad/ Loss 86,181,348 74,232,781 146,307,430 132,393,408 34,958,285,464 20,846,130,626
7.13) Movement of classified loans and advances
Opening balance 132,393,408 - Addition during the year 70,925,212 132,393,408 Reductions during the year 57,011,190 - Closing balance 146,307,430 132,393,408
134 Annual Report 2016 Measures taken for recovery of classified loans and advances:
Bank as a whole has taken following steps to recover its classified Loans and Advances a) Sending letters and remainders to customers b) Special assets management department is responsible for holding discussion with the clients to recover the loans c) Disposal /encashment of security through action. d) Legal proceedings and settlement e) Rescheduling or restructuring f) Negotiation and settlement with approval from competent authority
7.14 Particulars of required provision for loans and advances General Provision
Status Base for provision Rate Provision Provision Amount Amount
General loans and advances 33,264,556,709 1.00% 332,645,567 197,306,704 SME Loans 695,428,923 0.25% 1,738,572 924,470 Consumer financing 65,403,033 5.00% 3,270,152 2,785,988 Other certain types of lending 96,053,192 2.00% 1,921,064 6,978,514 Short term agriculture loan 1,982,257 2.50% 49,556 430,564 Special mention account - Consumer 1,203,483 5.00% 60,174 93,529 Special mention account (SMA) 554,967,290 1.00% 5,549,673 828,156 Staff Loan 132,383,146 0.00% - - Total 34,811,978,033 345,234,758 209,347,925
Other certain types of lending includes Housing Finance, Loans for Professionals to set up business under Consumer Financing Scheme, Loans to Brokerage House, Merchant Banks, Stock dealers etc. Specific Provision
Status Base for provision Rate Provision Provision Amount Amount
Sub-standard 7,240,281 20.00% 1,448,057 66,543 Doubtful 5,995,138 50.00% 2,997,569 9,320,107 Bad / Loss 14,894,067 100.00% 14,894,067 32,291,050 28,129,486 19,339,693 41,677,700 Required provision for loans, advances and lease/investments 364,574,451 251,025,625 Total provision maintained 364,574,451 251,025,625 Excess / (short) provision at 31 December - -
7.15 Particulars of required provision on Off-balance Sheet Exposures
Particulars Base for provision Provision at Provision at 1.00% 1.00%
Acceptances and endorsements 813,190,583 8,131,906 2,685,537 Letter of guarantee 3,893,670,621 38,936,706 9,585,901 Letter of credit 326,934,608 3,269,346 3,816,624 Required provision on Off-balance Sheet Exposures 5,033,795,812 50,337,958 16,088,062 Total provision maintained 50,337,958 16,088,062 Excess / (short) provision at 31 December - -
Annual Report 2016 135 Amount in Taka
2016 2015 8. Fixed assets including premises, furniture and fixtures of the Bank Cost Property, plant & equipment Furniture & Fixture 284,818,684 182,775,674 Machineries and equipment 250,947,377 184,892,939 Motor Vehicle 86,501,836 50,701,836 Computer and Peripherial 167,629,075 153,230,415 Automated Teller Machine (ATM) 57,539,180 44,017,597 Books and journals 805,000 805,000 848,241,152 616,423,461
Intangible assets Core banking solution 68,974,611 68,974,611 Other softwares 7,572,545 4,674,795 76,547,156 73,649,406 Total fixed assets at cost 924,788,308 690,072,867 Less: Accumulated depreciation 294,664,126 158,025,446 Net book value at the end of the year (See Annexure-A for detail) 630,124,182 532,047,421
Premises not used by the Bank As of 31 December 2016, the Bank holds no premises not used by the Bank for its own or business purpose or any unused part of partially used premises.
9. Other Assets of the Bank Income generating other assets Interest receivable Note-9.1 217,815,295 186,154,602 217,815,295 186,154,602
Non income generating other assets Stationery and stamps 15,382,171 11,343,300 Preliminary Expenses 65,642,980 131,285,962 Prepaid expenses 2,029,214 105,008 Note-9.2 Tax deducated at sources (AIT) 179,075,202 131,686,160 Advance tax payment 111,861,716 6,821,716 Advance to supplier 75,627,643 114,317,142 Advance rent 454,298,869 480,626,317 Security Deposit 638,378 2,498,379 Branch adjustment account - - Suspense account - - Balance with First Security Islami Capital & Investment Limited 421,910 1,483,238 Silver - - Others 37,120,099 4,113,498 942,098,182 884,280,720 1,159,913,477 1,070,435,322
* Advance to supplier includes partial amount paid to vendor on account of purchasing of furniture & fixture and interior decoration to be finalised and hence not yet transferred to fixed assets.
136 Annual Report 2016 Amount in Taka
2016 2015 9.1 Interest Receivable Interest receivable on loans and advance 14,490, 363 8,222,387 Interest receivable on Govt. securities 56,396,480 52,636,153 Interest receivable on other securities 7,874,444 9,843,056 Interest receivable on balance with other banks 139,052,008 115,453,006 217,815,295 186,154,602
9.2 Preliminary Expenses Consultancy Fees 27,054,401 54,108,803 Registration fees to RJSC & SEC 1,802,450 3,604,901 BSEC Application and Consent Fees 296,771 593,542 Office Rent 36,432,988 72,865,976 Other expenses 56,370 112,740 65,642,980 131,285,962
As permitted by the Bank Company (Amendment) Act 2013, the Bank has taken the option of capitalizing its preliminary expenses in accordance with the practices followed by some other new Banks in Bangladesh. The Management initially decided to fully amortize these preliminary expenses over Two years period starting from 1 January 2014. However, consid- ering the overall macro economic condition of the Country and the Bank's operational performance since starting of commercial operation, Management has changed the proposed amortization of these preliminary expenses and instead of two years decided to fully amortise these expenses as per the following schedule as approved by the Board. This change in amortisation schedule has been considered as change in accounting estimate as per Bangladesh Accounting Standards 8 and accordingly applied prospectively. Because of this change in accounting estimate current year's amorti- sation expense is lower by Tk 7.2 crore and this shall be spread over the revised period.
2015 Tk 4.00 crore 2016 Tk 6.57 crore 2017 6.56 crore
10. Non-banking assets - - - -
No non-banking asset is under the possession of the Bank as per BRPD circular no. 14 dated 25 June 2003 which is acquired as claims. NRB Global Bank Limited did not acquire any such asset till 31 December 2016.
