Uncertainty looms large over BCCI operations

Uncertainty looms large over the resumption of operations by the Bank of credit and Commerce International (BCC1) to Bangladesh. The central bank could not give any (Inn Indication till -yesterday about its future mum of action on the bank. In a press release. Bangladesh Bank refuted that It has started the liquidation pares, of BCCI in Bangladesh. It termed the reports in a section of the press on the liquidation as 'totally baseless and imaginary.' It reiterated that it would continue to Inky all necessary measures to protect the interest of the depositors and other creditors of the Bank.' But the anxiety of BCCI clients has continued to mount. Most of them do not know when they will be al-lowed to operate their ac-counts or withdraw funds from their deposits with the Bank The operations of the Bank were suspended Saturday last following a request of the Bank. The request came from the UAE:, where its 77 per rent shares are held by the royal family. BCCI operations worldwide were disrupted In the wake of closure of its business or liquidation in seven European countries including the UK and Luxembourg. The Bangladesh Bank decision to suspend the operations of BCC! in Bangladesh came In accordance with the provisions under Clause 45 of the recently enacted flanking Company Bill. The Clause does not, how-ever. spell out the time frame for any temporary suspension of any transaction by any scheduled bank. The central bank has also powers under the same Act to start legal proceedings for seeking the verdict of the High Court Division In case it decides to do so. This provision is applicable to all scheduled banks, local or foreign, operating under permission or registration with the central bank. Meanwhile an observer and two chartered accountants appointed by the Bangladesh Bank will be examining the portfolio of the Bank. A six-member inspection team of the flank started its enquiry • yesterday. The BCC'. with its head-quarters in the Caymen is-lands, a British protectorate, Is the largest foreign bank operating in Bangladesh. It started functioning in 1970 and its volume of business recorded

very phenomenal growth in the HO. Total deposits in the Bank stand at about Tit 550 crore. its lending pperations are concentrated ifl foreign trade Operations. Banking sources in Dhaka said that the operations of the Bank were suspended in Hong Kong on Monday. Manila is reported to have taken the same action on the same lines. Earlier. Delhi suspended transactions at BCCI branches in India. However. Pakistan has al-lowed limited transactions. facilitating the depositors to withdraw funds up to certain limits. Meanwhile. trade circles In Dhaka have reacted favourably to the statement of Bangladesh Bank that it would protect the interest of depositors of the BCCI. Experts sug-gest that authorities should explore all avenues for salvaging the ailing Bank instead of closing it down. Informed sources say that one proposal made directly to the authorities in Bangladesh Bank is that the MCI. with all Its assets and liabilities. be 'merged' with an existing large commercial bank. These sources say that such a move should be made with-out delay to restore confidence among the creditors and clients of the institution.

Another proposal which The Daily Star learns has been communicated to the Ministry of rillallet and the Bangladesh Bank, at their highest level. suggests that the BCCI be -refloated' under a new name. with the new bank accepting all the assets and liabilities of the old one. Reactions of the Ministry of Finance and the Bangladesh Bank to these proposals cannot be ascertained at this stage. However. informed sources believe that the Bangladesh Bank which has been trying to prevent any disruption in the overall banking system of the country would not dismiss any new proposal out of hand. The choice of the central bank authorities will largely depend on the report of their auditors and other teams now scrutinising the real state of health of the entire operation of the BCCI. sources say. While it may be heartening to its clients that the Bank's deposit runs to 550 crore. said to be adequate for meeting all its obligations, auditors \monk' be finding out how much of it lies in loans and advances and how much of it is recoverable in time. This, sources say. is linked to the Bank's liquidity position.