2017

ANNUAL REPORT 2017

5 th
Annual General Meeting (AGM)
of South Bangla Agriculture
& Commerce Bank
Limited will be held
on May 10, 2018 at
Antara Hall of Radisson
Blu Dhaka Water Garden,
Airport Road,
Dhaka Cantonment,
Dhaka-1206

Advancement
South Bangla Agriculture & Commerce (SBAC) Bank
Limited started its journey in 2013 with a clear vision to
be customer-friendly with service excellence. We
started with two advantages: uniquely qualified
leadership and a firm capital base of BDT 4089.6
million. Building on this rock-solid foundation enabled
us to offer our customers a wide array of financial
solutions. Combining these solutions with our wealth of
experience enabled us to exercise judgment to propel
our customers' financial interests forward.

As one of this country's new generation and fastest

growing bank, we offer our customers innovative
financial solutions, modern technology based products
and services for businesses as well as individuals. We
are striving to keep our customers' stake protected by
leading- edge security protocols and practices. All our
efforts to ensure a continuous and steady growth has
borne a series of successes which include deploying an
world class Core Banking System and implementing all
Central Bank initiated projects ( BACPS, BEFTN,
Online CIB, go AML etc.) within the shortest time.

We have set up clear goals and accordingly drawn

strategic plan to achieve the goals and Committed to
highest ethical standards where top priority is given to
products diversification & satisfactory services.

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 ANNUAL REPORT 2017

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 ANNUAL REPORT 2017

Vision

Our vision is to build Green Bangladesh free of poverty and

pollution through sustainable development by application of
latest information technology. We want to be the leading
Private Commercial Bank in terms of efficiency, capital
adequacy, asset quality, sound management, profitability
with strong liquidity and financial inclusion. Our cherished
dream is to establish ourselves firmly at home and abroad as
a front ranking Bank of the country.

Mission

• To provide a customer-friendly environment.

• To deliver service excellence for all of our corporate, agro
based, SME and retail segments Particularly Women agri
and small entrepreneurs.
• To maximize shareholders’ value.
• To establish different compatible delivery channels.
• To be pro-active in fulfilling our Social Responsibilities.

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CONTENTS
ABOUT US
3 Vision & Mission
4-5 Table of Contents (Index)
6 Letter of Transmittal
7 Notice of the 5th AGM
8 Commitments
9 Our Management Philosophy
10 Strategic Priorities
11 Company History
12 Corporate Information
13 Milestones
14-15 Unique Achievements
16 Credit Rating of the Bank

LEADERSHIP
17 Leadership
18 Board of Directors
19 Committees of the Board
20-23 List of Honorable Sponsor Shareholders
24-44 Directors' Profile
45 Our Management Team
46-47 List of Executives of the Bank
48-51 Chairman's Address
52-54 Overview of Managing Director & CEO

PRODUCTIVITY & GROWTH

55-67 Performance Highlights
68-108 Directors' Report
109 Value Added Statement
110 Economic Value Added Statement

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CONTENTS
RESPONSIBILITY
111 Responsibility
112-113 Report of the Risk Management Committee of the Board
114-129 Risk Management
130-133 Green Banking
134-137 Report of Audit Committee
138-151 Corporate Governance
152-159 Certificate of Compliance Status of Corporate Governance
160-186 Basel III Disclosure

FINANCIAL STATEMENTS
187 Financial Statement
188 Declaration of Managing Director & CEO and CFO
189-190 Independent Auditors' Report
191 a. Balance Sheet
192 b. Off Balance Sheet
193 c. Income Statement/Profit & Loss Account
194 d. Cash Flow Statement
195 e. Statement of Changes in Equity
196 f. Liquidity Statement
197-234 g. Notes to the Financial Statements

MISCELLANEOUS
235-236 Branch Network
237 Proxy Form

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Letter of Transmittal

All Shareholders of South Bangla Agriculture & Commerce Bank Ltd.

Bangladesh Bank
Bangladesh Securities & Exchange Commission (BSEC)
Registrar of Joint Stock Companies & Firms

Subject: Annual Report 2017 of South Bangla Agriculture & Commerce Bank Ltd.

Dear Sir/Madam (s),

Reference to the above, we enclose herewith copy of Annual Report 2017 of South Bangla Agriculture &
Commerce Bank Limited along with Audited Financial Statements as at 31st December 2017. This report
includes Income Statement, Balance Sheet, Cash Flow Statement, Liquidity Statement, Statement of Changes
in Equity and Notes to the Accounts thereon of South Bangla Agriculture & Commerce Bank Limited.

This is for your kind information and ready reference.

Md. Mokaddess Ali ACS

Vice President &
Company Secretary

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NOTICE OF THE 5th ANNUAL GENERAL MEETING

Notice is hereby given to all Members of South Bangla Agriculture & Commerce Bank Limited (the
“Company”) that the 5th Annual General Meeting of the Members of the Company will be held on
Thursday, May 10, 2018 at 11:30 a.m. at Antara Hall of Radisson Blu Dhaka Water Garden, Airport
Road, Dhaka Cantonment, Dhaka-1206 to transact the following business and adopt necessary
resolutions:

AGENDA:

1: To receive, consider and adopt the Audited Accounts of the Company for the year ended
December 31, 2017.

2: To declare dividend out of the Profits for the year ended December 31, 2017.

3: To elect Directors in place of those who shall retire in accordance with the provisions of the
laws and the Articles of Association of the Company.

4: To appoint Auditors of the Company for the term until the conclusion of the next Annual
General Meeting and to fix their remuneration.

5. Expenditure regarding Vehicles of Bank’s Pool.

6: To transact any other business with permission of the Chair.

Dhaka By order of the Board,

Date- April 15, 2018

Md. Mokaddess Ali ACS

Vice President &
Company Secretary

NOTES:

a. The date of Book Closure (Record Date) shall be April 12, 2018;

b. The Shareholders whose names appear in the Register of Members of the Company as at
the close of the business on April 12, 2018 will only be entitled to the dividend declared in
the AGM, if any;

c. Any member of the Company entitled to attend and vote at the General Meeting may
appoint a proxy to attend and vote on his/her/their behalf;

d. The instrument appointing proxy duly signed by the Member(s) and stamped must be
submitted at the Registered Office of the Company at least 48 hours before the Meeting
and

e. Members are requested to notify changes of address, if any, to the Company Secretariat
on or before April 12, 2018.

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Commitments
SBAC Bank Ltd. is committed to be a source of positive impact for our people, our customers and the
communities in which we do business. A number of core values embodies the way in which the Bank
employees work together to deliver effective results for our customers and community.

Compliance Culture:
Good governance is the backbone of any organization. Compliance is the pre requisite to establish good
governance. In South Bangla Agriculture and Commerce Bank Limited, we believe in compliance Culture.
‘Compliance first; profit is it’s logical consequence’ with this motto the Bank is moving forward to accomplish
the organizational goal.

Client Focus:
 Bank is mainly a service oriented organization. To meet the need of customer with satisfactory service,
we adopted modern technology based Core Banking Solution. Our clients are at the center of our
activities and their satisfaction is our ultimate objective.
 Our success is dependent on our ability to provide the best products and services to our clients; we are
committed to helping our clients achieve their goals.
Hard Work:
 Discipline and perseverance govern our actions so as to achieve outstanding results for our clients and
outstanding returns for our stakeholders.
 Service excellence guides our commitment to our clients.
 We work with our clients to reach their current goals while anticipating and planning for their future
objectives.
Transparency:
 We value open and clear communications which develop confidence and trust for our customers,
shareholders and employees.
Integrity:
 We believe in the highest standards of personal and professional ethics in all aspects of our business.
 We comply fully with the letter and spirit of the laws, rules and practices that govern SBAC Bank’s
business.
 We say what we do and do what we say.
Innovation:
 Since our inception, the Bank believes innovation is a core competitive advantage and promotes it
accordingly.
 We strive to lead the financial services industry to a higher level of performance in serving the millions
of our people who are still under privileged or unbanked.
Teamwork:
 We ensure access to information openly within the stakeholders of the Bank.
 We believe in total quality Management (TQM) with in the Bank.
 We value and respect one another’s cultural backgrounds and unique perspectives.
Respect to the Individual:
 We respect the individual whether an employee, a client, a shareholder or a member of the
communities in which we live and operate.
 We treat one another with dignity and respect and take time to answer questions and respond to
concerns.
 We firmly believe each individual must feel free to make suggestions and offer constructive criticism.
 SBAC Bank is a meritocracy, where all employees have equal opportunity for development and
advancement based only on their merits.

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Our Management Philosophy

1. Growing Together with Our Customers:

Our bank has been sharing this philosophy as a starting point for all of our business activities
since its formation. We believe that the creation and provision of new values based on
customers’ perspectives will strengthen the relationship of mutual trust between our customers
and the Bank, and become a source of mutual development.

2. Contribute to the national and global community through our business:

Our Bank recognizes that contributing to “State of the Art System based Services” to our
customers throughout the world leads to the development not only of local communities, but
also the international community as a whole, and we conduct our business activities with the aim
of providing the highest quality of solutions in each area of operations.

3. Develop human resources for creative and challenging activities:

Rather than being content with the present situation, we are constantly in search of new and
better ideas to put into action in order to improve and enhance our business activities. This is
the SBAC Bank’s basic philosophy of human resources development and we believe that the
Bank’s unique corporate culture will be further developed by continuing to practice this
philosophy.

4. Maintain sound Corporate Culture based on high ethics and fairness:

We promote transparency and excellence and we comply with Provisions of Laws in the Bank’s
management and in all aspects of its business activities and strive to further enhance its
corporate value while conducting sound activities. We believe in ethical values, due diligence
and good governance as a whole.

5. Take good care of people and the Planet:

By treating our stakeholders (such as shareholders, customers, business partners, employees

and local residents) and the global environment with respect, we strive to continue to be a good
company for both people and the earth.

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Strategic Priorities
Keeping the economic trend in mind, we have set our strategic priorities focusing on asset quality. Our
objective is to maintain the Non Performing Loans below one percent. In the year 2018 we must concentrate
our efforts to build up a better deposit mix with base deposit i.e. low/no cost deposit.

1. Expansion of branch network to make banking services available at important locations throughout
the country. The Bank has already opened 64 branches up to December, 2017 and opening of few
more branches is under process. The Bank has a plan to increase number of branches to 85 by
December 31, 2018.
2. Maintaining highest quality of customer services by offering best products compatible with customers’
needs.
3. Financial inclusion through widening the coverage of banking services specially by including the
disadvantaged section of society. The Operation of Agent Banking will come into operation soon.
4. Continuation of diversification of credit portfolio on sectoral & geographical basis.
5. Improvement of deposit mix by penetrating board-based customers, increasing share of low cost and
no cost deposit in total deposit and decreasing rate sensitive high cost deposit.
6. Maintaining optimum level of liquidity through skillfully managing asset-liability mismatch and
recovery of past due loans.
7. Administering regular and effective monitoring and conducting recovery drive to ensure asset quality.
8. Diversification of products and services by introducing IT based innovative digital products and
engaging alternate delivery channels.
9. Expediting delivery of inward remittance to increase the flow of foreign remittance.
10. Insuring good governance through strengthening corporate cultures, motivation, training and
supervision at all levels of management.
11. Conduct Business Process Re-engineering in different functional areas to improve efficiency and
ethical values.
12. Develop Human Resources Management system to motivate and retain Human Resources and
transform them into Human Assets through continuous skill development.
13. Cost minimization and efficiency optimization at all levels of operation by ensuring budgetary control.
14. Expansion of activities related to Corporate Social Responsibility and Green Banking within the
framework of organizational goals.
15. Maintaining strong capital base by ensuring borrowers’ rating, concentrating on lending portfolio
having lower capital charge, strengthening Internal Capital Adequacy Assessment Process (ICAAP).
16. Ensuring efficient and effective risks management for sustainable business growth.
17. Increasing brand visibility by creating positive image of the Bank.
18. To add value for all stakeholders.
19. To take appropriate measures to ensure AML/CFT
20. To be compliant with all organizational and regulatory requirements by adherence to all laws, rules,
regulations relating to banking.

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COMPANY HISTORY

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Corporate Information
Name of the Company : South Bangla Agriculture and Commerce Bank Limited.

Legal Form : A public limited company incorporated in Bangladesh on 20th

February 2013 under the Companies Act 1994.

Date of incorporation : 20th February 2013.

Date of Commencement
of Business : 20th February 2013.

Nature of Business : Banking, a Scheduled Private Commercial Bank licensed

under Banking Companies Act 1991 (amended up to 2018)

Head Office (Registered) : Sun Moon Star Tower

37, Dilkusha C/A, Dhaka - 1000

Phone : (02) 9577207-11

Routing No : 270270002

Fax No. : +88 02 9577212

SWIFT : SBACBDDH

Website : www.sbacbank.com

Chairman : Mr. S. M. Amzad Hossain

Managing Director & CEO : Mr. Md. Golam Faruque

Company Secretary : Mr. Md. Mokaddess Ali ACS

Auditors : Khan Wahab Shafique Rahman & Co., Chartered Accountants

Tax Consultants : Islam and Co., Chartered Accountants

Legal Consultant : Bhuiyan Islam and Zaidi.

No. of Branches : 64

No. of ATM Booth : 22

No. of Employees : 716

Stock Summary

Authorized Capital : Tk. 10,000 million

Paid up Capital : Tk. 4985.2224 million

Face Value per Share : Tk. 10

Chairman's Office : Akram Tower (9th Floor), 199, Sayed Nazrul Islam Sarani 15/5,
Bijoy Nagar, Dhaka-1000.
E-Mail : lockpurgroup@gmail.com

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Milestones
SL. No. Event Issue Date
1 Letter of Intent 17/04/2012
2 Certificate of Incorporation 20/02/2013
3 Certificate for Commencement of Business 20/02/2013
4 License Issued by Bangladesh Bank favoring South Bangla Agriculture & Commerce Bank Ltd. 25/03/2013
5 Inclusion of SBAC Bank in Bangladesh Gazette 31/03/2013
6 Enlistment as Scheduled Bank 01/04/2013
7 Inauguration of Head Office 03/04/2013
8 Inauguration of Principal Branch 28/04/2013
9 Obtaining Foreign Currency Transactions License (Head Office & Principal Branch) 13/05/2013
10 Inauguration of SWIFT Operation 04/08/2013
11 Inauguration of BACPS & BEFTN Operation 20/11/2013
12 Openning of Nostro Account:
AB Bank (Mumbai Branch) 22/05/2013
United Bank Of India 17/06/2013
Sonali Bank (UK) 25/06/2013
Mashreq Bank Psc (Newyork) 25/09/2013
National Bank of Pakistan (Tokyo, Japan) 20/03/2014
Mashreq Bank Psc (London, U.K) 23/06/2014
Sonali Bank (Kolkata) 11/02/2015
13 Signing agreement with ITCL for launching ATM operation 23/11/2013
14 Live ATM and Card Operation 09/03/2014
15 1st AGM held on 31/03/2014
16 Eastablishment of Trade Processing Unit 01/07/2014
17 Joining the National Payment Switch Bangladesh (NPSB) 01/10/2014
18 UBAF, France (Union De Banques Arabes Et Francaises) approved credit line December, 2014
19 Commencement of Foreign Remittance Services:
Wall Street Finance LLC, USA 20/07/2014
Trans-Fast Remittance LLC, USA 19/10/2014
Xpress Money Service Limited 22/12/2014
Western Union Network 07/06/2015
Placid NK Corporation, USA (Placid Express) 29/06/2015
Continental Exchange Solution (Ria Financial Service) 06/07/2015
Aman Exchange Company WLL, Kuwait 11/24/2015
20 Obtained Letter of Appreciation, awarded by Bangladesh Bank 4/12/2016
21 Obtained Patel Award of Sardar Patel Trust, Gujrat India 23/09/2016
22 Agreement on Green Transformation Fund for Export oriented Textile &
Textile Products, Leather manufacturing industries and Jute products 09/02/2017
23 The Bank has achieved “Grade A” for Successful implementation of National
integrity strategy Action plan for the Quarter April-June, 2017 30/06/2017
24 Signing Agreement with JICA for ''Two Step Fund of Foreign Direct Investment
Promotion Project(FDIPP) BD-P86" 14/02/2018

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UNIQUE ACHIEVMENTS
1. The Bank has been rated A3 (long term) and
ST-2 (short term) By Credit Rating Agency of
Bangladesh Ltd. (CRAB) on June 21, 2017.