11. Borrowings from other banks, financial institutions and agents In Bangladesh Note - 11.1 757,085,065 48,807,071 Outside Bangladesh Note - 11.2 - - 757,085,065 48,807,071
Annual Report 2016 137 Amount in Taka
2016 2015 11.1 In Bangladesh Call borrowing 660,000,000 - Refinance against Green Banking from Bangladesh Bank 4,545,455 - Refinance against Ten Taka account from Bangladesh Bank 7,994,500 - Bangladesh Bank (Off-shore Banking Units) - - Repo of Treasury Bills - - Refinance against Woman Enterprise loan from Bangladesh Bank 6,008,333 600,000 Refinance against EDF loan from Bangladesh Bank 78,536,777 48,207,071 757,085,065 48,807,071
11.2 Outside Bangladesh - - - -
11.3 Security against borrowings from other banks, financial institutions and agents Secured (Treasury bills) - - Unsecured 757,085,065 48,807,071 757,085,065 48,807,071
11.4 Maturity grouping of borrowings from other banks, financial institutions and agents Payable on demand - - Up to 1 month 660,000,000 - Over 1 month but within 3 months 7,994,500 - Over 3 months but within 1 year 84,545,110 48,807,071 Over 1 year but within 5 years 4,545,455 - Over 5 years - - 757,085,065 48,807,071
12. Deposits and other accounts Current deposits and other accounts Note - 12.1 1,716,672,837 1,123,072,706 Bills payable Note - 12.2 144,609,092 60,351,751 Savings bank deposits Note - 12.3 1,549,816,494 743,974,875 Fixed deposits Note - 12.4 39,466,980,543 24,757,839,736 Bearer certificate of deposit - - Other deposits 2,295,159 1,839,931 42,880,374,125 26,687,078,999
138 Annual Report 2016 Amount in Taka
2016 2015 12.1 Current deposits and other accounts Current deposits 924,979,399 533,254,030 Deposit margin on letters of credit 92,242,680 88,881,288 Deposit margin on letters of guarantee 32,720,879 28,797,507 Deposit margin on pay order 667,200 Interest payable on deposit 533,542,574 414,541,073 Withholding VAT/Tax/Excise duty payable to Government authority. 50,235,291 40,140,703 Foreign currency deposit 73,388,111 13,584,186 Security deposit and others 8,896,703 3,873,919 1,716,672,837 1,123,072,706 12.2 Bills Payable Demand draft payable - - Payorder payable 144,609,092 60,351,751 144,609,092 60,351,751 12.3 Savings bank deposits NGB savings deposits 1,452,290,389 703,975,672 NGB freshers 1,399,027 1,031,135 NGB perfect 25,772,440 316 NGB queen 3,753,259 2,920,007 NGB junior 5,884,630 2,070,842 NGB salary account 12,300,338 3,006,331 Farmers savings deposit 8,806,881 2,873,797 NGB staff savings deposit 39,609,530 28,096,775 1,549,816,494 743,974,875 12.4 Fixed deposits Special Notice Deposit (SND) account 862,824,763 464,925,658 Term deposit account 29,070,754,313 21,264,010,501 Scheme deposit 9,533,401,467 3,028,903,577 39,466,980,543 24,757,839,736
12.5 Deposit from banks inside Bangladesh Uttara Bank Limited 500,000,000 350,000,000 Mercantile Bank Limited 200,000,000 - Mutual Trust Bank Limited 200,000,000 - Southeast Bank Limited 250,000,000 - South Bangla Agriculture & Commerce Bank Limited 250,000,000 - Eastern Bank Limited 300,000,000 - Bank Asia Limited 200,000,000 - Modhumoti Bank Limited 250,000,000 - AB Bank Limited 100,000,000 - Rupali Bank Limited 500,000,000 - 2,750,000,000 350,000,000
Annual Report 2016 139 Amount in Taka
2016 2015 12.6 Sector-wise break-up of deposits and other accounts Government 1,344,763,990 903,062,040 Deposit from banks 2,750,000,000 350,000,000 Other public 12,070,244,000 5,809,811,521 Foreign currency 73,388,111 13,584,186 Private 26,641,978,024 19,610,621,252 42,880,374,125 26,687,078,999 12.7 Payable on demand and time deposits a) Demand deposits Current deposits 924,979,399 533,254,030 Savings deposits (9%) 139,483,484 66,957,739 Foreign currency deposits 73,388,111 13,584,186 Security deposits 8,896,703 3,873,919 Sundry deposits 711,703,783 574,200,502 Bills payable 144,609,092 60,351,751 2,003,060,572 1,252,222,127 b) Time deposits Savings deposits (91%) 1,410,333,010 677,017,136 Fixed deposits 29,070,754,313 21,264,010,501 Special notice deposits 862,824,763 464,925,658 Deposits under schemes 9,533,401,467 3,028,903,577 40,877,313,553 25,434,856,872 42,880,374,125 26,687,078,999 12.8 Maturity analysis of deposits a) Maturity analysis of deposits from Banks Payable on demand - - Up to 1 month 1,200,000,000 - Over 1 month but within 3 months 1,050,000,000 350,000,000 Over 3 months but within 1 year 500,000,000 - Over 1 year but within 5 years - - Over 5 years but within 10 years - - Over 10 years - - 2,750,000,000 350,000,000
b) Maturity analysis of customer deposits Payable on demand 1,716,672,837 1,123,072,706 Up to 1 month 3,959,513,670 4,496,063,673 Over 1 month but within 3 months 10,860,201,864 9,070,710,929 Over 3 months but within 1 year 16,883,604,690 7,737,153,179 Over 1 year but within 5 years 4,654,573,227 2,083,964,044 Over 5 years but within 10 years 2,030,530,969 1,821,523,912 Over 10 years 25,276,868 4,590,556 Total 40,130,374,125 26,337,078,999 42,880,374,125 26,687,078,999
140 Annual Report 2016 Amount in Taka
2016 2015 13. Other liabilities
Provision for loans and advances Note - 13.1 364,574,451 251,025,625 Provision for off Balance Sheet Note - 13.2 50,337,958 16,088,062 Provision for income tax Note - 13.3 536,345,842 152,409,779 Provision for deferred tax liability Note - 13.4 12,490,405 27,120,530 Provision for diminution in value of investments - 17,112,948
Interest suspense account Note - 13.5 19,731,508 18,346,482 Payable for sanchay patra 21,900,000 - Payable for gratuity 4,801,818 - Expenditure and other payable 2,655,431 1,424,442 1,012,837,413 483,527,868
13.1 Provision for loans and advances Movement in specific provision on classified loans and advances
Provision held as on 1 January 41,677,700 - Less: Fully provided debts written off during the year - - Add: Recoveries of amounts previously written off - - Add: Specific provision made during the year for other accounts - 41,677,700 Less: Provision no longer required (22,338,007) - Add: Net charge to profit and loss account - - Provision held as on 31 December 19,339,693 41,677,700
Movement in general provision on unclassified loans and advances
Provision held as on 01 January 209,347,925 110,832,927 Less:Amount transferred to classified provision - - Add:General provision made during the year 135,886,833 98,514,998 Provision held as on 31 December 345,234,758 209,347,925 364,574,451 251,025,625
13.2 Provision for off-balance sheet exposures
Provision held as on 01 January 16,088,062 12,205,595 Add:Amount transferred from classified provision - - Add:Provision made during the year 34,249,896 3,882,467 Provision held as on 31 December 50,337,958 16,088,062
13.3 Provision for income tax
Balance at 01 January 152,409,779 26,583,081 Add: Provision made during the year 383,936,063 125,826,698 536,345,842 152,409,779 Settlement of previous year's tax liability - - Balance at 31 December 536,345,842 152,409,779
Annual Report 2016 141 13.4 Deferred tax liability Movement in specific provision on classified loans and advances Deferred tax has been calculated based on deductible/taxable temporary difference arising due to difference in the carrying amount of the assets and its tax base in accordance with the provision of Bangladesh Accounting Standard (BAS)12 'Income Taxes" Deferred tax liability is arrived at as follows:
Carrying amount Taxable temporary Particulars Tax base of balance sheet difference
Taka Taka Taka
Assets Fixed assets net of depreciation as on 31 December 2016 630,124,182 594,096,352 36,027,831 Provision for gratuity 4,801,818 - 4,801,818 Total 634,926,000 594,096,352 31,226,013 Assets Fixed assets net of depreciation as on 31 December 2015 532,047,421 464,246,097 67,801,324 Total 532,047,421 464,246,097 67,801,324 Applicable tax rate 40.00% Deferred tax liability as on 31 December 2016 12,490,405 Deferred tax liability as on 31 December 2015 27,120,530 Deferred tax income accounted for during the year 2016 (14,630,125)
Amount in Taka
2016 2015 13.5 Interest suspense account
Balance as on 1 January 18,346,482 - Add: Prior year adjustment - - Add: Amount transferred to "interest suspense" account during the year 1,385,026 18,346,482 Less: Amount recovered from "interest suspense" account during the year - - Less: Amount written-off during the year - - Balance as on 31 December 19,731,508 18,346,482
14 Share capital Movement in specific provision on classified loans and advances Authorized capital is the maximum amount of share capital that the bank is authorized to issue to shareholders by its memorandum & articles of association.
1,200,000,000 ordinary shares of Taka 10 each 12,000,000,000 12,000,000,000
14.1 Issued, subscribed and fully paid up capital The issued share capital of the Bank is the total nominal value of the shares of the Bank which have been issued to the shareholders and remaining outstanding as on the reporting date.
