58pc bank branches have no fund transfer policy: BIBM

About 58 percent of the bank branches in the country do not have any policy for transferring funds from one branch to another, according to a research of the Bangladesh Institute of Bank Management.

"This is an obstacle to maintaining proper liquidity," said the report styled 'Fund transfer pricing of commercial banks: status and measures for implementing in banks of Bangladesh'.

The report was presented at a seminar held at the BIBM auditorium at Mirpur in Dhaka on Sunday.

In the branch banking system, fund transfer from one branch to another is a normal phenomenon, said Helal Ahmed Chowdhury, supernumerary professor of the BIBM.

However, in transferring funds, determining what would be the proper pricing is important.

According to the BIBM report, 62 percent of the banks do the pricing manually in transferring funds, while 85 percent do it through a committee.

"The pricing is also necessary for proper treasury and liquidity management, on which the bank's profitability depends," Chowdhury said.

In Bangladesh, banks do not follow unit banking but branch banking. In that case, if a branch has excess liquidity it is transferred to another branch or head office.

If proper interest is not given, the branch plunges into loss. If a bank has more loss-making branches, the bank's overall health suffers. Only seven banks do reporting following the global reporting initiatives guideline; 34 banks do not follow it at all, according to another report of the BIBM that was presented at the seminar.