2. SBAC Bank Ltd. has been the highest profit

maker among the nine fourth generation
banks for two consecutive years i.e. 2016-17.

3. The bank has opened so far 64 branches

maintaining rural-urban ratio 1:1.

4. At the end of December 2017, Balance Sheet

size of the bank reached to Tk. 58,940.78
million. Cash under arrangement of Sub-
agency/associate member.
5. The Bank made robust business growth in all
respects of its business in 2017 i.e. the oper- 10. In order to support the Non-AD (Non-
ating profit growth 19.70%, total assets Authorized Dealer) branches, the bank estab-
growth 29.26%, total deposits growth lished Central Trade Processing Unit (TPU)
30.74%, total loans and advances growth at Head Office.
43.45%, earnings per share growth 3.68%.
11. To transform the human resources into
6. The Bank earns net profit of Tk. 982.03 human asset, the bank established it’s Train-
million in 2017 with a rising trend in compare ing institute at the beginning of 2014.
to that of previous year.
12. The Bank launched Online Banking Service
7. SBAC Bank Ltd. has been able to uphold the from the 1st day of it’s operation.
quality of it’s assets at a significant level by
13. Among the new generation banks, our Bank
keeping Non-performing loan (NPL) very low.
was the first to commence BACPS Operation,
8. Among the new banks, SBAC Bank Ltd. was Inaugurate EFTN/ RTGS Operation and
first to go on live with SWIFT and open USD State of the Art Data Centre.
Nostro Account with Correspondent Banks in
14. To foster inclusive growth, the bank has intro-
the USA, gets Credit Line Arrangement with
duced Tk. 10 privileged savings account,
foreign bank for LC confirmation and
senior citizen savings account and students
discounting thereof to facilitate foreign trade
savings account. Besides, the bank has
business.
obtained “AGENT BANKING” operation
9. The Bank has made Drawing Arrangements approval from Bangladesh Bank which will
with Wall Street Finance LLC, USA and Aman come into operation soon.
Exchange Company WLL, Kuwait. Remit-
15. To fulfill the target of Green Finance at least
tance through Instant Cash and Account
3% of total loan disbursed, The Bank has
Credit has also been started with Transfast
already formulated "Green Finance Policy"
Remittance LLC, Placid NK Corporation,
incorporating Bangladesh Bank approved
Xpress Money Services Ltd., Western Union
green products duly approved by the Board.
Network, Ria Financial services and Turbo

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Under this policy the loan will be disbursed at 20. Agreement on Foreign currency loan from
flexible terms and subsidized interest rate. ‘Long Term Financing Facility' under their
financing agreement with International
16. To strengthen the organizational capability
Development Association (IDA) of World
and human resources base, the bank has
Bank (WB)’ On August 04, 2016.
recruited 100 talented, meritorious and
deserving candidates as MTO (Management 21. Agreement on ‘Green Transformation Fund
Trainee Officer) who had come out success- for Export oriented Textile & Textile Prod-
ful after rigorous selection procedures of ucts, Leather manufacturing industries and
which 75 joined the bank. Jute products’ On 09 February, 2017.

17. To combat Money Laundering and Terrorist 22. The Bank has achieved “Grade A” for
Financing appropriate preventive measures Successful implementation of National integ-
have been taken. rity strategy Action plan for the Quarter April-
June, 2017.
18. The Bank got “Letter of Appreciation” for
achieving agriculture finance target in 2016. 23. Agreement with JICA on ‘Two Step Fund of
Foreign Direct Investment Promotion
19. As an international recognition, the Bank
Project(FDIPP) BD-P86’ On 14 February
achieved “Sardar Patel Award 2016” for the
2018
contribution in socio-economic development
of our country.

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Credit
Rating A3
Report
Year Long Term Short Term Date of Valid Till
Rating Rating Rating

2017 A3 ST-2 21 June 2017 30 June 2018

2016 BBB1 ST-2 02 June 2016 30 June 2017

Long Term : A3

 Commercial Banks rated ‘A3’ have strong capacity to meet their financial
commitments

 Judged to be of high quality with low credit risk.

BBB1

 Commercial Banks rated BBB1 have adequate capacity to meet their financial
commitments.

Short Term : ST-2

 Commercial Banks rated ‘ST-2’ category are considered to have strong capacity
for timely repayment of obligations characterized with commendable position in
terms of liquidity, internal fund generation and access to alternative sources of
funds.

Outlook : Stable

The above rating has been done by Credit Rating Agency of Bangladesh Ltd. (CRAB) on the basis
of Financial Statements of 2017, 2016 and other qualitative & quantitative information.

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LEADERSHIP

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THE BOARD OF DIRECTORS

Mr. S.M. Amzad Hossain Mr. Talukder Abdul Khaleque Captain M. Moazzam Hossain Mr. Maksudur Rahman
Chairman Independent Director Chairman Chairman
& Vice-Chairman Executive Committee Risk Management Committee

Mr. Abdul Kadir Molla Begum Sufia Amjad Mr. Abu Zafar Mohammod Shofiuddin Al-haj Mizanur Rahman
Director Director Director Director

Engr. Md. Moklesur Rahman Mr. Md. Amzad Hossain Mr. Hafizur Rahman Babu Mr. Muhammad Mohsin
Director Director Director Director

Mr. Anwar Hussain Mrs. Tahmina Afroz Ms. Kamrun Nahar Mr. Sk. Shyedujjaman
Director Director Director Director

Mr. Mohammad Nawaz Mr. Mohammed Ayub Mr. Sakhawat Hussain Dr. Syed Hafizur Rahman
Director Director Director Independent Director

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COMMITTEES OF THE BOARD

EXECUTIVE COMMITTEE
Chairman
Captain M. Moazzam Hossain
Members
Mr. Abdul Kadir Molla
Engr. Md. Moklesur Rahman
Al-Haj Mizanur Rahman
Mr. Hafizur Rahman Babu
Mr. Sk. Shyedujjaman AUDIT COMMITTEE
Mr. Mohammad Nawaz Chairman
Mr. Talukder Abdul Khaleque
Members
Mr. Md. Amzad Hossain
Nominated by : Rupsha Fish & Allied Industries Ltd.
Mr. Abu Zafar Mohammod Shofiuddin
Mr. Anwar Hussain
Dr. Syed Hafizur Rahman

RISK MANAGEMENT COMMITTEE

Chairman
Mr. Maksudur Rahman
Members
Mr. Muhammad Mohsin
Ms. Kamrun Nahar
Mr. Mohammed Ayub
Mr. Sakhawat Hussain
Nominated by : Haji Shakhawat Anwara Eye Hospital Ltd.

Managing Director & CEO

Mr. Md. Golam Faruque

COMPANY SECRETARY
Mr. Md. Mokaddess Ali ACS

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List of Honorable Sponsor Shareholders

Miss Tajori Mr. Motiur Rahman Ms. Mysha Khabir

Mrs. Sanawar Bano Mr. Iqbal Haider Chowdhury Mr. Mohammed Nazrul Islam

Mr. A.K. Mizanur Rahman, FCA Mr. Mainul Huq Khan, Mr. Mozaharul Haque Shahid
Representing
Padma Lamitube Ltd.

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Mr. Md. Emdadul Haque Mr. Md. Eathashamul Haque Mr. Kafil Uddin Bhuiyan

Mr. Shahab Uddin Khan Mrs. Hazera Begum, Mr. Mohammad Imran
Representing
Abdul Gaffar & Co. (Pvt.) Ltd.

Mrs. Shamima Hossain Ms. Sadnam Sadiana Mr. Md. Rezaul Haque

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Mr. Md. Mizanur Rahman Ms. Shamsun Nahar Rahman Mr. Mohammed Ilias

Mr. Md. Mizanur Rahman, Mr. Ayaz Waris Khan Warisi Mr. Mohammad Abdul Hye
Representing
M/S. Contech Construction Ltd.

Mst. Nasima Begum, Mr. Md. Toyamur Islam Rasel Barrister Ehsan-E-Moazzam,
Representing Representing
Thermax Textile Mills Ltd. Agrovita Ltd.

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Mr. Sajid Mohammad Saad Mr. Goutam Kumar Kundu, Mr. Md. Mahin
Representing
Southern Foods Ltd.

Mr. Md. Ezaz Uddin, Mr. Tabassum Arifin Rahman Mr. Eshmam Arifin Rahman
Representing
M/S Moonstar Polymer Export Ltd.

Ms. Mahia Binte Mizan Mr. Mohammed Belal

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Directors Profile

Mr. S.M. Amzad Hossain

Chairman

Mr. S.M. Amzad Hossain, an eminent business

personage of the country, has been elected Chairman of
the first Board of Directors of South Bangla Agriculture
and Commerce Bank Limited on February 20, 2013 and
subsequently reappointed for a further period of three
years on 03-01-2016. A post-graduate from the University
of Dhaka Mr. Hossain traversed a long path of business
which for himself ramified into trade and other parts of
commerce. More than three decades ago Mr. Hossain, in
his early twenties, started a humble business in a
hinterland at Bagerhat. By dint of all human qualities to
the level of excellence his Shrimp cultivation very soon
turned him an exporter. In quick succession he
established the Lockpur Group which currently comprises
corporate independent units named: Lockpur Fish
Processing Co. Ltd., Khulna Printing & Packaging Ltd.,
Bagerhat Seafood Ind. Ltd., Shampa Ice & Cold Storage
Ltd.,Western Inn International Ltd., Metro Bricks Ltd.,
Moon Star Jute Mills Ltd., Khulna Builders Ltd.,
Bangladesh Poly Printing Int'l Ltd., Rupsha Fish & Allied
Industries Ltd., Ideal Polymer Export Ltd., Eastern
Polymer Ltd., Moon Star Fish Ltd., Khulna Apparels Ltd.,
Woman Wears Ltd., Ocean Trade International. His
business acumen and personal salesmanship are behind
the national and international prize-winning successes of
the concerns of the group which he leads as its Chairman
and CEO. As a philanthropist Mr. Hossain has established
several schools, colleges, mosques and other
socio-religious institutions.

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Mr. Talukder Abdul Khaleque

Independent Director & Vice-Chairman

Mr. Talukder Abdul Khaleque is an Independent Director &

the Vice-Chairman of South Bangla Agriculture and
Commerce Bank Limited. Moreover, He is the Chairman
of Audit Committee of the Board. He graduated from M M
City College in 1974. He is a veteran politician of
Bangladesh. Mr. Talukder is former State Minister and
former Mayor of Khulna City Corporation. Presently, he is
a Member of Parliament as well.

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Captain M. Moazzam Hossain

Director

Captain M. Moazzam Hossain, F.C.I.T., is a Sponsor

Director of the Bank. He is also the Chairman of Executive
Committee of the Board. He was born on 01 June 1961 in
Bangladesh. He obtained his M.Sc. Degree from
Bundeswehr University, Germany in 1986. He also
qualified Master Class I from Australian Maritime Safety
Authority and is a Fellow of Chartered Institute of
Transport (FCIT), UK. His student life was full of brilliant
academic achievements. He started his career in
Bangladesh Navy as a Commissioned Officer in 1980 and
later on joined Merchant Fleet and commanded ocean
going large ships/vessels as Captain and continued till
1995. Mr. Hossain is a successful entrepreneur,
industrialist and a businessman of Bangladesh having
diversified experience in the business of Bank, Financial
Industries, Stock Brokerage and Investment Banking.
Initially, he started his business focusing in Shipping, Ship
Chartering and ocean going ship operation but presently
he has extended his business and association with Agro
based farming & fisheries, Land Developer and Real
Estate, Retail chain super shops, River, Seaport and Bay
dredging, Insurance, Venture capital, Private Universities
and College etc. Captain M. Moazzam Hossain is the
Chairman of E-Securities Ltd. & Agrovita Ltd. At the same
time, He is involved with Admiral Trading Corp., Ekushey
Homes Ltd., United Corp. Advisory Ltd., Masters Ocean
Voyage, Athena Venture and Equity Ltd., Radiant
Dredging Ltd., Shoppers World Ltd., Paramount
Properties Ltd., Canadian Trillinium School, Sonar Bangla
Insurance Ltd., People's Leasing and Financial Services
Ltd., Great Walls Land Property Ltd., Fareast
International University, SS Steel Private Ltd.