425,000,000 ordinary shares of Taka 10 each fully paid up in cash 4,250,000,000 4,250,000,000 Bonus share - - Rights share - - 4,250,000,000 4,250,000,000
142 Annual Report 2016 14.2 Movement of share capital
2016 2015 Particulars No. of shares Amount No. of shares Amount
Balance at the beginning of the year 425,000,000 4,250,000,000 425,000,000 4,250,000,000 Add: Bonus shares issued - - - - Closing at the end of the year 4,250,000,000 4,250,000,000
14.3 Percentage of shareholdings at the closing date
2016 2015 Particulars Amount % Amount %
Sponsors (NRB) 1,725,000,000 40.6% 4,250,000,000 100% Financial institutions - 0% - 0% Foreign investors - 0% - 0% Non-resident Bangladeshi - 0% - 0% General public - 0% - 0% Others 2,525,000,000 59.4% - 0% 4,250,000,000 100.00% 4,250,000,000 100%
14.4 Shareholding range on the basis of shareholdings as at 31 December 2016
Number of Shareholding Shareholding range shareholders No. of shares Percentage
Less than 500 0 - 0.00% 500- 5,000 0 - 0.00% 5,001 - 10,000 0 - 0.00% 10,001 - 20,000 0 - 0.00% 20,001 - 30,000 0 - 0.00% 30,001 - 40,000 0 - 0.00% 40,001 - 50,000 0 - 0.00% 50,001 - 100,000 0 - 0.00% 100,001 - 1,000,000 1 1,000,000 0.24% Over 1,000,000 26 424,000,000 99.76% 27 425,000,000 100%
Annual Report 2016 143 14.5 Directors' shareholding as at 31 December 2016
Closing Percentage of Sl.No. Name of the Directors Status position shareholding
01 Mr. Nizam Chowdhury Chairman 20,000,000 4.71%
02 Mr. Belal Ahmed representing Padma Wears Limited Vice chairman 10,000,000 2.35%
03 Mr. Ghulam Mohammed Director 20,000,000 4.71%
04 Mr. Mohd. Ataur Rahman Bhuiyan Director 10,000,000 2.35%
05 Dr. Mohammed Faruque Director 10,000,000 2.35%
06 Mr. Arif Ahmed representing Shah Amanat Prakritik Gas Co. Ltd. Director 18,000,000 4.24%
07 Mr. Osman Gani representing Global Trading Corporation Ltd. Director 36,982,800 8.70%
08 Mr. Rashed Uddin Mahmud Director 20,000,000 4.71%
09 Mrs. Maimuna Khanam Director 42,500,000 10.00%
10 Mr. Morshedul Alam representing Chemon CR Strips Ltd. Director 16,000,000 3.76%
11 Mrs. Sarwar Jahan Maleque representing Karnafully Prakritik Gas Ltd. Director 14,935,370 3.51%
12 Mr. Md. Mostan Billah Adil repsenting Fatehabad Farm Ltd. Director 16,000,000 3.77%
13 Ms. Shahana Ferdous representing Portman Cements Ltd. Director 29,290,000 6.89%
14 Ms. Danny Chowdhury Director 1,000,000 0.24%
15 Mosammat Shajada Noor Begum Director 10,000,000 2.35%
16 Mr. Mohammed Kutub Uddo Ind. Director - 0.00%
17 Mr. S.A.M Salimullah Ind. Director - 0.00%
274,708,170 64.64% Capital adequacy ratio as per BASEL - III
In terms of section 13 (2) of the Bank Company (Amendment) Act, 2013 and Bangladesh Bank BRPD circular no. 18 dated 21 December 2014, and DOS circular no. 02 dated 4 March 2015, required capital of the Bank at the close of business on 31 December 2016 was Taka 4,000,000,000 as against available Common Equity Tier-1 capital of Taka 4,606,575,462.00 and supplementary capital of Taka 399,616,149.00 making a total capital of Taka 5,006,191,611.00 there by showing a surplus capital of Taka 775,489,651.00 at that date. Details are shown below: Amount in Taka
2016 2015
Common Equity Tier-1 (Going-Concern Capital) Fully paid up capital/ capital deposited with BB 4,250,000,000 4,250,000,000 Non-repayable share premium account - - Statutory reserve 189,374,321 30,910,902 General reserve - - Retained earnings 167,201,141 (97,346,597) Dividend equalization account - - Minority interest in subsidiaries - - Share money deposit - - Non-cumulative irredeemable preferance share - - 4,606,575,462 4,183,564,305
144 Annual Report 2016 Amount in Taka
2016 2015
Regulatory adjustments from Tier - I - - Shortfall in provision required against non performing loan
- 34,225,896 Shortfall in provision required against investment in share
- - Goodwill and all other Intangible Assets
- - Reciprocal Crossholdings in the CET-1 Capital of Banking, Financial and Insurance Entities
- - Any investm entexceeding the approvedl imit under section 26ka(1) of Bank
Company Act, 1991 (50% of Investment) - - Investments in subsidiaries which are not consolidated (50% of Investment)
Others (if any) - - Total deduction - 34,225,896
Total Common Equity Tier-1 Capital (a) 4,606,575,462 4,149,338,409
Additional Tier-1 Capital - -
Total additional Tier-1 capital - -
Tier-2 Capital (Gone-Concern Capital)
General provision on unclassified loans and advances 345,234,758 209,347,925
General provision on off balance sheet items 50,337,958 16,088,062
Revaluation Reserves as on 31 December, 2014 (50% of Fixed Assetsand Securities & 6,739,054 6,739,054 10% of Equities)
All Other preference shares - -
Subordinated debt/Instruments issued by the banks that meet the qualifying criteria for Tier 2 capital (as per Annex 4 of Basel III Guidelines) - -
Others (if any item approved by Bangladesh Bank)
402,311,770 232,175,041
Annual Report 2016 145 Amount in Taka
2016 2015 Regulatory adjustments
Revaluation Reserves for Fixed Assets, Securities & Equity Securities (follow Phase-in 2,695,621 1,347,811 deductions as per Basel III Guidelines)
Investment in own T-2 Instruments/Shares (as per Para 3.4.7 of Basel III Guidelines) - -
Reciprocal crossholdings in the T-2 Capital of Banking, Financial and Insurance Entities - -
Any investment exceedingt he approved limit under section 26 ka(1) of Bank - - Company Act, 1991 (50% of Investment)
Investments in subsidiaries which are not consolidated (50% of Investment) - -
Others if any - -
2,695,621 1,347,811
Total eligible Tier - II capital (b) 399,616,149 230,827,230
Total eligible capital (a+b) 5,006,191,611 4,380,165,639
Total assets including off balance sheet exposure 54,175,584,421 32,921,157,418
Total Risk weighted assets (RWA) 42,307,019,603 27,311,391,237
Required capital based on risk weighted assets (10% of RWA) 4,230,701,960 2,731,139,124
Surplus Capital 775,489,651 380,165,639
Capital to risk weighted assets ratio (CRAR):
Common Equity Tier-1 (minimum-5.50%) 10.89% 15.19%
On actual capital (minimum-10.625%) 11.83% 16.04%
15 Statutory reserve
Balance on 1 January 30,910,902 898,801 Addition during the year ( 20% of pre-tax profit) 158,463,419 30,012,101 Balance at 31 December 189,374,321 30,910,902
16 Revaluation reserve
Revaluation reserve on Government securities Note - 16.1 9,880,103 27,051,726 Asset revaluation reserve Note - 16.2 - - 9,880,103 27,051,726 16.1 Revaluation reserve on Government securities 2016 2015 Particulars HTM HFT Total Total
Balance at the beginning of the year 27,051,726 - 27,051,726 13,478,108
Add: Addition during the year - - - 13,573,618
Less: Adjustment during the year 17,171,623 - 17,171,623 -
Balance as on 31 December 9,880,103 - 9,880,103 27,051,726
146 Annual Report 2016 Amount in Taka
2016 2015 16.2 Asset revaluation reserve
Balance at the beginning of the year - - Add: Addition during the year - - Less: Adjustment during the year - - Balance as on 31 December - -
17 Surplus / (deficits) in profit and loss account
Balance on 1 January (97,346,597) (86,306,318) Addition during the year 423,011,157 18,971,822 Transfer to statutory reserve (158,463,419) (30,012,101) Cash dividend - - Issue of bonus shares - - Balance at 31 December 167,201,141 (97,346,597) Add: Foreign currency translation gain/ (loss) - - 167,201,141 (97,346,597)
18 Contingent liabilities of the bank
18.1 Acceptance and endorsement
Back to back bills (Foreign) 62,646,760 4,539,063 Back to back bills (Local) 63,909,725 40,216,004 Back to back bills (EPZ) 2,740,979 - Cash bills defferrd(Local) 462,270,000 - Cash bills defferrd(Foreign) 221,623,119 223,798,661 813,190,583 268,553,728 Less: Margin - - 813,190,583 268,553,728
18.2 Letters of guarantee
Letters of guarantee (Local) 3,829,846,413 638,922,902 Counter guarantees (Local) 35,438,362 118,250,052 Performance Guarantee 28,385,846 201,417,133 3,893,670,621 958,590,087 Less: Margin 32,720,879 28,797,506 3,860,949,742 929,792,581
Money for which the bank is contingently liable in respect of guarantees given favouring:
Directors - - Government - - Banks and other financial institutions - - Others 3,893,670,621 958,590,087 3,893,670,621 958,590,087
Annual Report 2016 147 Amount in Taka
2016 2015 18.3 Letters of credit
Letter of credit (Foreign) 288,290,916 336,762,149 Back to back letter of credit (Foreign) 5,965,217 - Back to back letter of credit (EPZ) 516,815 - Letter of credit (EPZ) - 22,358,160 Back to back letter of credit (Local) 32,161,660 3,256,920 Letter of credit Deferred (Foreign) - 19,285,200 326,934,608 381,662,429 Less: Margin 92,242,680 88,881,288 234,691,928 292,781,141
19 Income statement Income:
Interest, discount and similar income Note- 19.1 4,575,728,806 3,029,183,052 Dividend income 17,031,390 15,909,722 Fee, commission and brokerage Note- 19.2 43,515,524 39,236,716 Gains less losses arising from dealing in securities - - Gains less losses arising from investment securities - - Gains less losses arising from dealing in foreign currencies Note- 23 26,985,223 9,664,286 Income from non-banking assets - - Other operating income Note- 19.3 29,424,182 30,774,159 Profit less losses on interest rate changes - - 4,692,685,126 3,124,767,935
Expenses:
Interest, fee and commission Note- 19.4 2,557,559,670 1,876,519,837 Losses on loans and advances - - Administrative expenses Note- 19.5 791,597,480 605,210,596 Other operating expenses Note- 34 280,032,040 222,312,306 Depreciation and repair of Bank's assets Note- 33 140,493,067 109,476,578 3,769,682,257 2,813,519,317 923,002,869 311,248,618
19.1 Interest, discount and similar income
Interest income from Loans and Advances 3,855,602,390 2,273,009,096 Interest on call loan 1,596,750 64,965,277 Interest on balance with other banks and financial institutions 429,863,304 489,670,419 Interest received from foreign bank 401,295 135,633 Going on sale of share 15,572,057 - Interest received on commercial paper - 6,409,878 Interest received on subordinate bond 24,325,000 - Interest received on Govt. bond 233,741,177 144,133,078 Interest received on treasury bills 21,020,052 51,747,807 4,582,122,025 3,030,071,188 Less: Loss on sale/revaluation of security trading 6,393,218 888,136 4,575,728,806 3,029,183,052
148 Annual Report 2016 Amount in Taka
19.2 Fees, commission and brokerage 2016 2015
Commission Note- 23 43,515,524 39,236,716 Settlement fee - - 43,515,524 39,236,716 19.3 Other operating income
Charge on account maintenance fees 14,901,423 9,267,550 Service and other charges 4,383,435 7,901,654 Rent received from locker 354,100 201,000 Income received from rebate 279,849 7,382,098 Income from ATM services 3,437,650 1,790,480 Others earnings 6,067,725 4,231,377 29,424,182 30,774,159 19.4 Interest, fee and commission
Interest paid on deposits Note- 21 2,492,663,226 1,819,496,818 Interest paid for borrowings Note- 21 64,896,444 57,023,019 2,557,559,670 1,876,519,837
19.5 Administrative expenses Salary and allowances Note- 25 455,046,916 337,447,303 Rent, taxes, insurance, electricity etc. Note- 26 280,830,460 215,072,045 Legal expenses Note- 27 761,547 776,498 Postage, stamp, telecommunication etc. Note- 28 13,176,307 10,993,433 Stationery, printings, advertisement etc. Note- 29 13,526,511 27,610,018 Managing Director's salary and fees Note- 30 10,880,000 10,137,097 Directors' fees Note- 31 17,059,489 2,886,702 Auditors' fees Note- 32 316,250 287,500 791,597,480 605,210,596 20 Interest income
Cash credit 1,212,751,573 666,899,228 Staff loan 10,368,586 8,131,583 Overdraft 1,146,174,113 716,389,400 Small and Medium Enterprise (SME) 48,456,766 6,865,276 Term loan 197,602,941 141,917,002 Documentary bill Purchases and discounted 1,105,874,134 652,039,437 House building Loan 18,865,960 8,838,259 Consumer credit scheme 11,261,796 5,801,815 Payment against documents 12,903,742 6,786,706 Loan against trust receipts 70,885,454 57,845,068 Agricultural and rural credit 14,443,451 798,795 Interest income from credit card 3,869,128 383,262 Other Loans and Advances 2,144,746 313,265 Total interest on loans and advances 3,855,602,390 2,273,009,096 Interest on call loans 1,596,750 64,965,277 Interest received from foreign bank 401,295 135,633 Interest on balance with other banks and financial institution 429,863,304 489,670,419 4,287,463,739 2,827,780,425
Annual Report 2016 149 Amount in Taka
2016 2015 21 Interest paid on deposits and borrowings
(i) Interest paid on deposits: Savings bank deposits 30,050,817 15,927,208 Special notice deposits 29,457,169 23,079,250 Monthly Savings Scheme 76,656,926 20,121,585 Fixed Deposit 1,843,936,762 1,529,307,661 Special Deposits under scheme 512,561,551 231,061,114 2,492,663,226 1,819,496,818 (ii) Interest paid for borrowings Bangladesh bank refinance 973,737 1,024,449 Call borrowing 63,922,708 55,998,570 64,896,444 57,023,019 (iii) Interest paid to foreign Bank account - - 2,557,559,670 1,876,519,837
22 Investment income
Interest received on treasury bills /reverse repo 21,020,052 51,747,807 Interest received on Govt. bonds 233,741,177 144,133,078 Dividend received from shares 17,031,390 15,909,722 Gain on discounted bonds / bills - 51,073 Interest from debentures - - Gain on sale of share 15,572,057 - Interest received on commercial paper - 6,409,878 Interest received on subordinate bond 24,325,000 - 311,689,676 218,251,558 Less: Loss on revaluation of bonds 6,393,218 888,136 305,296,458 217,363,422
23 Commission, exchange and brokerage
Commission on L/Gs 19,248,872 10,109,249 Commission on bills and remittance 1,442,469 880,244 Commission on letter of credit 22,801,230 28,178,795 Commission on others 22,953 68,428 43,515,524 39,236,716 Gain on revaluation from foreign currency 26,985,223 9,664,286 70,500,747 48,901,002 24 Other operating income
Charge on account maintenance fees 14,901,423 9,267,550 Service and other charges 4,383,435 7,901,654 Rent received from locker 354,100 201,000 Income received from rebate 279,849 7,382,098 Postage / telex / SWIFT/ fax recoveries 3,222,966 2,756,701 Income from ATM services 3,437,650 1,790,480 Credit card income 1,907,638 502,120 Others earnings 937,121 921,483 29,424,182 30,723,086
150 Annual Report 2016 Amount in Taka
2016 2015 25 Salary and allowances
Basic pay 129,437,640 87,832,370 Allowances 213,999,736 144,703,040 Bonus 45,585,208 37,645,957 Bank's contribution to provident fund 12,237,076 7,987,413 Consolidated salary 27,503,644 44,715,615 Gratuity 4,801,818 - Arrear salary 3,296,091 1,900,935 Salary to casual employees 18,185,703 12,661,973 455,046,916 337,447,303
26 Rent, taxes, insurance, electricity etc.
Rent, rates and taxest 239,792,788 188,167,530 Insurance 22,183,569 13,908,214 Power and electricity 18,854,103 12,996,301 280,830,460 215,072,045 27 Legal expenses
Legal expenses 227,007 244,048 Other professional charges 534,540 532,450 761,547 776,498 28 Postage, stamp, telecommunication etc.