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 ANNUAL REPORT 2017

Mr. Maksudur Rahman

Director

Mr. Maksudur Rahman is one of the Directors in the business. As a result his foot print is on
of South Bangla Agriculture and Commerce the various backward and forward linkage
Bank Limited. He is also the Chairman of Risk firms in the same industry as well as other
Management Committee of the Board. He was businesses. Presently, Mr. Maksudur Rahman
born in 1950. He is a graduate having 41 is involved with Ratanpur Shipping Lines Ltd.,
years of business experience. He is the Ratanpur Ship Re-cycling Inds. Ltd., Ratanpur
founder of the RSRM group and the Ratanpur Shipping Services Ltd., Ratanpur Real-State
Steel Re-rolling Mills Limited, one of the Ltd. and Sapphire Corporation Ltd. He is
concerns of the RSRM group. He is the engaged with various social development
Managing Director of Ratanpur Steel activities such as member of trustee board of
Re-Rolling Mills Ltd. Upon completion of Feni University at Feni, Hakkani Darbersharif
Graduation, Mr. Rahman started his business Dhakil Madrasha at Faridpur and Chittagong
in the year 1972 and established a steel Seniors Club.
Re-rolling Mill in Chittagong in the year 1986.
After realizing the business risk and
diversification prospect regarding backward
linkage, Mr. Rahman planned to start scrap
ship breaking in the year 1990 and till now he
is one of the pioneer businessmen in
Chittagong in this sector. He owns two
high-tech scrap ship breaking yards. In the
mean-time he has proved himself as one of
the intelligent business entrepreneurs in the
country. Mr. Rahman gathered
multi-dimensional business knowledge and he
knows well how to reduce the systematic risk

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 ANNUAL REPORT 2017

Mr. Abdul Kadir Molla

Director

Mr. Abdul Kadir Molla is one of the Sponsor foreign currency. Mr. Molla is very much fond
Directors of the Bank. He obtained his MBA of education. He is the founder of Panch Kandi
degree from American World University. Mr. Degree College, Monohardi, Narsingdi. He
Molla is one of the successful ones having has own educational institutes like as Abdul
huge conglomerates in the spinning, dyeing Kadir Molla City College, N.K.M. High School
and knitting industries. He started his & Homes, Abdul Kadir Molla International
business in 1997 and established Thermax School. Abdul Kadir Molla City College
Group Ltd. Presently, he is the Chairman & secured the second best result in Dhaka
Managing Director of Thermax Textile Mills Board for last few years. He visited most of the
Ltd., Thermax Melange Spinning Mills Ltd., countries in the world. He has a good
Thermax Knit Yarn Ltd.,Thermax Spinning reputation in overseas business. All the
Ltd., Thermax Blended Yarn Ltd., Thermax industries and institutes of Thermax Group
Yarn Dyeing Ltd., Thermax Woven Dyeing Ltd. are in "State of the Art" under the dynamic
Ltd., Thermax Yarn Dyed Fabrics Ltd., leadership of Mr. Abdul Kadir Molla. He was
Thermax Check Fabrics Ltd., Sister Denim honored as Commercially Important Person
Composite Ltd., Indigo Spinning Ltd., (CIP) in 2012 and as the highest individual tax
Thermax Colour Cotton Ltd., Sister Garments payer for AY2012-13 for the country and the
Ltd., Adury Knit Composite Ltd., Adury highest tax payer in Dhaka City Corporation
Apparels Ltd., Adury Fashion & Print Ltd., for AY2013-14.
Adury Ring Denim Spun Ltd., Kadir Molla
Medical College & Hospital Ltd., Sultana
Enterprise and Sultana Filling Point Ltd. Near
about 14,000 (Fourteen Thousand)
employments are working in Thermax Group
Ltd. Being 100% export oriented facilities, all
the concerns of Thermax Group Ltd. earn

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 ANNUAL REPORT 2017

Begum Sufia Amjad

Director

Begum Sufia Amjad is one of the Sponsor Directors of

South Bangla Agriculture and Commerce Bank Limited.
She is also associated with several business firms of
Lockpur Group. She is a successful entrepreneur in
frozen fish industry. She is the wife of Mr. S.M. Amzad
Hossain and a decision maker in Lockpur Group.
Besides, she holds a significant number of shares as a
Director of Lockpur Fish Processing Co. Ltd., Bagerhat
Sea Food Ind. Ltd., Shampa Ice & Cold Storage Ltd.,
Rupsha Fish & Allied Ind. Ltd., Metro Bricks Ltd., Moon
Star Jute Mills Ltd., Moon Star Fish Ltd., Woman Wears
Ltd., Western Inn International Ltd., Khulna Builders Ltd.,
Ideal Polymer Export Ltd., Khulna Printing & Packaging
Ltd. & Khulna Apparels Ltd. She has a remarkable
contribution in socio economic activities in her local area.

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 ANNUAL REPORT 2017

Mr. Abu Zafar Mohammod Shofiuddin

Director

Mr. Abu Zafar Mohammod Shofiuddin is one of the

Sponsor Directors of South Bangla Agriculture and
Commerce Bank Limited. He is a prominent business
personality in the country. He obtained B.Com (Hons.),
and M.Com (Marketing) degree from University of Dhaka
in 1991 & 1992 respectively. He has started his business
in 1992 and established SQ Group of Companies which
extended to Different subsidiaries presently. He is the
Chairman of Techno Electricals Ltd., SQ Wire & Cable Co.
Ltd., & SQ Lights Ltd. He is also the Managing Director of
TSCO Power Ltd., TS Transformers Ltd. and Director of
Microgenix BD Ltd., SQ Wood Preservatives, SQ Energy
Ltd., SRN Power, Power- Ad, Meter D'Tech & Managing
Partner of SQ Trading & Engineering as well.

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 ANNUAL REPORT 2017

Al-haj Mizanur Rahman

Director

Al-haj Mizanur Rahman is one of the Sponsor Directors of

the Bank. Mr. Rahman is a prominent business
personage having huge conglomerates in the Real
estate, Construction, Housing and Print media sector.
Al-haj Mizanur Rahman, by dint of his dynamic leadership
founded Moon Group of Industries Limited in 1989. Today,
Moon Group of Industries Ltd, most commonly known as
Moon Group, is one of the largest and leading business
conglomerates of Bangladesh having Sister Concerns
namely: Madina Properties & Housing Limited, M. R.
Trading Company Limited, The Daily Bartoman and Sun
Moon Star Real Estate International etc. Besides, he has
involved himself in different socio economic activities.

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 ANNUAL REPORT 2017

Engr. Md. Moklesur Rahman

Director

Engr. Md. Moklesur Rahman is one of the helping the economy of Bangladesh to grow.
visionary industrialists in Bangladesh. He is He also founded B&T Cold Storage, providing
one of the Directors of South Bangla affordable perishable storage facilities to the
Agriculture and Commerce Bank Limited. He mass of Bangladeshi farmers. He has always
obtained his B.Sc. Civil Engineering degree been a civil engineer at heart and founded
from Chittagong University of Engineering and B&T Development Limited, building
Technology (former Chittagong Engineering apartments in prestigious locations in Dhaka
College), one of the top universities in such as Lalmatia, Banani, Gulshan & Khilgaon
Bangladesh. He has always been a dreamer as well as providing affordable housing
and wanted to run his own business since the solutions elsewhere in Bangladesh. Presently,
early age, after gaining experience while Engr. Md. Moklesur Rahman is involved with
working in Gemcon Group. On 29 May, 2001, B&T Spinning Mills Ltd., B&T Distribution, B&T
he finally realized his dream and started Meter Ltd., Tushar Ceramics Ltd., B&T
Contech Construction Ltd., one of the most Transformers Ltd also. From his humble
highly respected SPC Piles & Poles suppliers beginnings, he has come a long way to be one
in Bangladesh. He is a self made man, and did of the founding sponsor directors of South
not inherit his business from anyone but Bangla Agriculture and Commerce Bank Ltd.
founded Contech Construction Ltd. with the Since then, Mr. Moklesur Rahman has set his
sweat of his brow. His amazing track record sights on giving back to the community of
did not stop there. Later on 09 February, 2004 Bangladesh, the very same people who
he founded Pre-Stressed Poles Ltd., to meet helped him reach where he is right now. He
the exceptional demand for SPC Poles. He has donated generously to a number of
has always been forward thinking and wanted educational and religious institutions,
to diversify his business into other sectors. His providing for the underprivileged people of
largest start up to date has been B&T Cables Bangladesh with basic amenities such as
Ltd. established on 11 January, 2005 to supply food, clothing and shelter. Married to Mrs
electrical wires and is the largest income Quamrun Nahar and with two children, Engr.
generator in the B&T Group. Mr. Rahman is a Md. Moklesur Rahman always believes in
hard working man and had still not quenched being honest and hard working.
his thirst for running new businesses and

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 ANNUAL REPORT 2017

Mr. Md. Amzad Hossain

Director

Mr. Md. Amzad Hossain is one of the Directors of the

Bank nominated by Rupsha Fish & Allied Industries Ltd.
He started his banking career as Probationary Officer in
Pubali Bank Ltd. in the 1975. Thereafter, he joined
Bangladesh Commerce Bank Limited Higher Position of
the said Bank with diversified responsibilities. Now, he is
also a member of the Audit Committee of SBAC Bank Ltd.
Besides the above career, Mr. Md. Amzad Hossain is also
a Director of Bangladesh Poly Printing International
Limited, Ideal Polymer Export Ltd., International Core
Factory Ltd., Khulna Printing and Packaging Ltd. He is
also a Freedom Fighter of Bangladesh Liberation War.

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 ANNUAL REPORT 2017

Mr. Hafizur Rahman Babu

Director

Mr. Hafizur Rahman Babu is one of the prominent

business persons and renowned entrepreneurs of the
country. He is a sponsor Director of South Bangla
Agriculture & Commerce Bank Ltd. and the Chairman of
S.B. Group, a leading group of companies in Bangladesh
which was established in the year 1990. The S.B. Group
of companies is working in wide range of business
activities with different subsidiary companies like S.B.
Agro Fertilizer Limited, Sheikh Jute Mills Limited, Sheikh
Cement Mills Limited, Joytun Securities International
Limited, Joytun Developers Limited, Gold Hill Properties
Limited, Joytun Tours & Travels, Joytun Agro Auto Rice
Mills Ltd., Sheikh Agro Food Industries, Sheikh Shipping
Lines Ltd., Sheikh LPG Ltd, M/S. Sheikh Brothers and
M/S. Hafizur Rahman Babu. He is also the Member of
Dhaka Stock Exchange Limited representing Joytun
Securities International Limited. Besides, he is one of the
founders of the Canadian Trillium School. He participated
in various professional workshops and seminars at home
and abroad and is also associated with many social,
cultural and charitable organizations.

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 ANNUAL REPORT 2017

Mr. Muhammad Mohsin

Director

Mr. Muhammad Mohsin is one of the the outstanding performance & contribution
Sponsor Directors of South Bangla Agriculture towards the development of National
and Commerce bank Limited. He obtained his Economy are praiseworthy. Due to his
MSS degree from Chittagong University in perseverance, Saad Musa Group was
1990. He has been in the business operation awarded with the National Export Trophy in
since 1982. With his tremendous managerial the year 2010-11 & 2011-12 respectively and
capacities and his foresight, Mr. Mohsin has he is also selected as Commercially Important
built his business conglomerate with range of Persons (CIP) by the Bangladesh Govt. Under
business. He is the Managing Director of Saad his dynamic leadership, he is also helping in
Musa Group and also the Managing Director promoting industrial development, exchange
of SM Avenue Motors, Chittagong Fibre earning, job creation and poverty elevation of
Boards Ltd., Rokeya Spinning Mills Ltd., the country. His contribution towards the
Emdad Etima Spinning Mills Ltd., Mahmud social activities is also remarkable. Mr. Mohsin
Sajid Cotton Mills Ltd., Sultana Habiba Fabric is the founder Director of many schools,
Mills Ltd., Saima Samira Textile Mills Ltd., M A colleges & hospitals and also involved with
Rahman Dyeing industry Ltd., Saad Musa other social activities. He is the founder
Hometex & Clothing Ltd., Hasni Vanaspati Director of Chittagong Metropolitan Hospital
Manufacturing Company Ltd., Ahmadi Oil Mills Ltd., Imperial Hospital Ltd., South Point
Ltd., Al-Mustafa Vegetable Oil Industry, Saad School & College, Chittagong Ideal School &
Musa Properties Ltd., Saad Musa Housing College, South East University, National
Complex, SAAD MUSA Fishing Project, English School, Proactive Medical College &
Shade Developers Ltd., Desh Computers, Hospital Ltd. & Asian Hospital Ltd. etc.
Saad Musa City Center, Saad Musa Fabrics
Ltd. (Weaving Division), Saad Musa Fabrics
Ltd. (Dyeing & Printing Division), Saad Musa
Fabrics Ltd. (Garments Division), Cresent
Industries Ltd., Crescent Park Neighbor Hood,
MARSS Automobile and he is also the
Director of BTMA Executive Committee. Mr.
Mohsin is a renowned Industrialist. His

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 ANNUAL REPORT 2017

Mr. Anwar Hussain

Director

Mr. Anwar Hussain is one of the Sponsor Directors of the

Bank. He is a young, well reputed and emerging business
man in the country. He has obtained Bachelor Degree in
Business Administration. He is a Proprietor of Anwar
Corporation, Managing Director of H.A.R Industries Ltd.,
Director of Abdul Gaffar & Co. (Pvt) Ltd., Asuka CNG
Refueling Station Ltd., SAFAH CNG Refueling Station
Ltd. and AGI Corporation. His goal is to bring in new
innovation and dynamism in his company.

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 ANNUAL REPORT 2017

Mrs. Tahmina Afroz

Director

Mrs. Tahmina Afroz is one of the Sponsor Directors of

South Bangla Agriculture and Commerce Bank Limited.
She obtained her B.Sc. degree from Dhaka University.
She is a notable business person in the country
particularly in the Health Care Sector. Mrs. Tahmina Afroz
is the proprietor of Mother Trade Centre. She is also a
Director of Anwer Khan Modern Medical College Hospital
Ltd., Modern Diabetic Centre Ltd., Modern Holdings Ltd.
and Haji Shakhawat Anwara Eye Hospital Ltd. She is a
sponsor shareholder of Far East Finance & Investment
Ltd.

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 ANNUAL REPORT 2017

Ms. Kamrun Nahar

Director

Ms. Kamrun Nahar is a Sponsor Director of South Bangla

Agriculture and Commerce Bank Limited. She is a
successful housewife in her personal life. Besides that,
she is a successful businesswoman as well. She has
business interest in diversified fields such as Insurance,
Aviation and Travel, Education, Medical Services,
Construction etc. Ms. Kamrun Nahar is the Founder and
Proprietor of M/S. M.K. Fisheries. As a prominent
entrepreneur she is engaged with Canadian Trillinium
School, Noor Asset Development, Intelligent Technology
Solutions Ltd., People's Leasing & Financial Services Ltd.
She is also a founder and patron of different socio-cultural
organizations in the country. She is the wife of Mr. Motiur
Rahman who is Ex-Director of the Bank and Chairman of
MK Group.

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 ANNUAL REPORT 2017

Mr. Sk. Shyedujjaman

Director

Mr. SK. Shyedujjaman is a Sponsor Director of South

Bangla Agriculture and Commerce Bank Limited. He is a
young and emerging entrepreneur of south Bengal. He
obtained B.B.A. and M.B.A (Marketing) degree from AMC
College, Bangalore in 2001 & 2003 respectively. He is a
successful businessman in the frozen food industry. Mr.
SK. Shyedujjaman is involved with South East Union
Ceramic Industries Ltd. He is the Proprietor of Sadiana
Trading. He is a man of strong moral values and believes
in ethical investment.

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 ANNUAL REPORT 2017

Mr. Mohammad Nawaz

Director

Mr. Mohammad Nawaz is one of the Directors of South

Bangla Agriculture & Commerce Bank Limited. He is a
renowned and successful industrialist of the country
having diversified business portfolio. Mr. Nawaz was born
in a respectable Muslim Family at Dhaka in July 25, 1975.
He obtained his B.Sc. and Masters (Marketing &
Management) Degree from University of Plymouth. In
2003, He did a Ph.D. in Chemistry as well. After returning
to the Country in 2004, He started Famous Printing &
Packaging Limited (famouspack), one of the leading
flexible packaging industry supplying laminates to
multinational companies such as Unilever, Pepsi, Coca
Cola, Reckit Benkiser, Bayer, Syngenta etc. Famouspack
also supply laminates to local corporate organizations,
namely Square, Pran, Cocola, ACI, Ispahani etc. In 2005,
He started Famous Iberchem Flavour & Fragrance
Limited (joint venture with Iberchem Spain), the only
manufacturer of Fragrance and Flavours in Bangladesh.
Their client list includes - Square, ACI, Keya Cosmetics,
Kohinoor, Cocola, Olympic, Nabisco, Olympic etc. He is
also Director of Eden Multicare Hospital (100 bed
hospital) in Dhanmondi. He is a member of Board of
Trustee in South East University, one of the leading
private university of Bangladesh. He is also the Director of
Famous Group of Companies Limited, Famous Printing &
Packaging Ltd, Famous Iberchem Flavours & Fragrances
Ltd., Famous General Agencies Ltd., Matcon limited, F.S.
Printing & Packaging Ltd., Green Soap & Chemical Co.
Ltd., and Famous Flavours & Fragrances Ltd.

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 ANNUAL REPORT 2017

Mr. Mohammed Ayub

Director

Mr. Mohammed Ayub is one of the Sponsor Directors of

South Bangla Agriculture and Commerce Bank Limited.
He was born in a respectable Muslim family at Chittagong
in 1962. He obtained his B.Com. degree from Chittagong
University in 1981. He is a reputed and emerging
business man in the country particularly in the port city
having business in Garments Accessories Manufacturing
& Export and Packaging Industries. He is the Managing
Director of Ayub & Co Ltd., Proprietor of M/S. Pioneer
Enterprise and M/S. United Enterprise. He is a Managing
Partner of Pacific Enterprise and Owner of Ayub Trade
Center, Chittagong.

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 ANNUAL REPORT 2017

Mr. Sakhawat Hussain

Director

Mr. Sakhawat Hussain is one of the Directors of the Bank

nominated by Haji Shakhawat Anwara Eye Hospital Ltd.
He is also a member of Executive Committee of the
Board. He is a former banker. He obtained his post
graduate degree from Rajshahi University in 1966. He
had worked in Janata Bank Limited for about 30 years.
Mr. Hussain is also associates with Modern Group of
Company.

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 ANNUAL REPORT 2017

Dr. Syed Hafizur Rahman

Independent Director

Dr. Syed Hafizur Rahman is an Independent Director of

South Bangla Agriculture and Commerce Bank Limited.
He obtained his Masters (Economics) Degree from
Rajshahi University in 1982 and achieved the Ph.D. in
Economics from Ochano Mieju University, Japan in 1990.
As a Scholar of Economics Dr. Rahman has contributed
to the Knowledge through his publications such as
‘Economics Development and To be Done’ and ‘Sankita
Sankalpa’. Immediately after completing his Academic as
well as professional education, Dr. Rahman started to
implement his theoretical knowledge at Business Sector
as an Entrepreneur and Established Shrimpex.com, Coal
Mark and Alliums Trade Associate. Presently, Dr. Rahman
has a notable Contribution to the frozen food, coal
marketing and Packaging Accessories sector of Southern
zone. He is highly respected for his contribution to the
society through his numerous welfare works and well
recognized for his involvement with various
socio-economic organizations such as, Bangladesh
Economic Association, Bangladesh Red Crescent
Society, Bangladesh Human Rights Commission,
Bangladesh Debating Society, Khulna University & Rotary
District Hospital, Umesh Chandra Public Library, Rajshahi
University Alumni Association and Sonali Otit Club,
Khulna. He is also the Chairman of SEED (Autistic Child
Care Organization) and Trustee Board Member of BNSB
Eye Hospital, Khulna.

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Mr. Md. Golam Faruque

Managing Director & CEO

Mr. Md. Golam Faruque is the Managing Director & Chief

Executive Officer (CEO) of South Bangla Agricultural and
Commerce Bank Limited. Prior to his current assignment,
he was the Managing Director of Rajshahi Krishi Unnayan
Bank, Deputy Managing Director (DMD) of Janata Bank
Limited and DMD of Bangladesh Krishi Bank (BKB).
Having recruited through Bankers Recruitment
Committee (BRC), he started his banking career with
Janata Bank as Senior Officer in 1984. During his long
triumphant service, he served in different capacities
Particularly in Khulna, Barisal and Chittagong as
Divisional Head and Head of Audit, Credit & Vigilance
Department at Head Office of the same Bank with 22
years of managerial exposure. Mr. Faruque has proven
expertise in Bank Management having sound track
records with diversified experience in various types of
Auditing with a firm understanding of the complexities
involved in strong Corporate Culture. In his Banking
career, he has a noteworthy contribution in Credit,
Investment, International Trade, Treasury Management,
Audit and Corporate Finance as well. He took part in the
various trainings, seminars and symposiums at home and
abroad. He obtained his BSS (Honour’s) degree in 1981
and Master’s Degree in 1984 in Economics from the
University of Dhaka with a brilliant academic background.
He is a man of strong ethics having moral values and
involved himself in different socio economic activities.

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 ANNUAL REPORT 2017
Our Management Team

Mr. Md. Golam Faruque

MD & CEO

Mr. Mostafa Jalal Uddin Ahmed

AMD

Mr. Md. Ghulam Nabi Mr. Md. Mamunur Rashid Molla Mr. Shafiuddin Ahmed
SEVP SEVP SEVP

Mr. Md. Mizanur Rahman Mr. Md. Masoodur Rahman Mr. Mohammad Asadul Haque Mr. Asirul Haque
EVP SVP SVP VP

Mr. Md Abu Bayazid Sk Mr. Md. Mokaddess Ali Mr. Md. Shafiul Azam Mr. Md. Khalequzzaman
VP VP FVP AVP

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 ANNUAL REPORT 2017

List of Executives
Sl. No. Name Designation Place of Posting
1 Mr. Md. Golam Faruque MD & CEO Head Office, Dhaka
2 Mr. Mostafa Jalal Uddin Ahmed AMD Head Office, Dhaka
3 Mr. Md. Ghulam Nabi SEVP HRD & GSD, Head Office
4 Mr. Mohammed Salim Chowdhury SEVP Agrabad Branch, Chittagong
5 Mr. Md. Mamunur Rashid Molla SEVP Credit Division, Head Office, Dhaka
6 Mr. Shafiuddin Ahmed SEVP International Division, Head Office, Dhaka
7 Mr. Md. Altaf Hossain Bhuyan SEVP Banani Branch, Dhaka
8 Mr. Md. Kamal Uddin SEVP Principal Branch, Dhaka
9 Mr. Md. Nurul Azim EVP Gulshan Branch, Dhaka
10 Mr. Md. Mizanur Rahman EVP ICT, Head office, Dhaka
11 Mr. Md. Saiful Islam SVP Nawabpur Branch, Dhaka
12 Mr. Salahuddin Ahmed SVP Amin Bazar Branch, Dhaka
13 Mr. Md. Masoodur Rahman SVP FAD, Head Office, Dhaka
14 Mr. Mohammad Asadul Haque SVP Treasury Division, Head Office, Dhaka
15 Mr. S.M. Iqbal Mehedi SVP Khulna Branch, Khulna
16 Mr. Asirul Haque VP CAD & RMD, Head Office, Dhaka
17 Mr. Mohammed Imtiaz VP Jubilee Road Branch, Chittagong
18 Mr. Md. Monzur Murshed Khan VP Rajshahi Branch, Rajshahi
19 Mr. Md. Sajedul Alam Khan VP Jessore Branch, Jessore
20 Mr. Abu Bayazid Sk. VP BOD, Head office, Dhaka
21 Mr. Yousuf Solaiman Russel VP Dhanmondi Branch, Dhaka
22 Mr. Md. Mokaddess Ali VP Board Division, Head Office
23 Mr. Emdad Haider VP EPZ Branch, Chittagong
24 Mr. Md. Rashed Mahbub Rabban VP Principal Branch, Dhaka
25 Mr. Md. Abdul Mannan VP Credit Division, Head Office, Dhaka
26 Mr. Mohammed Anwarul Kabir VP Gulshan Branch, Dhaka
27 Mr. Md. Mostafizur Rahman FVP Pragati Sharani Branch, Dhaka
28 Mr. Md. Ziaul Latif FVP Credit Division, Head Office, Dhaka
29 Mr. Md. Mahbubur Rahman FVP Rangpur Branch, Rangpur
30 Mr. Sahab Uddin FVP Bhatiary Branch, Chittagong
31 Mr. A.N.M. Moyeej Ahmed FVP Katakhali Branch, Bagerhat
32 Mr. Abu Salem Mohammad Hojaiffa Noman FVP Mirpur Branch, Dhaka
33 Mr. Mohammad Shafiul Azam FVP Card Division, Head Office, Dhaka
34 Mr. Mannan Bapari FVP Panthapath Branch, Dhaka
35 Mr. A.N.M. Mejbahul Hasan FVP ID, Head Office, Dhaka
36 Ms. Sultana Razia FVP Dhanmondi Branch, Dhaka
37 Mr. Md. Delowar Hossain Mondol FVP Bogra Branch, Bogra
38 Mr. Mohammad Yousuf Chowdhury FVP Nasirabad Branch, Chittagong
39 Mr. Md. Shahidur Rahman FVP Satkhira Branch, Satkhira
40 Mr. Bidhan Kumar Saha FVP KDA C/A Branch, Khulna

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Sl. No. Name Designation Place of Posting

41 Mr. Md. Fakhrul Islam FVP ICT, Head office, Dhaka
42 Mr. Sheikh Sharfuddin FVP Motijheel Branch ,Dhaka
43 Mr. Dewan Arifur Rahman FVP Treasury, Head Office
44 Mr. Md. Khalequzzaman AVP ICCD, Head Office, Dhaka
45 Mr. Md. Mazharul Hasan AVP ID, Head Office, Dhaka
46 Mr. Sankar Kumar Ghosh AVP Narayangonj Branch, Narayangonj
47 Mr. Md. Sayeed-Bin-Islam AVP Uttara Branch, Dhaka
48 Mr. Husban Ahmed Chowdhury AVP Sylhet Branch, Sylhet
49 Mr. Md. Kamal Hosen AVP Natore Branch, Natore
50 Mr. Syed Hafij Ahmed AVP Barisal Branch, Barisal
51 Mr. Salil Kumar Dutta AVP Takerhat Branch, Madaripur
52 Mr. Mohammad Rafiqul Islam AVP Ashulia Branch, Dhaka
53 Mr. Md. Islamul Haque AVP Imamgonj Branch, Dhaka
54 Mr. Md. Arifur Rahman AVP ICCD, Head Office, Dhaka
55 Mr. Mohammed Gias Uddin AVP Feni Branch, Feni
56 Mr. Khondokar Noory Imam AVP Marketing Division, Head Office, Dhaka
57 Mr. Md. Manirul Islam AVP Gulshan Branch, Dhaka

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 ANNUAL REPORT 2017

Chairman’s
Address

“We strongly believe in good governance. The bank is governed with the set of rules and procedures that
ensure the principles of value based management. Our Bank is founded on four “pillars” – Responsibility,
Accountability, Fairness and Transparency. The Board of Directors of the Bank is responsible to formulate
policy-guidelines and supervise business activities of the bank efficiently without any intervention in the role of
Management as it is essential to earn and maintain the confidence of the depositors, who are the prime
financiers. To accomplish the organizational goal, we are committed to establish good corporate governance.”

Bismillahir Rahmanir Rahim upswing in economic activity is strengthening. Global

growth, which in 2016 was the weakest since the
Distinguished Shareholders,
global financial crisis at 3.2 percent, is projected to
It is my immense pleasure and honour to welcome rise to 3.6 percent in 2017 and to 3.7 percent in 2018.
you at the 5th Annual General Meeting of South The growth forecasts for both 2017 and 2018 are 0.1
Bangla Agriculture and Commerce Bank Ltd. On percentage point stronger compared with the April
behalf of the Board of Directors and from myself, I 2017 World Economic Outlook (WEO) forecast.
would like to express my sincere gratitude to all of you Global Growth Forecast to Rise Further in 2018 and
for your active support and cooperation for which it 2019.
was easier for us to take your Bank to a prestigious
Bangladesh Economy is likely to benefit from the
position.
improved global outlook. Exports and remittances are
It is my privilege to place before you, the Annual projected to recover to still below their historic double
Report-2017 and the financial statements of the Bank digit averages. This together with the damages
for the year ended 31st December 2017. By the caused by floods to agricultural output and
grace of almighty Allah, this year your bank completes infrastructure will drag growth down in FY18 to 6.4
5 years of journey and marching with a momentum of percent followed by a rise back to 6.7 percent in
growth by accumulating a series of successes which FY19. Inflation is likely to increase due to overheating
includes deployment of state-of-the-art Core Banking resulting from the excess of actual growth over the
Solution and implementing all Central Bank initiated potential growth rate and adverse supply shocks. But
projects within shortest time, expanding branch prudent monetary policy is expected to keep inflation
network, launching innovative products & services, bearable. External current account deficit will persist,
achieving remarkable profitability etc. making exchange rate flexibility more important. The
Honourable fellow shareholders, public debt to GDP ratio is projected to rise as well,
but remain below levels that may start worrying the
If we look at the world economic features, the global