Postage 1,444,359 1,498,360 Telegram, telex, fax and e-mail 610,728 286,080 Data communication 8,996,700 7,496,427 Telephone - office 2,048,004 1,687,271 Telephone - residence 76,516 25,295 13,176,307 10,993,433
29 Stationery, printing, advertisements etc.
Office and security stationery 6,486,080 6,277,992 Computer consumable stationery 1,625,436 1,101,882 Publicity and advertisement 5,414,995 20,230,144 13,526,511 27,610,018
30 Managing Director's salary and fees
Basic salary 4,800,000 4,606,452 Bonus 1,880,000 1,800,000 House rent all 1,200,000 1,151,613 House maintenance allowance 1,800,000 1,427,419 Leave fare assistance 1,200,000 1,151,613 10,880,000 10,137,097 31 Directors' fees
Meeting attendance fees 1,076,400 836,050 Meeting expenses 5,038,809 817,342 Directors travelling expenses 10,944,280 1,233,310 17,059,489 2,886,702
Annual Report 2016 151 Each director of the bank is paid Tk.5,000/- per board meeting and per committee meeting up to 3 October 2015 and subsequently as per BRPD circular no. 11 dated 4 October 2015 each director of the bank is paid Tk.8,000/- per board meeting and per committee meeting. Amount in Taka
32 Auditors' fees 2016 2015
External audit fee 275,000 250,000 VAT on audit fee 41,250 37,500 316,250 287,500 33 Depreciation / amortization and repair of Bank's assets Depreciation - (see annexure-A for detail)
Dep. on furniture and fixture 23,268,528 18,011,409 Dep. on machineries and equipment 41,735,797 31,518,563 Dep. on motor vehicle 14,904,509 6,655,245 Dep. on computer & peripheral 31,218,810 27,472,516 Dep. on ATM booth 10,565,312 6,195,402 Dep. on books and journals 161,004 53,668 Dep. on software & network acces 14,784,720 16,981,101 136,638,680 106,887,904 Repairs Repair & maintenance 3,854,387 2,588,674 3,854,387 2,588,674 140,493,067 109,476,578 34 Other expenses
Entertainment 4,630,468 5,103,295 Car expenses 33,047,353 27,123,089 Bank charges and commission paid 3,040,569 2,444,082 Donation and subscription 1,990,560 22,747,792 Traveling expenses 5,134,573 4,295,448 Software maintance expenses 12,682,697 8,350,836 Business development 11,212,127 5,028,946 Expenses for corporate social responsibility 49,045,000 31,345,160 Expenses on training, seminer and workshop 1,935,390 1,748,755 Wages to casual labour 73,530 70,560 Local Conveyance 2,540,915 2,027,556 Finance charge for lease asset 14,631,228 14,631,228 Ammortization of preliminary exp. 65,642,982 40,000,000 Security and Cleaning 26,013,536 20,687,341 Branch opening expenses 3,570,924 1,909,650 Expenses for crokeries and cutleries 289,886 124,958 Medical expenses 2,704,994 2,647,119 Sponsorship expenses 135,000 3,146,845 SWIFT Charge 2,602,870 1,899,582 Expenses for credit card 2,513,796 3,416,678 Service and other charges 8,794,060 8,973,585 Annual General Meeting expenses 400,000 300,000 Holiday banking allowances 1,532,850 1,349,780 ATM operation expenses 18,365,577 8,377,191 Miscellaneous expenses 7,501,155 4,562,830 280,032,040 222,312,306
152 Annual Report 2016 Amount in Taka
2016 2015 35 Provision for loans, off balance sheet exposure & other assets of the Bank
Provision for classified loans and advances (22,338,007) 41,677,700 Provision for unclassified loans and advances 135,886,833 98,514,998 Provision for off-shore banking units - - Provision for other assets - - Provision for off-balance sheet exposure 34,249,896 3,882,467 Provision for diminution in value of investments (17,112,948) 17,112,948 130,685,774 161,188,113 36 Tax expenses
Current tax Note- 13.3 383,936,063 125,826,698 Deferred tax Note- 13.4 (14,630,125) 5,261,985 369,305,938 131,088,683
37 Receipts from other operating activities Service and other charges 29,424,182 30,723,086 29,424,182 30,723,086
38 Payments for other operating activities Rent, rates and taxes (280,830,460) (215,072,045) Legal expenses (761,547) (776,498) Postage and communication charges, etc. (13,176,307) (10,993,433) Directors' fees (17,059,489) (2,886,702) Other expenses (218,559,695) (185,188,480) (530,387,498) (414,917,160)
39 Increase / (decrease) of other assets
Closing balance
Stationery and stamps 15,382,171 11,343,300 Prepaid expenses 2,029,214 105,008 Advance to supplier 75,627,643 114,317,142 Advance rent 454,298,869 480,626,317 Security deposit 638,378 2,498,379 Balance with First Security Islami Capital & Investment Limited 421,910 1,483,238 Others 37,120,099 4,113,496 585,518,284 614,486,880 Opening balance
Stationery and stamps 11,343,300 3,981,811 Prepaid expenses 105,008 1,033,189 Advance to supplier 114,317,142 34,170,417 Advance rent 480,626,317 437,145,140 Security deposit 2,498,379 482,345 Balance with First Security Islami Capital & Investment Limited 1,483,238 - Others 4,113,496 3,664,347 614,486,880 480,477,249 28,968,596 (134,009,631)
Annual Report 2016 153 Amount in Taka
40 Increase / (decrease) of other liabilities 2016 2015
Closing balance
Interest suspense account 19,731,508 18,346,482 Payable for sanchay patra 21,900,000 - Payable for gratuity 4,801,818 - Expenditure and other payable 2,655,431 1,424,442 49,088,757 19,770,923
Opening balance
Interest suspense account 18,346,482 - Expenditure and other payable 1,424,442 4,602,280 19,770,924 4,602,280 29,317,833 15,168,643
41 Earnings Per Share (EPS)
As per year end position of share
Profit attributable to the ordinary shareholder 423,011,157 18,971,822 Number of Ordinary shares outstanding (Denominator) 425,000,000 425,000,000 Earnings per share (EPS) 1.00 0.04
Earnings per share has been calculated in accordance with BAS 33 "Earnings Per Share (EPS)".
42 Number of employees The number of employees engaged for the whole year or part thereof who received a total remuneration of Tk. 36,000 p.a. or above were 738.