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creditors. Downside risks include the resurgence of the rural economy of Bangladesh, the Bank has
political instability in the run up to elections in early opened a number of rural branches to boost up rural
2019 and a hardening of credit constraints with economy through specialized product like Agriculture
increased insolvency of banks due to rising NPLs. Loan, SME Loan and Women Entrepreneur Loan.
Excess liquidity and reduction in fiscal space through Our Retail Banking and SME units are extending fully
cost inefficient domestic financing of budget deficit fledged financial facilities to retail customers & small
present latent risks. and medium enterprises under the refinance scheme
of Bangladesh Bank. It is my strongest belief that it
Dear Colleagues,
will be promoting self-employment in the economy,
We have delivered another good year despite the and contributing towards creation of new job
uncertain and challenging economic environment and opportunities.
crisis in the bank industry. The banking sector, which
The year 2018 will be one of the most challenging
dominates the financial sector in Bangladesh, has
years in recent times for the financial sector in
continued to struggle. Some banks failed to maintain
Bangladesh. The country witnessed remarkable
the regulatory capital requirement and this problem is
crash in the country’s stock market, crisis in the
acute amongst the State-Owned Banks (SOB). In
investment market, an immensely-fluctuating foreign
2016, the CAR of State-Owned Commercial Banks
exchange market and other flashpoints in the
(SCB) and State Owned Development Banks (SDB)
economic arena. As a new Bank, we had to garner
was 5.9 percent and -33.7 percent respectively. The
deposit at higher costs and lend at lower rates.
magnitude of their capital shortfall has prompted the
Despite, our Bank was able to maintain its corporate
government to once again keep a budgetary provision
asset portfolio at BDT 5,894.08 crore. Financially, our
for their recapitalization. Asset quality has
Bank turned in a solid performance. We took
deteriorated. The gross non-performing loan (NPL)
advantage from both the favorable and unfavorable
ratio increased to 9.2 percent in 2016 from 8.8
conditions in the banking industry to enable us to
percent in 2015. The asset quality of the SCBs
reach a position of long-term sustainability. Our
continues to remain poor and is the main driver
strength, confidence and your cooperation helped us
behind the deterioration of the asset quality within the
make 19.70% growth in operating profit in a
sector. Protecting profitability amidst the default loan
challenging environment. In 2017, our operating
culture makes banks reluctant to decrease the spread
income stood at 347.61 crore. Our loans and
on the interest rate despite holding a high level of
advances stood at 4,328.50 crore, compared to
liquidity. The absence of good borrowers and a poor
3,017.41 crore in 2016, with a growth rate of 43.45%.
legal framework to recover default loans has also
During the year our total deposits was 5,012.15 crore
been instrumental in the banking sector’s increase in
in comparison to 3,833.72 crore in 2016, showing a
risk aversion.
growth rate of 30.74%. Our Net Profit was 98.20 crore
In spite of the crisis, our Bank has expanded its in 2017. Our Capital and Reserve grew to 4,98.52
business significantly during the year 2017: deposits crore and 1,55.38 in 2017, respectively,
Tk.5,012.15 crore, loans and advances Tk 4,328.50 strengthening of capital base and sustainability of the
crore and net profit Tk. 98.20 crore. The bank Bank.
maintained a healthy loan deposit ratio of 83.99%
Dear Members,
during the year. The Bank has ensured its presence in
64 different parts of the country i.e. the Bank now has The Bank has been operating the foreign trade
64 branches across Bangladesh. The Branches is business through 6 (six) Authorized Dealer (AD)
equipped with modern technology and highly skill branches at important commercial hubs of the country
human resources. Currently your bank has a including a centralized Trade Processing Unit at Head
workforce consisting of almost 732 employees. Our Office to handle the trade transaction of Non-AD
lending expanded in the areas of manufacturing, branches using state-of-the-art technology. The Bank
import and export, infrastructure, services and has been maintaining fervent correspondent banking
agriculture credit, ranging from corporate clients to relationship with internationally reputed banks to
small and medium enterprises and retail clients. facilitate foreign trade and other international
transactions. As on 31st December 2017, the number
As the Government has embarked on strengthening
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45 countries. The Bank maintains 14 Nostro Accounts (equivalent USD 15.25 million) in the year 2016, BDT
in 8 major currencies with reputed international banks 269.40 million (equivalent USD 3.43 million) in the
around the world in all the important global financial year 2015, and BDT 70.60 million (equivalent USD
centers. The bank also enjoys credit lines from the 0.90 million) in the year 2014.
correspondent banks for adding confirmation to letter
Our Bank has successfully managed the liquidity risk,
of credit as and when needed which is facilitating
interest rate risk and foreign currency risk within the
international trade.
laid down policies and guidelines of Bangladesh
Bank has introduced Automated Sanction Screening Bank. Statutory requirement in respect of all
system of Flora Bank CBS for filtering all messages indicators (CRR, SLR, ADR, LCR, NSFR,
and transactions which helped us to reach Commitment, Wholesale Borrowing and NOP limits)
international standard to address concern relating has been maintained positively. Despite the
AML/CFT. Moreover, to ensure strict compliance of challenges of 2017, our Treasury has done
Trade Based Money Laundering and combating considerably well by exercising diligence and proper
terrorist financing, Bank has also implemented fully execution of its strategies.
automated SWIFT owned Sanction Screening system
The Bank has separate ALM Desk under Treasury,
at our SWIFT Server to screen all incoming and
which supplies economic, market and Bank
outgoing transactions related to foreign trade.
information and analysis to asset liability
In the year 2017 our Bank handled BDT 25854.40 Management Committee (ALCO) for taking strategic
million (equivalent USD 310.19 million) import decision. ALCO, which meets at least once in a
business from 4503 number of Documentary month, is responsible for managing balance sheet
Credit/LC. Import volume in the year 2016, 2015, and compositions, determining interest rates to increase
2014 was BDT 17596.80 million ( equivalent USD efficiency, managing liquidity and interest rate risks
219.96 million), 10942.10 million (equivalent USD and maximizing returns. A new ALM policy has been
137.64 million) and 7969.00 million ( equivalent USD formulated by ALM Desk keeping BASEL III liquidity
100.24 million) respectively. ratios (LCR & NSFR) in mind and central bank’s ALM
guidelines into active consideration.
Export volume in the year 2016, 2015, and 2014 was
BDT 8760.31 million ( equivalent USD 110.89 million), The Bank has undertaken various technology
9905.70 million ( equivalent USD 126.19 million) and enabled business initiatives to realize the vision of
5662.20 million ( equivalent USD 72.13 million) customer centricity and to respond to customer
respectively. demand in real time by knowing its customers and
their behaviour. The bank is leveraging
Bank is a legal channel for remittance procurement.
implementation of Digital Banking Apps, Mobile
As our prime regulator, the Bangladesh Bank always
Wallet and automation of technology, which will
encourage scheduled banks to procure remittance
enable us to be nimbler, more FinTech-like and faster
through banking channel. SBAC Bank Ltd. is also
to market in delivering cutting-edge solutions.
committed to handle remittance inflow from the
expatriate Bangladeshis. We have direct drawing For the Core Banking System, new enhancements
arrangement with Aman Exchange Company WLL, were implemented to improve operational efficiencies
Kuwait, Wall Street Finance LLC, USA, Al-Ansari and provide better control and monitoring capabilities.
Exchange LLC, UAE, Worldwide West 2 East Our Bank has best of technology infrastructure where
Services Ltd, UK,( A/C: Sha Global), and LCC state-of-the-art Data Centre and Disaster Recovery
Trans-sending Ltd, UK ( A/C: Small World). We have Site have been built in different seismic zone in order
also arrangement with renowned exchange house to avoid single point of failure and ensure
such as Transfast Remittance LLC and Placid NK uninterrupted banking service delivery to customers.
Corporation, Xpress Money Services Ltd., Western In addition to the Disaster Recovery Centre, Bank has
Union Network, Ria Financial services, and Turbo also implemented the Near Disaster Recovery Centre
Cash as associate members. During the year 2017, to ensure Near Zero Data Loss as part of its Business
the Bank received BDT 2294.60 million (equivalent Continuity Planning and Disaster Recovery strategy.
USD 27.86 million) as wage earners remittance. Over the years, Bank has built a strong foundation of
Remittance figure was BDT 1199.76 million cyber security comprising a comprehensive set of

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information security measures to counter against Education Assistance Trust, BN Ashar Alo School &
cyber-attacks. Rehabilitation Centre (BN Central Welfare Fund) etc.
Blankets worth Tk. 73,60,000 for the cold bitten
Our Bank has a well equipped Card Division capable
people, particularly in the northern districts of the
to achieve the vision and commitment & for providing
Country.
the customer an uninterruptable round the clock
transaction facilities having ATM/CDM services along We strongly believe in good governance. The bank is
with Debit card operations. The bank deployed 22 governed with the set of rules and procedures that
ATMs and 2 CDMs in different branch locations of the ensure the principles of value based management.
country and more ATMs are yet to be set up with new Our Bank is founded on four “pillars” – Responsibility,
and existing branches soon. Till the date we have Accountability, Fairness and Transparency (RAFT).
issued 16,000 Debit Cards & approximately 700 credit The Board of Directors of the Bank is responsible to
cards with Implementation of EMV Chip Card. formulate policy-guidelines, supervising business
activities of the bank efficiently without any
Our Bank has a strong operating platform and a clear,
intervention in the role of Management as it is
well defined strategy. Sound management of risks,
essential to earn and maintain confidence of the
capital and costs will continue to be a priority. While
depositors, who are the prime financiers. To
continuing to pursue business targets, our Bank is
accomplish the organizational goal, we are committed
committed to maintaining a high standard of
to establish good corporate governance.
Corporate Governance in the operations of the Bank.
The Risk Weighted Assets of the Bank stood at Tk. I have had the privilege to express my gratitude to the
4238.97 crore based on 31.12.2017. So, the minimum Government of Bangladesh, the Bangladesh Bank,
capital was required Tk. 423.90 crore but the bank the Bangladesh Securities and Exchange
maintained Tk.695.76 crore i.e. surplus capital stood Commission, the Registrar of Joint Stock Companies
at Tk. 271.86 crore. As per directives of Bangladesh & Firms, and other regulatory bodies for all their
Bank, every bank is required to maintain minimum extended support during this year.
capital plus capital conservation buffer at 11.25% for
I would like to thank all our Directors for their guidance
the year 2017 but SBAC Bank maintained capital
and support. I would also like to thank our respectable
plus capital conservation buffer at 16.41% i.e. excess
shareholders, clients, patrons, well wishers, and all
5.16%. In accordance with Bangladesh Bank
employees for their constant support and
guidelines, we are happy to inform you that our
cooperation, without which the bank would not be
present Capital Adequacy Ratio is 16.41% of Risk
able to attain its current position. As we continue to
weighted Assets (RWA) and paid up capital 498.52
deliver ever-higher standards of service and
crore.
performance for our customers, our shareholders,
The Bank is a socially responsible corporate citizen. stakeholders and our communities, we look forward to
We are committed to work for the people and are your cooperation and support for 2018.
actively engaged in social projects throughout. The
I would like to express our firm commitment to our
Board of SBAC Bank Ltd. has approved a policy for
valuable shareholders to continue our effort to make it
Corporate Social Responsibility (CSR). Under the
a bank of excellence.
CSR program, the Bank has a remarkable
contribution towards Education, Preventive and May Allah help, guide and shower unending blessings
Curative Healthcare, Emergency Disaster Relief, upon us.
Financial Inclusion, Community Investments by way
Allah Hafiz,
of donations etc. Under CSR Program the Bank has
distributed Tk. 80,976,820.00 (eight crore nine lac
seventy six thousand eight hundred twenty) among
the areas mentioned above including Prime Minister’s
Relief Fund 1.75 crore, Muktijoddha Sangshad Krira
Chakra, Father of the Nation Sheikh Mujibur Rahman S. M. Amzad Hossain
Memorial Trust, Muktijoddha Shanshad, Child Day
Care Centre for Private Banks, Prime Minister’s Chairman

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Overview of
Managing
Director
& CEO

“In South Bangla Agriculture and Commerce Bank Limited, we believe in compliance Culture. ‘Compliance
First; Profit is it’s logical consequence’ with this motto the Bank is going ahead with state-of-the-art Core
Banking Solution to accomplish the organizational goal. We want to establish good governance in all spheres.
In short span of journey, we have opened 64 branches supported by latest Financial Technology. We have
been successful in achieving expected progress in Key Performance Indicators (KPIs) during the year 2017.
Our aim is to build the bank as a centre of Excellence”

Bismillahir Rahmanir Rahim, eligible to graduate to a developing country from a

least developed one as it has met all the three criteria
It is honourable and privilege for me to present about
for the first time for getting out of the LDC bloc. The
our progress and achievements of the bank in 2017
three criteria are Gross National Income (GNI) per
and outline for 2018. Despite challenges of acute
capita, Human Assets Index (HAI) and Economic
competition in the banking industry and political
Vulnerability Index (EVI). According to the UN's
upheaval, SBAC Bank Limited has been able to
graduation threshold, the GNI per capita of a country
record progress in almost all the areas of operation in
has to be $1,230 or above. Bangladesh's GNI per
2017. The bank has completed a successful year
capita is now $1,272. In terms of the HAI, a country
2017 in respect of operating profit, capital adequacy
must have a score of 66 or above. Bangladesh's
ratio, branch network, asset qualities, working
score is now 72.8 ; well above the threshold. In the
environment Risk Management, financial inclusion
economic vulnerability index (EVI), a country's score
etc.
has to be 32 or below. Bangladesh's score is 25 in the
The International Monetary Fund (IMF) in its latest EVI, an indicator of natural and trade-related shocks.
World Economic Outlook report (October, 2017) has
The Bangladesh economy is expected to grow
given a more optimistic forecast for global economic
between 6.4 per cent to 6.8 per cent in 2017 and
growth. 3.6 per cent global economic growth this year
2018. But declining exports, falling remittances and
followed by 3.7 per cent the next year have been
rising food (especially rice) price inflation may result in
predicted in the report. It is now 10 years since the
lower than expected growth. The economy grew by
Global Financial Crisis (GFC), the greatest economic
6.3 percent on average for more than a decade. The
collapse we have ever seen in our life time till now.
growth rate was over 7 percent in the last two fiscal
Within this context this optimistic economic outlook is
years. But suddenly, this smoothly-run economy was
very encouraging.
hit by a serious liquidity crisis a couple of months
In a major leap forward, Bangladesh has become back. As a result, banks' lending rates have hit double

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digits again after more than a year, making things 30.74%, 43.45% and 19.70%. The bank was always
harder for businesses and consumers alike. complied in maintaining a healthy advance deposit
ratio of 83.99 % during the year. Our Capital and
As the Government has embarked on strengthening
Reserve grew to 4,98.52 crore and 1,55.38 in 2017,
the rural economy of Bangladesh, the Bank has
respectively, strengthening of capital base and
opened a number of rural branches to boost up rural
sustainability of the Bank.
economy. As we believe in sustainable development,
our SME ¬units are extending fully fledged financial We may foresee the year 2018 as one of the most
facilities to retail customers & small and medium challenging years in recent times for the financial
enterprises under the refinance scheme of sector in Bangladesh. The country’s stock market
Bangladesh Bank in order to create new faced a volatile trend. The industry has been facing a
entrepreneurs. It is my strongest belief that it will be severe liquidity crisis as well. Balance of payment of
promoting self-employment in the economy and Bangladesh entered the negative territory for the first
contributing towards creation of new job time in 16 years in July on the back of a wide
opportunities. mismatch in trade. The overall balance was $179
million in the deficit in the first month of fiscal 2017-18
As Bangladesh is moving one step closer to being a
against $480 million in the surplus a year earlier. The
cashless society, we are going to adopt latest
current account balance also traversed to the
financial technology which will ultimately help build a
negative territory for the first time in four years in fiscal
cashless society. Transactions through the digital
2016-17.
payment system will be settled on a real-time basis.
We have undertaken various technology enabled Keeping the above facts in mind, we have set our
business initiatives to realize the vision of customer strategic priorities. We have focused on asset quality.
centricity in real time by knowing its customers and Our objective is to maintain the Non Performing
their behaviours. The bank is leveraging Loans below one percent. In the year 2018 we must
implementation of Digital Banking Apps, Mobile concentrate our efforts to build up a better deposit mix
Wallet and automation of technology, which will with base deposit i.e. low/no cost deposit. For the
enable us to be nimbler in delivering cutting-edge purpose we are going to expand of branch net work
solutions. The Bank has equipped itself with throughout country to make banking facilities
state-of-the-art infrastructure management systems available at the remote area. The Bank has already
and support equipment in order to achieve best opened 64 branches and opening of 10 more
possible usage of power. branches is under process to be completed by June
2018. We have a plan to establish 3 women branches
Our Bank has a goal to bring forward the small and
as we believe in women empowerment. We want to
medium businesses and needs continuous efforts to
improve Deposit Base by maintaining efficient deposit
achieve the same. The SME sector is now recognized
mix, increasing share of low cost and no cost deposit
by economists as the undisputed symbol of
in total deposit; increase non-funded business;
sustainable, gender balanced development and
maintain adequate level of liquidity through
progress of Bangladesh. Our Bank continues to thrive
minimizing asset-liability mismatch ; diversify
in the SME sector with a realistic target.
products and services by introducing IT based
I am delighted and proud to express that SBAC Bank innovative products and alternate delivery channels;
Ltd. was the highest profit maker among the nine improve internal governance through strengthening
fourth generation banks for two consecutive years i.e. good corporate cultures, motivation, training and
2016-17. Our Bank was able to maintain its corporate supervision in all levels of management; strengthen
asset portfolio at BDT 5,894.08 crore showing a internal control and monitoring; develop Human
growth of 29.26% in such a challenging environment. Resources Management System to motivate and
Financially our Bank turned in a solid performance. retain the Human Resources and transform Human
Our strength, confidence and your cooperation Resources to Human Capital through proper training
helped us make 19.70% growth in operating profit in a in every aspects of working area; expansion of
tough situation. Our deposits stood Tk. 5,012.15 activities related to Corporate Social Responsibility
crore, loans and advances Tk 4,328.50 crore and and Green Banking.
operating profit Tk. 181.93 crore showing a growth of
Our strategic priorities and actions plan for future