43 Disclosure on Audit Committee
a) Particulars of Audit Committee The audit committee of the Board was duly constituted by the Board of Directors of the Bank in accordance with the BRPD circular no. 11 dated 27 October 2013 of Bangladesh Bank. Pursuant to the BRPD circular no. 08 dated 19 June 2011 and SEC notification no. SEC/CMRRCD/2006-158/129/Admin/44 dated 7 August 2012 on Corporate Governance, the current Committee is Constituted with the following 05 (Five) members of the Board:
Sl.No. Name Status with Status with Bank committee Educational Qualification
01 Mr. Mohammed Kutub Uddowllah Independent Director Chairman Bachelor of Science(B.Sc)
02 Mr. Rashed Uddin Mahmud Director Member Graduation in Global Fashion Management.
03 Mr. Arif Ahmed Director Member Master of Science (M.Sc) and C.E.M.
04 Mosammat Shajada Noor Begum Director Member Under S.S.C.
05 Mr. S.A.M Salimullah Independent Director Member Master of Business Administration (MBA)
b) Meetings held by the Audit Committee during the year by date:
Sl.No. Meeting no. Holding Date
01 8th 13-February-2016
02 9th 19-June-2016
03 10th 07-September-2016
04 11th 04-December-2016
154 Annual Report 2016 44 Related Party Disclosures
a) Disclosure of transaction regarding Directors and their related concerns
Sl.No. Name of Party Relationship Amount Nature of Transaction
01 Reliance Finance Limited Common Director 4,671,551,473 Fixed deposit
02 Reliance Finance Limited Common Director 308,575,000 Subordinate bond
b) Shares issued to Directors and Executives without consideration or exercisable at a discount. Nil
c) Lending Policies to Related Parties
Sl.No. Particulars Amount
Lending to related parties is effected as per requirements of Section 27(1) of the Bank 01 Nil Companies Act 1991 amended up to 2013
Amount of transaction regarding loans and advances, deposits, guarantees and 02 Nil commitment as on 31 December 2016
03 Amount of transactions regarding principal items of deposits, expenses and commission Nil
04 Amount of provision against loans and advances given to related party Nil
05 Disclosure of transaction regarding Directors and their related concerns Nil
d) Disclosure of transaction regarding Directors and their related concerns Nil
e) Business other than banking business with any related concern to the Directors as per Section 18(2) of the Bank Companies Act, 1991.
Sl.No. Particulars Amount
01 Lease agreement made with the Sponsor Director & Independent Director Nil
02 Service receiving companies where the Directors interest subsisted during the year Nil
45 i) Financial Highlights as at 31 December 2016 are shown in Annexure-E
46 i) Events after the Reporting Period Not Applicable
47 Approval of the financial statements The financial statements of the Bank has been approved by the Board of Directors at its 28th Board meeting held on 23 March 2017.
Chairman Director Director Managing Director
Annual Report 2016 155 A
-
n e u r x l u e n D o w a 590,328 n e V 36,454,541 36,454,541 A r i t e 60,738,429 95,396,169 40,287,752 630,124,182 532,047,421 W 235,029,281 161,627,682 593,669,641
e i n g n c l a 214,672 C l o s B a 40,092,615 40,092,615 89,319,695 25,763,407 72,232,906 17,251,428 294,664,125 158,025,446 49,789,403 254,571,511 r a e n t Y e
t m ------t i o n A d j u s D u r i n g t h e i a c p r e
D e r a e Y 161,004 p . D u r i n g t h e 41,735,797 14,904,509 31,218,810 10,565,312 23,268,528 121,853,960 106,887,904 14,79\84,720 t e d 136,638,680 14,79\84,720 D e i e l
u m e i n c L n i g 53,668 l a e d a p e k 6,686,116 25,307,897 25,307,897 B a k O 2 0 1 6 47,583,898 10,858,898 41,014,096 51,137,542
26,520,875 158,025,446 132,717,551 e r c h b S % o u n t i T a
t e 0 B a n 10% 20% 20% 20% 20% 20% 2
R a A m D e c m 3 1 a l
n e o b A s e t i n g
n c A s l a o 805,000 l C l o s B a 76,547,456 76,547,456 86,501,836 57,539,180 284,818,684 250,947,377 167,629,075 848,241,152 924,788,308 690,072,867 G x e d i r F a e n t Y e - t m ------N R B A d j u s t
D u r i n g t h e C o s r - a e Y 2,897,750 2,897,750 t h e 66,054,438 35,800,000 14,398,660 13,521,583 102,043,010 231,817,691 234,715,441 151,378,542 A d i t o n D u r g e n c n i g l a 805,000 p e B a 73,649,406 O 73,649,406 50,701,836 44,017,597 690,072,867 538,694,325 182,775,674 184,892,939 153,230,415 616,423,461 t 6 5 n l 1 1 e 0 0 t s r i a m e e r 2 r 2 s i p h u b e b e q r i p r e m m l s e e e e o f A s a t u d p c c e n r n
d f i x t s u m n a l e d e t s D e D e s s n j o i c 1 1 e s N a r a s h d r i e a s a n e t e e
r e u a i n a o n 3 o n 3 r v r e p s h s s
i t u k c t o m o r n l a l a o a n g i b l e T M o f t w a n g i b l e B A C o M M F u o T a I n t a S T o t a T o t a
156 Annual Report 2016 NRB Global Bank Limited Financial Reporting by Segment of the Bank
i) Geographical Segment Annexure-B
Inside Outside Particulars Bangladesh Bangladesh Total
Income 4,692,685,126 - 4,692,685,126
Less: Inter-segmental income - - -
Total income 4,692,685,126 - 4,692,685,126
Operating profit (Profit before unallocated expenses and tax) 2,135,125,456 - 2,135,125,456
Allocated expenses 1,212,122,587 - 1,212,122,587
Provision against loans and advances, others 130,685,774 - 130,685,774
Profit / (loss) before tax 792,317,095 - 792,317,095
Income tax including deferred tax 369,305,938 - 369,305,938
Net profit 423,011,156 - 423,011,156
Segment assets 49,266,752,168 - 49,266,752,168
Segment liabilities 49,266,752,168 - 49,266,752,168 ii) Business Segment
Conventional Islamic Particulars Banking Banking Investment Total
Income 4,692,685,126 - - 4,692,685,126
Less: Inter segmental income - - - -
Total income 4,692,685,126 - - 4,692,685,126
Operating profit (Profit before unallocated expenses and tax) 2,135,125,456 - - 2,135,125,456
Allocated expenses 1,212,122,587 - - 1,212,122,587
Provision against loans and advances, Others 130,685,774 - - 130,685,774
Profit / (loss) before tax 792,317,095 - - 792,317,095
Income tax including deferred tax 369,305,938 - - 369,305,938
Net profit 423,011,156 - - 423,011,156
Segment assets 49,266,752,168 - - 49,266,752,168
Segment liabilities 49,266,752,168 - - 49,266,752,168
Annual Report 2016 157 NRB Global Bank Limited Name of Directors and their interest in different entities
Annexure - C
Status with Sl.No. Name of Directors Entities where they have interest Status % of Interest NRBGBL
Trade Balance USA Corporation INC. President 50% 01 Mr. Nizam Chowdhury Chairman NRB USA Inc. Chairman 100%
M/S. Unitex Proprietor 100% 02 Mr. Belal Ahmed representing Padma Wears Ltd. Vice Chairman Unitex Spinning Limited Managing Director 60% Padma Wears Limited Managing Director 80%
Gianbeen Sung Trading (L.L.C.) Managing Director 29% AFA Steel Industries Ltd. Chairman 25% MAX Automobile Products Ltd. Managing Director 51% Lub House Industries Limited Managing Director 75% 03 Mr. Ghulam Mohammed Director MAX Industries Limited Managing Director 90% MAX Power Limited Managing Director 25.90% MAX Pre Stress Limited Managing Director 60% MAX Building Technologies Ltd. Chairman 60% Oscar Trade Syndicate Proprietor 100%