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focus on compliance with policies of the Bank, rules & Board of Directors and the other members of the
regulations of the regulators and the provisions of company for their support and co-operation. Thanks
laws of the country. In South Bangla Agriculture and are also due to all our stakeholders and employees
Commerce Bank Limited, we believe in compliance for their continuous support and guidance for making
Culture. ‘Compliance First; Profit is it’s logical the Bank as an elevating service industry. I am also
consequence’ with this motto the Bank is going ahead thankful to our valued customers for their continuous
with state-of-the-art Core Banking Solution to support and strong confidence in us. Let 2018 be a
accomplish the organizational goal. We want to year of progress and prosperity.
establish good governance in all spheres. In short
In fine, we beg to add that we build upon our strengths
span of journey, we have opened 64 branches with
and we are confident that we can make 2018 another
full-fledged online banking services. We have been
prosperous year and cross more mile stones with our
successful in achieving expected progress in Key
better service and best efforts.
Performance Indicators (KPIs) during the year 2017.
Our aim is to build the bank as Financial Excellence. Allah Hafiz,
I want to conclude with sincere thanks and gratitude
to the honorable Governor of Bangladesh Bank and
his good team for their time-befitting policies,
guidance and supports. I would like to express my Md. Golam Faruque
humble gratitude to our honorable Chairman, the Managing Director & CEO

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PERFORMANCE HIGHLIGHTS

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PERFORMANCE HIGHLIGHTS
2017

2016

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DIRECTOR’S REPORT

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Directors Report 2017

(Under Section 184 of Companies Act 1994 and
Notification No. SEC/CMRRCD/2006-158/134/
Admin/44 of Bangladesh Securities and
Exchange Commission)
Meeting of Board of Directors in progress.

The Board of Directors of South Bangla Agriculture & A renewed multilateral effort is also needed to tackle
Commerce (SBAC) Bank Limited has the pleasure the common challenges of an integrated global
and feels honored in welcoming you all to the Annual economy. The global pickup in activity that started in
General Meeting (AGM) and presenting the Annual the second half of 2016 gained further momentum in
Report 2017 and Audited Financial Statements for the the first half of 2017. Growth is projected to rise over
year 2017 along with the Report of the Auditors to the this year and next in emerging market and developing
shareholders. A brief overview of the global trend and economies, supported by improved external
the performance of Bangladesh economy vis-à-vis factors—a benign global financial environment and a
our Bank and our strategic plan for 2018 have also recovery in advanced economies. Growth in China
been provided in this Report. and other parts of emerging Asia remains strong, and
the still-difficult conditions faced by several
Global Economy: An Overview
commodity exporters in Latin America, the
The International Monetary Fund (IMF) in its latest Commonwealth of Independent States, and
World Economic Outlook report (October, 2017) has sub-Saharan Africa show some signs of
given a more optimistic forecast for global economic improvement. In advanced economies, the notable
growth. The global upswing in economic activity is 2017 growth pickup is broad based, with stronger
strengthening. Global growth, which in 2016 was the activity in the United States and Canada, the euro
weakest since the global financial crisis at 3.2 area, and Japan. Prospects for medium-term growth
percent, is projected to rise to 3.6 percent in 2017 and are more subdued, however, as negative output gaps
to 3.7 percent in 2018. The growth forecasts for both shrink (leaving less scope for cyclical improvement)
2017 and 2018 are 0.1 percentage point stronger and demographic factors and weak productivity weigh
compared with the April 2017 World Economic on potential growth. Changes to aggregate growth
Outlook (WEO) forecast. Broad-based upward forecasts relative to the April 2017 WEO are generally
revisions in the euro area, Japan, emerging Asia, positive but modest, with some meaningful changes
emerging Europe, and Russia—where growth for specific country groups and individual countries.
outcomes in the first half of 2017 were better than
Fiscal policy at the global level is projected to remain
expected—more than offset downward revisions for
broadly neutral in 2017 and 2018. The overall neutral
the United States and the United Kingdom. But the
stance masks some variation across countries and
recovery is not complete: while the baseline outlook is
important changes relative to the April 2017 WEO
strengthening, growth remains weak in many
assumptions. Among advanced economies, the fiscal
countries, and inflation is below target in most
stance (measured by the fiscal impulse) in 2017 is
advanced economies. Commodity exporters,
forecast to be broadly neutral, reflecting projected
especially of fuel, are particularly hard hit as their
easing in Canada, Germany, Italy, and Korea; broadly
adjustment to a sharp step down in foreign earnings
neutral policy in Japan and the United States; and
continues. And while short term risks are broadly
tightening in Spain. For 2018, the forecast assumes
balanced, medium-term risks are still tilted to the
moderate fiscal policy tightening in advanced
downside. The welcome cyclical pickup in global
economies, reflecting projected tightening in Japan,
activity thus provides an ideal window of opportunity
the United Kingdom, and to a lesser extent, the United
to tackle the key policy challenges—namely to boost
States. The projected increase in the structural fiscal
potential output while ensuring its benefits are broadly
balance for the United States in 2018 in the current
shared, and to build resilience against downside risks.
forecast is similar to the projection in the October

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2016 WEO, but represents major tightening relative to

the April 2017 assumptions (which included a fiscal
impulse of 1.5 Percent of GDP between 2017 and
2019 on the basis of then-anticipated corporate and
personal income tax reductions). In emerging market
and developing economies, fiscal policy is expected
to be broadly neutral in both 2017 and 2018. (The
projected looser fiscal policy for the group in 2018
relative to the assumptions in April primarily reflects
downward revisions for the structural fiscal balances
of Brazil and China). On monetary policy, the forecast Source: IMF staff estimates.
assumes a somewhat more gradual normalization of
the policy interest rate in the United States than Note: Commodity exporters includes fuel and nonfuel
projected in the April 2017 WEO. With US fiscal policy primary products exporters, as indicated in Table D of
now set to be broadly neutral in 2017 and projected to the Statistical Appendix, plus Brazil and Peru. EMDEs
tighten in 2018, monetary policy is projected to be =emerging market and developing economies; PPP =
moderately more accommodative than previously purchasing power parity.
expected, given weaker projected demand and Global Growth Forecast to Rise Further in 2018 and
diminished inflation pressure. While commodity 2019. Upside growth surprises were particularly
exporters are projected to grow at rates well below pronounced in Europe and Asia but broad based, with
their historical averages, they are nevertheless outturns for both the advanced and the emerging
expected to contribute significantly to the projected market and developing economy groups exceeding
global growth pickup between 2016 and 2022. the fall forecasts by 0.1 percentage point. The
Figure 1.12. GDP Growth, 1999–2022 stronger momentum experienced in 2017 is expected
to carry into 2018 and 2019, with global growth
revised up to 3.9 percent for both years (0.2
percentage point higher relative to the fall forecasts).
Table: Overview of the World Economic Outlook
Percentage Change Difference from
GDP at October 2017
Actual Estimate Projection
constant prices WEO Projection
2016 2017 2018 2019 2018 2019
World 3.2 3.7 3.9 3.9 0.2 0.2
Advanccd Economics 1.7 2.3 2.3 2.2 0.3 0.4
USA 1.5 2.3 2.7 2.5 0.4 0.6
Euro Area 1.8 2.4 2.2 2.0 0.3 0.3
Other Advanced
Economics 2.3 2.7 2.6 2.6 0.1 0.1
Emcrging Market and
Developing Economies 4.4 4.7 4.9 5.0 0.0 0.0
China 6.7 6.8 6.6 6.4 0.1 0.1
India 7.1 6.7 7.4 7.8 0.0 0.0
Source: World Economic Outlook Update (January, 2018), International Monetary Fund.

Bangladesh Economy: An Overview

Economic Growth and Investment:
For the first time in the recent past, BBS published the
final estimates of the growth of gross domestic
product (GDP) of the outgoing fiscal year, FY2017,
within the first half of the subsequent fiscal year.
According to the BBS final estimates, the real GDP
growth in FY2017 increased by 0.17 percentage
points to register 7.28 per cent growth. This is the
highest ever growth achieved considering the new
base year of 2005-06 for estimating national
accounts. This is also for the second successive time

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that the final estimates of GDP growth by the BBS Nonetheless, as BBS data showed, industries sector
surpassed the planned target, which was set at 7.2 has continued to grow at double digit (10.2 per cent)
per cent for FY2017. with significant contribution from the large and
medium scale manufacturing industries (11.0 per cent
An analysis of contribution to GDP growth and a
growth). Quantum Index of Industrial Production
comparison with the previous fiscal year’s
(QIIP) data suggests that a number of large scale
performance (7.11 per cent GDP growth) shows that
industries posted significant growth in FY2017
the incremental growth owed primarily to an
including leather and related products (53.4 per cent
increased contribution from the services sector, and in
growth) inspite of the production dislocation due to
particular, from the wholesale and retail trades sector
shifting of factories from the Hazaribagh area, textile
(Table 2.1). Growth contribution from financial
(21.2 per cent), pharmaceuticals and medicinal
intermediations also improved significantly in a year
chemical manufacturer (32.1 per cent) and
that was marked by deteriorating performance of the
manufacture of other non-metalic mineral products
banking sector of the country. In contrast, in FY2016,
(32.3 per cent). Combined weight of these four
industries (broad) sector was the lead contributor to
industries was about one-third of the total industrial
the GDP growth of 7.11 per cent. In FY2017,
production. However, this high growth recorded by
industries sector’s contribution has dropped due to
large scale industrial production failed to get reflected
lower contribution by both manufacturing and
in the export figures. Indeed, export earnings
electricity sectors. In case of agriculture (broad)
eventually registered only 1.7 per cent growth in
sector, the contribution was revised to lower than that
FY2017 and in particular the RMG exports posted
reported in the provisional estimates as it
only 0.2 per cent growth. It is also pertinent to note
incorporated the substantial loss of crop due to flash
that, in FY2017, export earnings of leather and leather
flood in haor areas in April 2017.

Table 2.1: Incremental Contribution to GDP Growth (%) in FY17

Sectors FY16 FY17 (p) FY17
Agriculture Sector 0.43 0.50 0.44
Crops & horticulture 0.07 0.14 0.08
Industries Sector 3.24 3.18 3.10
Manufacturing 2.26 2.21 2.21
Electricity 0.16 0.17 0.11
Services Sector 3.21 3.31 3.41
Public administration and defense 0.38 0.34 0.32
Wholesale and retail trade; repair of motor vehicles, 0.88 0.92 0.99
motorcycles and personal and household goods
Transport, storage & communication 0.67 0.73 0.73
Education 0.26 0.26 0.26
Health and social works 0.13 0.13 0.13
Financial intermediations 0.25 0.25 0.30
GDP growth 7.11 7.24 7.28

Note: (p) stands for provisional estimates.

Source: CPD calculation from BBS (2017) data.

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products increased by only 6.3 per cent. The export Inflation:

figures do corroborate the high growth of the
According to BBS data, the annual average inflation in
manufacturing sub-sectors, putting under doubt the
June 2017 was 5.4 per cent – well contained within
reliability of the production data.
the target of 5.8 per cent envisaged in the Monetary
Private investment as share of GDP, in the backdrop Policy Statement of Bangladesh Bank. Indeed,
of some rise in the past, remained more or less at the inflation has steadily come down to 5.4 per cent in
same level, rising to 23.1 per cent from 23.0 per cent January 2017 and remained there until the end of
in FY2016. Private sector credit growth was FY2017. Non-food inflation started to drop from 7.5
consistent throughout the period and recorded 15.6 per cent in September and stayed at 4.6 per cent in
per cent growth against the 16.5 per cent target June 2017. On the other hand, food inflation started to
growth as of June 2017. On the other hand, public move up from 4.5 per cent in December 2016 and
investment has increased by a not insignificant 0.7 reached 6.0 per cent in June 2017 primarily due to
percentage points to reach 7.4 per cent of GDP in higher global food prices and various natural
FY2017. Gross national savings as a share of GDP disasters. The haor flash flood in April caused
has declined to 29.6 per cent which was 30.8 per cent significant loss of boro crops. This, coupled with
in FY2016. Per capita GNI has increased to USD government’s failure to achieve procurement targets
1610 per capita in FY2017 from USD 1,464 in of food grains and inability to ensure timely import of
FY2016, a rise of 9.9 per cent. rice, resulted in high food inflation. Indeed, from April
2017 onward, food inflation started to climb above the
New Trends in Poverty and Inequality:
national average, while non-food inflation went below
The new estimates of Household Income and the national average. The rural-urban dynamics of
Expenditure Survey (HIES) 2016 (survey being inflation was rather interesting in FY2017. For both
conducted during April 2016 – March 2017) has food and non-food commodities, inflation was lower in
brought forth a number of interesting trends in poverty rural areas throughout the FY2017 (Figure 2.3).
and inequality. The poverty head count rate, However, as the Figure 2.3 depicts, rural areas tend
calculated by using the Cost of Basic Needs (CBN) to succumb to inflationary pressure in a more intense
method, declined to 24.3 per cent in 2016 at the manner compared to urban areas.
national level from 31.5 per cent in 2010 (Figure 2.1).
Over the same timeframe, rural poverty reduced to
26.4 per cent from 35.2 per cent while urban poverty
went down to 18.9 per cent from 21.3 per cent over
the aforesaid period. Despite the improvement,
poverty reduction continues to be a major challenge
with poverty being an important feature in the rural
areas with its relatively higher incidence when
compared to the urban counterparts. One Monetary Growth and Financial Institutions:
encouraging note in this regard is that the difference Growth rates of different monetary aggregates in the
between the rural and urban poverty incidence has elapsed fiscal year remained varied compared to their
been on gradual decline over time. In 2000, the respective annual targets. Growth rate of broad
difference was about 17 percentage points which had money hovered around 13-14 per cent throughout the
come down to 7.5 percentage points in 2016. fiscal year and at the end of June 2017 ended up at
Figure 2.1: Poverty Rate in Bangladesh Based on the only 10.9 per cent while the target limit was 15.5 per
Upper Poverty Line (%) cent (Table 2.6). Credit expansion to the public sector
was negative during the reporting period as the
government made repayments to banks in the
backdrop of lower demand for bank borrowings to
service fiscal deficit. Growth of private sector credit
was very consistent, about 16 per cent, and closed
the year with 15.7 per cent growth while annual target
was set at 16.5 per cent. Volatility in exchange rate
Source: BBS (2017). during the last quarter of FY2017 contributed to limit