Toma Construction & Co. Ltd. Managing Director 60% Toma Properties Limited Chairman 99%
04 Mr. Mohd. Ataur Rahman Bhuiyan Director Toma Concrete Limited Managing Director 75% Max Power Limited Director 20% Vatican Properties Limited Chairman 35%
Orchard Sweaters Ltd. Managing Director 95% Hotel Orchard Plaza Ltd. Chairman 25% Orchard Developer & Construction Ltd. Managing Director 70% Bengal Telecom Company Ltd. Managing Director 70% Orchard International Ltd. Managing Director 70% Orchard Hotels & Resorts Ltd. Managing Director 65% 05 Dr. Mohammed Faruque Director Orchard Industries Ltd. Managing Director 65% Mecca Cola Limited Managing Director 70% Royal Aviation Services Ltd. Managing Director 75% Orchard Agro Park Ltd. Managing Director 60% Orchard Marketing Company Ltd. Managing Director 70% Gulf Aviation Ltd. Managing Director 60%
06 Mr. Arif Ahmed representing Shah Amanat Prakritik Gas Co. Ltd. Director M/s Arif Traders Owner 100%
07 Mr. Osman Gani representing Global Trading Corporation Ltd. Director Not Applicable Not Applicable N/A
08 Mr. Rashed Uddin Mahmud Director Global Fashion Makers, Corp. President 100%
Avenue Overseas Ltd. Director 50% 09 Mrs. Maimuna Khanam Director Reliance Finance Limited Director 5.28%
Chemon Ispat Ltd. Managing Director 47.50% 10 Mr. Morshedul Alam representing Chemon CR Strips Ltd. Director S. Alam Super Edible Oil Ltd. Managing Director 35%
Mrs.Sarwar Jahan Maleque representing JASCO Bangladesh Limited. Director 30% 11 Director Karnaphuli Prakritik Gas Ltd. JASCO Capital Management Ltd. Vice Chairman 22%
12 Mr. Md.Mostan Billah Adil representing Fatehabad Farm Ltd. Director M/S Mostan Billah Adil Owner 100%
M/S Shahnaj Trading Owner 100% 13 Ms.Shahana Ferdous representing Portman Cements Ltd. Director S Alam Edible Oil Ltd. Director 30% Galco Steel (BD) Ltd. Managing Director 51%
14 Ms. Danny Chowdhury Director Trade Balance USA Corporation Director 50%
15 Mosammat Shajada Noor Begum Director Rashad Industries Director 10%
16 Mr. Mohammed Kutub Uddowllah Independent Director D. S. Line Director and CEO 100%
17 Mr. S.A.M Salimullah Independent Director Not Applicable Not Applicable N/A
158 Annual Report 2016 NRB Global Bank Limited Balance with other banks-outside Bangladesh (Nostro Account)
As at 31 December 2016
Annexure - D
2016 2015
Name of the Bank Account Type Currency Type FC Exchange Equivalent FC Exchange Equivalent
Amount Rate Taka Amount Rate Taka
Mashreq Bank, New York CD US $ 622,881.25 79.25 49,363,339 192,402 78.55 15,113,187
Mashreq Bank, London CD EURO € 48,239.82 83.54 4,030,152 140,000 86.32 12,084,702
Mashreq Bank, London CD GBP£ 66,048.45 97.81 6,460,318 25,326 119.45 3,025,085
United Bank. Kolkata CD ACU $ 111,266.84 79.25 8,817,897 476 78.55 37,382
AB Bank, Mumbai CD ACU $ 131,879.67 79.25 10,451,464 130,553 78.55 10,254,930
NIB Bank, Pakistan CD ACU $ 923.66 79.25 73,200 2,880 78.5500 226,256
Total 981,240 79,196,370 491,637 40,741,542 Annual Report2016 159 NRB Global Bank Limited Highlights Annexure - E
(Taka in million) Sl. No. Particulars 2016 2015 1 Paid-up capital 4,250.00 4,250.00 2 Total capital 5,006.19 4,380.17 3 Capital surplus / (deficit) 1,006.19 380.17 4 Total asset 49,266.75 31,430.03 5 Total deposits 42,880.37 26,687.08 6 Total loans and advances 34,958.29 20,846.13 7 Total Contignent liabilities and commitment 4,908.83 1,491.13 8 Credit deposit ratio 81.69% 78.02% 9 Percentage of classified loans against total loans and advances 0.42% 0.64% 10 Profit after tax and provision 423.01 18.97 11 Amount of classified loans during current year 146.31 132.39 12 Provisions kept against classified Loan 19.34 41.68 13 Provision surplus / (deficit) - - 14 Cost of fund 9.60% 11.54% 15 Interest earning assets 44,824.93 27,962.14 16 Non-interest earning assets 4,441.82 3,467.89 17 Return on investment (ROI) 1.05% 0.45% 18 Return on assets (ROA) 0.26% 0.02% 19 Income from investment 305.30 217.36 20 Earnings per share (Taka) 1.00 0.04 21 Net Income per share (Taka) 1.00 0.04 22 Price Earning Ratio (Taka) 10.05 224.02
160 Annual Report 2016 BRANCH NETWORK OF NRB GLOBAL BANK LIMITED Branches in Dhaka Division
Gulshan Corporate Branch Ulokhola Branch Mawa Branch Motijheel Branch Abdul Whab Sarkar Khandker Tower, 94 Gulshan Modern Mansion, 53, Motijheel Dulal Plaza, South Medinimondal, Shopping Complex (1st Floor), Nagari Avenue, Gulshan -1, Dhaka-1212 C/A Dhaka - 1000 Louhojong, Munshiganj Kaligonj, Gazipur
Uttara Branch Dhanmondi Branch Banani Branch st Naya Paltan Branch Plot No -10, Gausal Azam Avenue Rangs Panorama (1 Floor) “Hotel Sweet Dream” Orchard Faruque Tower, 72 (1st & 2nd) Floor, Sector No. 13 Plot No. 780 (Old) & 80 (New) (1st & 2nd floor), 60 Naya Paltan, VIP Road, Dhaka Uttara Model Town Shatmosjid Road, Dhanmondi R/A Kamal Ataturk Avenue Dhaka - 1230 Dhaka Banani C/A, Dhaka-1213
Beldi Bazar Branch Ashulia Branch Panthapath Mahila Branch Mohakhali Branch “Munsur Tower” “Halima Bhaban” (1st floor), Union: “Western Panthanibash” “Red Crescent Concord Tower” Jam Gara, Union – Yearpur Bir Uttam Kazi Nuruzzaman Sarak (1st Floor) Daudpur, P.O: Putina, P.S: Rupgonj Gazirchat Madrasa, Ashulia Panthapath, Kalabagan, Dhaka 1205 17 Mohakhali, Dhaka Savar, Dhaka Dist: Narayangonj
Kaliachapra Branch Nawabpur Road Branch st “Wealth GSM Tower” (1st Floor) “Hazi Lutfur Rahman Super Market” (1 Floor) Holding No.: 59-60, Nawabpur Road Kaliachapra, 6 No. Patuavanga Union South City Corporation, Dhaka P.O.: Maizhati, Thana: Pakundia Dist.: Kishoregonj
Branches in Chittagong Division
Link Road Branch Agrabad Corporate Branch Patherhat Branch Arif Market, Ctg.- Cox’s Bazar Palm View (Ground Floor) 101 Station Market, Union -13 Dohazari Branch Sadek Tower, Dohazari Main Road, Shahartali Link Road Agrabad C/A, Chittagong Noapara, Raozan, Chittagong Union No.-10, Zilonga, Cox’s Bazar Chandanaish, Chittagong
Adhunagar Branch Anowara Branch Jubilee Road Branch Nasirabad Branch “Bandar Shopping Complex”, North “Islamia Plaza”, Uttar Horina “S.M.A Tower” (1st & 2nd Floor), “Afford Sultan Elysium” 331/A, CDA Bandor, Union- 1 No. Bairag, Mahal Ghatiarpara,Union: 9 No. 178, Jubilee Road, P.O.: GPO Avenue, East Nasirabad, Sholoshahar Khan Bazar, Karnaphully Adhunagar, P.O: Adhunagar, P.S: Kotowali, Chittagong Panchlaish, Chittagong Anowara, Chittagong Lohagara, Dist: Chittagong
Rowshan Hat Branch Khatungonj Branch “Chowdhury Tower” Panchgachia Bazar Branch Nandiapara Bazar Branch (Adjacent to BGC Trust) “Sobhan Bhaban” 69, West Bijoy Sing Feni- “New York Plaza”, P.O.: Nandiapara, Kanchannagar, Chandanaish 601, Ramjoy Mohazon Lane Noakhali Road, Feni Sador, Feni P.S.: Sonaimuri, Dist.: Noakhali Post office Goli, 35 No. Baksir Hat Chittagong Kotwali, Chittagong
Patiya Branch Shindurpur Branch Feni Branch Gunabati Branch Delal Miah Shopping Mall C howdhury Centre (1st floor) P.O.: Nurjahan Plaza (1st floor) “Chowdhury Tower”, Gunabati, (1st floor) 703 Station Road, Patiya Chauddagram, Comilla Shindurpur, Mouza: Shindurpur 202 S. S. K. Road, Ward no.: 17 Chittagong Dagonbhuiyan, Feni Feni Sadar, Feni