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the excessive flow of net foreign assets which December’17 vis-à-vis 5.38 per cent in
gradually declined to 14.4 per cent as of June 2017. December’16.
However, the growth was still higher than the • Government’s distribution of food grains was
programmed level of 10.1 per cent. at the lowest level when the inflationary
Table 2.6: Growth (%) of Monetary Aggregates in pressure was at its peak. Inadequate stock is
FY2017 the major reason behind the failure to ensure
required food grain supply under the public
Monetary Aggregates Actual FY16 Target FY17 Actual FY17
Net foreign assets 23.2 10.1 14.4
food distribution system (PFDS).
Total domestic credit 14.2 16.4 11.2 • According to a CPD study, the estimated loss
Credit to public sector 2.6 NA -12.0 of Boro production was about 15.8 lac metric
Credit to private sector 16.8 16.5 15.7 tons during the flash flood in haor areas in
Net other assets 14.4 NA 19.7
2017 while the estimated loss of rice
Net domestic assets 14.2 17.3 9.7
Broad money 16.3 15.5 10.9 production was about Tk700 crore to 2700
Source: Bangladesh Bank Data. crore during the monsoon flood. Therefore, a
possible shortfall of food grains for the PFDS
Key points of the report highlighted during the during H2 FY18 could be between 2.44 to
media briefing include: 3.47 lakh MT.
• According to CPD’s estimation, an additional
1. Rising Income and Wealth Inequality
food budget of Tk700 crore to Tk1, 152 crore
• Poverty reduced in absolute level, but pace of will be required to address the situation.
poverty reduction has slowed down.
Challenges Counteractive Measures
• Poverty and employment estimates pose * Higher prices * Ensure rice imports to
questions in context of the benefits of the of rice and enhance public stock
other food * Expand safety net
attained economic growth. items Immediate programmers in favor
* Lower public Fallout of the poor
• Rich are getting richer while the poor are food stock High * Raise repo and
getting poorer. Ratio of income of top five per * Non-food inflationary reverse-repo rates
inflation may pressure * Raise general
cent and bottom five per cent households also catch up provisions for
increased to 121.3 in 2016 from 31.6 in 2010. food inflation unclassified loans
in the coming * Reduce debt-equity
• Wealth inequality depicts an even direr months ratio for consumer and
housing loans
picture. The percentage share of wealth of top
five per cent and bottom five per cent 3. Growing Malignancy in the Banking Sector:
households was 51.32 and 0.04 in 2010.
• The banking sector of Bangladesh has been
plagued by financial scams, non-performing
Challenges Counteractive
* Slowdown in Measures loans, inefficiency, and slack monitoring and
growth elasticity
of poverty
* Refocus
macroeconomic
supervision.
Immediate
* Higher income
Fallout
policy objective to • Around Tk 15,705 crore spent in
and wealth `decent
inequality Deteriorating employment recapitalising the banks during the period
* Employment quality of generating high
elasticity of economic economic growth’
FY2009-FY2017 which is roughly half the
growth also growth strategy from the cost of the construction of the Padma Bridge.
declined existing `GDP
considerably, growth • Instead of the growing malignancy, the
including for the acceleration’
manufacturing strategy government amended the Banking
sector Companies Act increasing the tenure of the
board of directors of a private bank from six
2. Inflation and Food Stock Outlook: years to nine years, and accommodating four
• Since mid-2017, Bangladesh has members of a family instead of two in the
experienced a rise in inflation partly due to the board.
consecutive floods. High food inflation is likely • Despite a decline in the interest rate, high
to continue in the coming months. The rates of lending continued to prevail in key
inflation rate rose to 7.13 per cent in sectors, discouraging investors.

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Challenges
Challenges Counteractive
* Rising NPL
* Significant Measures
* Capital inadequacy in
rise in import * Raise L/C
SCBs
payments margins for
* Farmers Bank is on the Immediate
* Inadequate import of
verge of collapse Fallout
export consumer and
* Several fourth generation Immediate Pressure on the
Counteractive earnings luxurious
banks are in trouble Fallout balance of
Measures * Insufficient commodities
* Deterioration of asset Crisis in the payment (BoP)
Whither inflow of * Reduce the
quality in the PCBs banking sector Financial remittances, time for L/C
* High requirement of
Sector foreign aid repayment for
provision for banks
Commission? and other such items
* High demand for
medium term * Stabilise
recapitalization for SCBs
foreign loans exchange rate
* `Cronyism’ in the
ownership of banks
weak governance and CPD’s Observations:
leadership quality
Based on the analysis, CPD observes that the
4. External Sector: macroeconomic stability of Bangladesh has come
under considerable pressure. Slowdown in growth
• Export sector of Bangladesh evinced positive
elasticity of poverty, high income and wealth
signals during the 1st half of FY18. A
inequality, food inflation, financing the budget deficit
period-on-period growth of 9.2 per cent will be
based on NSD certificates sale, rising non-performing
required in the remaining half (January-June)
loans (NPL), weak governance amid crisis in the
of FY18 to reach the export target of USD
banking sector, and lower remittance inflow are the
37.5 billion.
major concerning areas of this fiscal year. However,
• Bangladesh may face additional burden of the government did not undertake any major reform
import payments in the 2nd half of FY18 as measures, especially for the banking sector, to
price of crude oil evinced signs of rise. improve the situation.
• US imports of RMG products from
Bangladesh Economy Outlook 2018:
Bangladesh is decreasing (-5.1 per cent in
July – October period of 2017). In a major leap forward, Bangladesh has become
• Suspicious import growth (75 per cent) of raw eligible to graduate to a developing country from a
cotton despite stability in global price, least developed one as it has met all the three criteria
unmatched RMG export growth and no strong for the first time for getting out of the LDC bloc. The
indication of sudden spurt in investment in Committee for Development Policy (CDP), a United
spinning. Besides, high import growth for Nations panel, made an announcement on the
sugar (50 percent) and edible oil (39 percent) country's eligibility at a meeting at the UN
is likely to continue. headquarters in New York. The three criteria are
Gross National Income (GNI) per capita, Human
• Taka started to experience some depreciation
Assets Index (HAI) and Economic Vulnerability Index
since second quarter of FY17 continuing to
(EVI). According to the UN's graduation threshold, the
the early months of FY18. Monthly average
GNI per capita of a country has to be $1,230 or above.
nominal exchange rate (NER) in the first half
Bangladesh's GNI per capita is now $1,272. In terms
of FY2018 was USD/BDT 82.6.
of the HAI, a country must have a score of 66 or
• Exchange rate depreciation and upturn of oil above. Bangladesh's score is now 72.8 ; well above
price helped the slow recovery of remittance the threshold. In the economic vulnerability index
growth. The growth for (Jul-Dec) FY18 was (EVI), a country's score has to be 32 or below.
12.5 per cent. On the other hand, migration Bangladesh's score is 25 in the EVI, an indicator of
growth for (Jul-Dec) FY18 was 26.8 per cent. natural and trade-related shocks.
However, but it rate will drop to -20 per cent, if
excludes KSA. THREE CRITERIA FOR ELIGIBILITY
• Foreign exchange reserve has declined to Gross National Human Assets Economic Vulnerability
USD 32.0 billion as of January 2018. Current Income Index Index
account balance is USD (-) 3,311 million, and Required $1,230 or above 66 or above 32 or above
the overall balance of payments is USD (-) Bangladesh $1,272 72.8 25
225 million for Jul-Oct FY2018. Score

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The Bangladesh economy is expected to grow Bangladesh's GNI per capita is now $1,272. In terms
between 6.4 per cent to 6.8 per cent in 2017 and of the HAI, a country must have a score of 66 or
2018. But declining exports, falling remittances and above. Bangladesh's score is now 72.8 ; well above
rising food (especially rice) price inflation may result in the threshold. In the economic vulnerability index
lower than expected growth. However, there are (EVI), a country's score has to be 32 or below.
other risk factors that need to be factored in, such as Bangladesh's score is 25 in the EVI, an indicator of
early floods, the Rohingya refugee influx, the political natural and trade-related shocks.
uncertainties in the run up to elections in 2019, delays
History of SBAC Bank Limited:
in fiscal reforms , very low productivity, industrial
unrests and rising energy prices in projecting the South Bangla Agriculture and Commerce Bank
future growth rates. But the ongoing infrastructure Limited was incorporated in Bangladesh as a Public
development may help drive growth rates to a higher Limited Company (limited liability by shares) on
level in 2018 and beyond. February 20, 2013 under the Companies Act 1994. It
obtained license from Bangladesh Bank for carrying
The growth drivers in Bangladesh are likely to benefit
out banking business on March 7, 2013 under Bank
from the improved global outlook. Exports and
Companies Act 1991 (amended up to 2013). The
remittances are projected to recover to still below their
Bank has been carrying out its business through its
historic double digit averages. This together with the
sixty four (64) branches all over Bangladesh. SBAC
damages caused by floods to agricultural output and
Bank Limited started its banking operation on April 28,
infrastructure will drag growth down in FY18 to 6.4
2013 with the firm commitment of excellent customer
percent followed by a rise back to 6.7 percent in
service with a difference. Its vision remains to be the
FY19. Inflation is likely to increase due to overheating
best private commercial bank in Bangladesh in terms
resulting from the excess of actual growth over the
of efficiency, capital adequacy, asset quality, sound
potential growth rate and adverse supply shocks. But
management and profitability having liquidity. The
prudent monetary policy is expected to keep inflation
bank has now richly decorated 64 branches located at
bearable. External current account deficit will persist,
important places of Bangladesh with full-fledged
making exchange rate flexibility more important.
online facilities (another 10 branches are under
Budget deficit will rise and not just because of election
process to open within June 2018).
pressure on public expenditures and revenue
mobilization. The public debt to GDP ratio is projected Area of Principal Activities of SBAC Bank
to rise as well, but remain below levels that may start Limited:
worrying the creditors. Downside risks include the The principal activities of the bank are banking and
resurgence of political instability in the run up to related businesses. The banking businesses include
elections in early 2019 and a hardening of credit deposits taking, cash withdrawal, extending credit to
constraints with increased insolvency of banks due to corporate organizations, organizing syndication
rising NPLs. Excess liquidity and reduction in fiscal deals, retail and SME financing, trade financing,
space through cost inefficient domestic financing of project financing, agro-based project financing,
budget deficit present latent risks agriculture loans, green financing, lease and hire
In a major leap forward, Bangladesh has become purchase financing, remittance services,
eligible to graduate to a developing country from a international trade financing etc.
least developed one as it has met all the three criteria Capital Management:
for the first time for getting out of the LDC bloc. The
Committee for Development Policy (CDP), a United Capital management of the bank is based on the
Nations panel, made an announcement on the objective to maintain an adequate capital base to
country's eligibility at a meeting at the UN support the projected business and regulatory
headquarters in New York. The three criteria are requirement. This is done by drawing an annual
Gross National Income (GNI) per capita, Human planned business growth vis-à-vis capital
Assets Index (HAI) and Economic Vulnerability Index requirement.
(EVI). According to the UN's graduation threshold, the As per guidelines of Basel III, minimum capital
GNI per capita of a country has to be $1,230 or above. requirement of the bank is 10% of Risk Weighted

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Assets (RWA) or Tk. 400.00 crore whichever is spread across 45 countries. The Bank maintains 14
higher. RWAs is calculated considering 03 three risks Nostro Accounts in 8 major currencies with reputed
i.e., credit risk, market risk and operational risk. international banks around the world in all the
Besides at the end of December 2017, bank has to important global financial centers. The bank also
maintain capital conservation buffer by 1.25%, which enjoys credit lines from the correspondent banks for
will be gradually increased to 2.50% at the end of adding confirmation to letter of credit as and when
December 2019. On December 31, 2017 Risk needed which is facilitating international trade.
Weighted Assets of the Bank stood at Tk. 4,238.97
Bank has introduced Automated Sanction Screening
crore. Total eligible capital stood at Tk. 701.27 crore
system of Flora Bank CBS for filtering all messages
against minimum requirement of Tk. 423.89 crore
(10% of RWA), i.e., bank able to maintain excess and transactions which helped us to reach
capital of Tk. 277.38 crore as on December 31, 2017. international standard to address concern relating
Capital to Risk Weighted Asset Ratio (CRAR) stands AML/CFT. Moreover, to ensure strict compliance of
to 16.54% on that day in which Tire 1 capital to Risk Trade Based Money Laundering and combating
Weighted Asset Ratio was 15.31% (Tk. 648.82 crore) terrorist financing, Bank has also implemented fully
against minimum requirement of 6.00% and Tire 2 automated SWIFT owned Sanction Screening system
capital to Risk Weighted Asset Ratio was 1.24% (Tk. at our SWIFT Server to screen all incoming and
52.45 crore). outgoing transactions related to foreign trade. This
screening solution has been procured from SWIFT,
Trade Finance: Belgium and the solution is considered as the most
Our Bank has a well equipped International Division robust sanctions screening system. The solution will
(ID) which is a vital part of the trade business of the scrutinize all the SWIFT messages as per sanctioned
Bank and plays a strong role in overall supervision list of OFAC, UN, EU, UKHMT, HKMA, AUSTRAC,
and control of foreign trade and foreign exchange BFIU etc.
business of the Bank. The division is looking after
Here is glimpse of correspondent banking of SBAC
Correspondent Banking Relationships, Trade
Bank Ltd:
Processing Unit, Treasury Back Office, Trade
Settlement& Regulatory Reporting Unit and Inward
Wage-earner Remittance Unit. The foreign trade
business of the Bank operates through 6 (six)
Authorized Dealer (AD) branches in important
commercial hubs of the country including a
centralized Trade Processing Unit at Head Office to
handle the trade transaction of Non-AD branches. A
large pool of bright and dedicated professionals
having international certification on trade products
and procedures in foreign exchange business of the
Bank using state of the art technology.
Correspondent Banking: Import:
Correspondence Banking is the main international Import from overseas is essential in order to meet
contact point of the Bank. SBAC Bank Ltd has been people’s need as well as industrial needs. It is
maintaining fervent correspondent banking mentionable that Bangladesh is an Import based
relationship with internationally reputed banks to economy though its export volume is increasing over
facilitate foreign trade and other international the last decades. Import customers of SBAC Bank Ltd
transactions such as advising, confirmation, are various types among them export oriented
reimbursement of L/Cs, discounting of bills, garments industry, and general traders are
international transfers, documentary bills collection, remarkable. The main import items includes rice,
guarantee etc. As on 31st December 2017, the wheat, onion, Garlic, mustard oil cake, assorted food
number of foreign correspondents is 171 Banks items, fresh fruits, poultry feeds, medical equipment,