Kashipur Bazar Branch st Cox’s Bazar Branch Madina Tower (1 floor) Dakbangla Bazar Branch Chambol Branch Fatema Market (1st Floor) “Green Sohel Complex” (1st Floor) “Shafique Centre” Holding No.: 464, Mouza – Kashipur, Union - Mouza – Mirjapur, Union – 3 No. East Chambol, Union: Chambol Main Road, Ward No.: 10, Cox’s Barogaon, P.O. – Moheshgonj, Mangalkandi, Thana – Sonagazi Thana: Banshkhali, Dist.: Chittagong Bazar Pouroshava, Dist.: Cox’s Bazar Upazila: Sonaimuri, Dist.: Noa khali Dist. – Feni
NRB Global Bank Limited Annual Report 2016 Annual Report 2016 161177 Branches In Other Division
Sylhet Branch Bogra Branch Khulna Branch
Optimum Tower “Saikat Complex” “Khan Plaza”
66 Chayatiru VIP Road 1st floor, Holding No.: 141-01 1st floor, Holding No.: 76 Lamabazar, Sylhet Sherpur Road, Bogra Sadar KDA Avenue, Khulna Bogra
UP- COMING BRANCHES OF NRB GLOBAL BANK LIMITED
Upcoming Branches In Dhaka Division
Mirpur Branch Mawna Branch Gazipura Branch “Amigo Batayan Tower” “Kazal Fakir City Complex” “Kazi Nur Mohammad Super Market” Section: 12, Block: B Ward No.: 8, Sreepur Pouroshava Kazi Mollak Hossain Road Avenue: 01, Plot No.: 76 P.S.: Sreepur, Dist: Gazipur Ward No.: 50, Gazi City Corporation Mirpur Housing Estate, Dhaka 1216 Thana: Tongi, Dist.: Gazipur
Kalatia Branch Madhabdi Branch Krista Chandra Plaza “Hakim Tower”, Holding No.: 07 Shamserpur, Union: Kalatia Bank Potti, Ward no.: 8, Madhabdi Keranigonj, Dhaka Pouroshava, Madhabdi, Narsingdi
Upcoming Branches In Chittagong Division
Alangkar Mor Branch Boalkhali Chowdhury Hat “R.R. Complex”, Holding No.: Barabkunda Branch Branch “Miajee Market”, Barabkunda, 725, North Pahartali, Ward No.: 9, “S.M. Shopping Mall”, Chowdhury Union: 5 No. Barabkunda, Thana: Hat, Union: Kodhurkhali, Thana: Chittagong City Corporation, Sitakunda, Dist.: Chittagong P.S.: Pahartali, Dist.: Chittagong Boalkhali, Dist.: Chittagong
Ishapur Branch Chandina Branch “Laila Centre”, Ishapur, North Alhaj Dr. Rosmat Ali Super Market Market, Union: 8 No. Mekhel, Ward no: 05, Chandina Pourashava P.S.: Hathazari, Dist.: Chittagong Chandina, Comilla
Upcoming Branches In Other Division
Rajshahi Branch Kamar Manzil, Holding No.: 37-38 Rani Bazar, Station Road, Ward no.: 20 Rajshashi City Corporation Dist.: Rajshahi
162 Annual Report 2016 NRBGBL 3rd AGM in 2016
Shareholders and Directors of NRB Global Bank
3rd Annual General Meeting (AGM) of the Bank is in progress
Mr. Nizam Chowdhury, the honorable Chairman is addressing to all attendees in the 3rd Annual General Meeting (AGM) of the Bank
Annual Report 2016 163 NOTICE OF THE 4TH ANNUAL GENERAL MEETING
Notice is hereby given to all shareholders of NRB Global Bank Limited that the 4th Annual General Meeting (AGM) of the Bank Company will be held on Wednesday, April 18, 2018 at 12:00 noon at the Corporate Head Office of NRB Global Bank Limited, Khandker Tower 94 Gulshan Avenue, Gulshan 1, Dhaka 1212, Bangladesh to transact the following businesses:
1. To receive, consider and adopt the Profit and Loss Account of the Company for the year ended December 31, 2016 and Balance Sheet as at that date together with the reports of the Directors and Auditors thereon.
2. To declare the Dividend for the year ended 31 December 2016.
3. To retire/elect Directors and also to confirm the appointment of new Directors and confirmation of the appointment of 02 (Two) Independent Directors.
4. To appoint Auditor of the Company for the term until the next Annual General Meeting and to fix their remuneration.
By order of the Board of Directors
Date: April 03, 2018.
Md. Manjur Hossain AVP & Company Secretary
Notes:
a) November 23, 2017 was scheduled as Record date. The shareholders whose name were be appeared in the Register of members of the Bank on the record date are eligible to attend the meeting.
b) A member eligible to attend and vote at the General Meeting may appoint a proxy to attend and vote on his/her behalf. The Proxy Form, duly stamped & signed by the member must be deposited at the Registered Office at least 72 hours before the time for holding the meeting.
c) Existing External Auditor, Shafiq Basak & Co., Chartered Accountants will retire in the 4th Annual General Meeting for the 1st time and is also eligible for re-appointment. Again, the Shareholders may nominate the Audit Firm(s) enlisted with Bangladesh Bank and send the name(s) to Bank’s Registered Office on or before April 10, 2018 for shareholders consideration to appoint as External Auditors in the 4th AGM.
d) Retirement/election of Directors of the Bank will be conducted in compliance with the Bank Companies Act- 1991, the Articles of Association of the Bank and other prevailing relevant rules & regulations of the country.
e) The appointment of 07 (Seven) Directors and 02 (Two) Independent Directors done in the Board Meeting to be ratified in the 4th AGM.
f) No Gift/Gift Coupon/Food Box etc. to be distributed at the 4th AGM.
164 Annual Report 2016
Registered Office: Khandker Tower 94 Gulshan Avenue, Gulshan 1, Dhaka 1212.
Proxy Form
I/We...... of...... being a member of NRB Global Bank Limited and entitled to vote, do hereby appoint Mr./Ms...... of ...... as my/our Proxy to attend and vote on my/our behalf in the 4th Annual General Meeting (AGM) of the Company to be held on Wednesday , April 18, 2018 at 12:00 noon at the Corporate Head Office, Khandker Tower 94 Gulshan Avenue, Gulshan 1, Dhaka 1212 or at any adjournment thereof. Signed this...... day of...... 2018.
…………………………… …………………………………. Signature of the PROXY Signature of the Shareholder(s)
No. of Shares held………………… Revenue Stamp Tk. 10 .00
Folio/BO ID No
Note: This Proxy Form, duly completed, must be deposited at the Company’s Registered Office not later than 48 (Forty Eight) hours before the commencement of AGM. Proxy shall be invalid if not signed and stamped as explained above. Signature of the Shareholders should agree with the Specimen Signature registered with the Company/Depository Participants.
Registered Office: Khandker Tower 94 Gulshan Avenue, Gulshan 1, Dhaka 1212. Attendance Slip I hereby record my attendance in the 4th Annual General Meeting (AGM) being held on Wednesday, April 18, 2018 at 12:00 noon at the Corporate Head Office, Khandker Tower 94 Gulshan Avenue, Gulshan 1, Dhaka 1212.
Name of the Member/
Proxy (in Block Letter) Folio/BO ID No No. of Shares held
Signature Verified by
………………………………………… ………………………………………… Signature of the Shareholder/PROXY Authorized Signatory of the Company
Note: Shareholders attending the meeting in person or by proxy are requested to complete the Attendance Slip and deposit the same at the reception desk. Any friend or children accompanying with the honorable Shareholders/Proxy will not be allowed to the meeting.
Notes Notes Corporate Head Office: Khandker Tower, 94 Gulshan Avenue Gulshan 1, Dhaka-1212, Bangladesh.
This annual report is available at our official web site www.nrbglobalbank.com