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chemicals, motor vehicles, coal, bicycle parts, remittance inflow from the expatriate Bangladeshis.
computer parts, raw cotton Polyester yarn, packaging We are the pioneer of having tie up with an exchange
materials, raw materials and capital machinery of company as a direct agent for remittance business
export oriented industry. They mainly Import from among the new generation Banks. We have direct
USA, UK, China, Taiwan, Singapore, India, Ireland, drawing arrangement with Aman Exchange Company
Germany, UAE, Dubai, Qatar, Thailand, Indonesia, WLL, Kuwait, Wall Street Finance LLC, USA,
Malaysia, Canada, Finland, Italy, and Japan. In the Al-Ansari Exchange LLC, UAE, Worldwide West 2
year 2017 SBAC Bank Ltd handled BDT 25854.40 East Services Ltd, UK,( A/C: Sha Global), and LCC
million (equivalent USD 310.19 million) import Trans-sending Ltd, UK ( A/C: Small World). In the
business from 4503 number of Documentary year 2017, the Bank received BDT 2294.60 million
Credit/LC. Import volume in the year 2016, 2015, and (equivalent USD 27.86 million) as wage earners
2014 was BDT 17596.80 million ( equivalent USD remittance. Remittance figure was BDT 1199.76
219.96 million), 10942.10 million ( equivalent USD million (equivalent USD 15.25 million) in the year
137.64 million) and 7969.00 million ( equivalent USD 2016, BDT 269.40 million (equivalent USD 3.43
100.24 million) respectively. million) in the year 2015, and BDT 70.60 million
(equivalent USD 0.90 million) in the year 2014
Export:
Export and economic growth of a country is directly Here is a graphical presentation of Foreign Exchange
related to each other. If export increases at a faster Transaction during last four years:
pace as compared to import, economic development
is being happened.Lower export contributes lower
foreign exchange thus a lower purchasing capacity of
a nation. In order to patronize the exporter as well as
the economy of the country and to boost up income
from export financing activities SBAC BANK Ltd
adopted export friendly trade strategy. RMG (Ready
Made Garments) sector is the largest sector of foreign
currency earnings of the country. Our exporter mainly
exports their manufactured items destined to UK,
USA, Canada,Hongkong,Germany,Turkey, Poland,
Norway, Denmark, Russia, Dubai, Japan, Italy,
Switzerland, France, Greece, Netherland and India.In Fig: Foreign Exchange Business Performance
the year 2017 SBAC Bank Ltd handled BDT 11361.00 (Amount in Million USD)
million (equivalent USD 138.03 million) export
business from 4634 number of export documents. Anti-Money Laundering:
Export volume in the year 2016, 2015, and 2014 was Money Laundering(ML) and Terrorist Financing (TF)
BDT 8760.31 million ( equivalent USD 110.89 million), is considered as vital issues and threat to all over the
9905.70 million ( equivalent USD 126.19 million) and world as well as our country. For strengthening the
5662.20 million ( equivalent USD 72.13 million) AML/CFT activities Bangladesh Government has
respectively.
enacted Money laundering Prevention Act-2012
Remittance: (Amended in 2015) and Anti-Terrorism Act-2009
(Amended in 2012 & 2013). In view of prevailing ML &
Remittance is the second most important sources of
TF scenario of the country, Bangladesh Financial
foreign exchange earnings for Bangladesh after
Intelligence Unit (BFIU) of Bangladesh Bank has
readymade garments (RMG).Bank is a legal channel
been issuing circulars/guidelines from time to time to
for remittance procurement. As central bank
strengthen AML & CFT compliance to protect the
Bangladesh Bank always encourage scheduled
banks to procure remittance through banking interest of the banks as well as the country as a
channel. SBAC Bank Ltd is also committed to handle whole.

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‘Money Laundering and Terrorist Financing Risk

Management Guidelines issued in September, 2015
has been mandatory for the scheduled banks to
implement within June, 2016. SBAC Bank Ltd. has
formulated and implemented AML and CFT Risk
Management policy Guidelines in December 03, 2015
in compliance with the rules, regulations, guidelines as
enacted by the competent regulatory authorities.
Activities on Anti-Money Laundering Division during
the year 2017 include:
Workshop on Prevention of Money Laundering and
• A message was circulated from the desk of Combating Financing of Terrorism.

the Chief Executive Officer on January 01,

2017 to all employees of the Bank • As per requirement of AML Division,
emphasizing compliance of AML issues; Training Institute has been regularly
arranging training programs on AML/CFT
• They are advised to submit Reports to the
for new coming Officers at the time of
Chief Executive Officer on half yearly basis
foundation program.
regarding AML/CFT Activities;
• Organized quarterly meeting by Central
• Conducting refresher sessions round the
year for updating knowledge of the Money
Compliance Committee on AML issues
Laundering Prevention and Anti-Terrorism
and activities;
with special focus on recent various
• Introduction of uniform Account opening Circulars of BFIU and current topics of
form as prescribed by Bangladesh Bank country and world in this regard.
with Bangla version;
• Internal Audit & Inspection teams have
• Review and update KYC profile and conducted AML Inspection on our Branches
Transaction Profile on periodical basis; to find out lapses in AML/ CFT issues.
• Reporting of Cash Transaction Report • Surprise visits have also been done by
(CTR) and Suspicious AML Division on our 14 Branches to
Transactions/Activity Report (STR/ SAR) detect& rectify weakness in AML/CFT
to BFIU on regular interval; activities as well as conducted discussion
• Collection and review of the meeting at branch premises to build up
self-assessment and independent testing awareness among the employees.
procedure reports from all of the Branches • Follow up and monitoring of Audit reports
and took corrective measures as and (related to anti-money laundering) as and
when required; when received from the Bank’s Audit &
• AML Division continuously communicates Inspection Division and external auditors
with branches for improving their AML & of the Bank.
CFT compliance culture through • Introduction of Automated Sanction
identifying needs and directing branches Screening Solutions for screening the
as and when required and responding to information of on boarding customers,
queries of branches. periodical screening of existing customers,
• AML Division through Training Institute has screening of all cross-border transactions
arranged several Training Programs in including outward & inward SWIFT
Dhaka, Bogra and Chittagong regions messages and remittances.
where total 164 participants received day • Distribute leaflets among customers to make
long training on Prevention of Money them aware about money laundering and
Laundering and Combating Terrorist terrorist financing and also arrange to stick
Financing. postersinevery branch at a visible place.

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Treasury Operations: Money Market Desk:

SBAC Treasury is engaged in management of This Desk mainly deals with products like Call money,
liquidity risk, interest rate risk and foreign currency Term money, Repo, Reverse Repo, BB Bill and FX
risk within the laid down policies and guidelines of swap. Our Treasury has been very active in interbank
Bangladesh Bank. Functions of Treasury are broadly money market through superior forecasting of the
divided into Money Market Desk, Fixed Income market, managing liquidity gaps and contributes
Investment Desk, Foreign Exchange Desk, Asset significantly to the bottom line the Bank.
Liability Management (ALM) Desk. Core
Money market remained highly liquid all through the
responsibilities of Treasury operations are
2017.Central Bank kept the reverse repo window
maintenance of statutory requirement i.e. CRR, SLR,
closed leading all scheduled Banks to park their
ADR, LCR, NSFR, Commitment, Wholesale
surplus liquidity in Bangladesh Bank bills of 7-day,
Borrowing and NOP limits. In the process of liquidity
14-day and 30-day tenors whose returns hovered
risk management, Treasury arranges funds both in
around 3.00%. Most market participants were in
LCY and FCY. While as an interest risk manger,
lending side keeping average call money rates below
Treasury focuses on maturity management of both
4.00% throughout the year while most deals were
loans and deposits in line with bank’s risk appetite.
settled around 3.75%.
Being a primary dealer, SBAC Bank performs its
responsibility as an underwriter to government Average Call Money Rate:
securities. SBAC Treasury provides an array of
Treasury products at competitive prices and superior
services with a dynamic and innovative workforce. It
has been performing consistently over the years with
respect to contribution to Bank’s profitability.
Despite the challenges of 2017, SBAC Treasury has
done considerably well by exercising diligence and
proper execution of its strategies. To ensure market
stability and to maintain the pace of economic growth,
Fixed Income Investment Desk:
Bangladesh Bank has taken several measures in
2017, which are as follows: SBAC Bank Fixed Income Desk deals with products
• To mop up the excess liquidity and to keep like Treasury Bills, Treasury Bonds. This Desk makes
the interest stable, Bangladesh Bank interest rate forecast and take position on
continued its sterilization operation through Government Securities. Active participation in
the auction of BB Bill of 30days, 14 days and secondary market through trading of government
7 days tenor. securities generated substantial capital gain in 2017.
• BB has adopted the accommodative Apart from that, we were able to successfully utilize
monetary policy to bring down the lending new facilities provided by Bangladesh Bank for the
rate to single digit to stimulate credit growth development of secondary trading like TWS (Trader
for speeding up economic activity. Work Station). SBAC Treasury is always active in
capturing trades with corporate clients in government
• Bangladesh Bank continues its participation
Treasury securities.
in the domestic foreign exchange market as
required for stabilizing foreign exchange rate
(USD/BDT) to boost up export and remittance
Yield Curve Comparison of GSECs
flow.
In the year 2017, there was no CRR/SLR shortfall and
no breach of Net Open Position (NOP) limit. Treasury
successfully used all types of money market and
foreign exchange instruments to ensure optimum
balance sheet spread.

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Foreign Exchange Desk: managed effectively. The ALM function comprises

management of liquidity, maturity profiles of assets and
Foreign Exchange Desk continuously makes forecast
liabilities, interest rate risks and Forex risk. ALM Desk
about movement of future exchange rate and
officials prepare ALCO paper incorporating local and
maintains its open position accordingly within the limit
international economic updates, market liquidity
USD 12.66 Million. This Desk minimizes foreign
forecasts, interest rate projections, balance sheet
exchange risk-potential due to change in market prices
analysis and recommend measures to be taken to
through proper market forecasting. It engages into
optimize balance sheet whether to reduce or increase
basic foreign exchange activities related to imports,
deposit and lending rates. ALM Desk guides ALCO in
exports and remittances which generated income for
changing lending and deposit rates with proper
the Bank.
analytics and better forecasts. In 2017, effective and
FX market was relatively tight throughout 2017 but timely change in rates by ALCO played a crucial role in
USD/BDT pair started going rocket high from the significant growth of NII. A new ALM policy has
September and persisted up to December. Central been formulated by ALM Desk keeping BASEL III
Bank intervened in the FX market to keep export liquidity ratios (LCR & NSFR) in mind and central
competitiveness as china and India; two major export bank’s ALM guidelines into active consideration.
competitors devalued their currencies. Remittance Change in deposit mix reducing dependency on term
flows slowed as rates in informal market was higher deposits can reduce substantial costs.
than the rate in formal market. To encourage routing of
Improvement of efficiency is a continuous process and
remittance through formal channel, Central Bank was
SBAC Treasury is always learning form the market and
in favor of pushing rates up in the formal market.
getting updated time to time.
Corporate houses intended to hedge their future
payments which pushed demand further. All turned Information Technology:
USD/BDT rates up.
Over the last 5 years, SBAC Bank has built a solid
NOP & Exchange Rate Movement during the Year: technological backbone that is standardized, resilient
and scalable. Today, we have a common platform of
services that enable us to integrate best-in-breed
technologies and embraced the practices of global
technology companies in design and technology –
adopting agile methodology, user interface and
human-centered designs to develop front-end
applications. We continued to enhance and invest in
information technology infrastructure as an enabler to
serve customers better and minimize technology
disruptions. So we have continuous endeavor to bring
more value to our customers by way of implementing
Asset Liability Management (ALM) Desk:
technology innovations.
The Bank has separate ALM Desk under Treasury,
The Bank has undertaken various technology enabled
which supplies economic, market and Bank
business initiatives to realize the vision of customer
information and analysis to asset liability Management
centricity and to respond to customer demand in real
Committee (ALCO) for taking strategic decision.
time by knowing its customers and their behavior. The
ALCO, which meets at least once in a month, is
bank is leveraging implementation of Digital Banking
responsible for managing balance sheet compositions,
App, Mobile Wallet and automation of technology,
determining interest rates to increase efficiency,
which will enable us to be nimbler, more FinTech-like
managing liquidity and interest rate risks and
and faster to market in delivering cutting-edge
maximizing returns.
solutions.
Change In interest rate, exchange rate and market
For the Core Banking System, new enhancements
liquidity may expose the Bank to risks and may
were implemented to improve operational efficiencies
threaten the survival of the Bank as well if not

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and provide better control and monitoring capabilities. To remain on the leading edge of the digital banking
The Bank has equipped itself with state-of-the-art revolution and to meet the ever changing expectation
infrastructure management systems and support trends of consumers, SBAC Bank is continuing to
equipment in order to achieve best possible usage of harness its information management and analytics
power. The Bank strengthened its backup system to capabilities to provide a superior experience to
improve backup services and move towards better customers, digital innovations and efficiency in
compliance and backup governance. Technology processes. Bank has been undertaking regular
enabled solutions were deployed by the Bank which capacity planning and upgrades to support growing
ensured high availability of critical applications along demand of business.
with enhanced performance.
ATM & Cards Services:
Our Bank has best of technology infrastructure where
state-of-the-art Data Centre and Disaster Recovery The journey of Card Division has started with the
Site have been built in different seismic zone in order to commitment of providing service excellence, offering
avoid single point of failure and ensure uninterrupted unique and versatile Card products to its clients
banking service delivery to customers. In addition to through updated technological facilities. To achieve the
the Disaster Recovery Centre, Bank has also vision and commitment & for providing the customer an
implemented the Near Disaster Recovery Centre to uninterruptable round the clock transaction facilities,
ensure Near Zero Data Loss as part of its Business SBAC Bank launched ATM/CDM services along with
Continuity Planning and Disaster Recovery strategy. Debit card operations on 9th March 2014 with the
In order to protect sensitive customer information and technical assistance of country’s largest ATM & Card
transactions, the Bank has put in place a robust service provider ITCL (IT Consultants Ltd). ITCL
information and cyber security system by consists with more than 33 consortium banks and
implementing a gamut of security controls. The list approximate 2000 shared ATMs are connected in this
includes firewalls, intrusion prevention system, data network all over the country.
rights management, data leakage prevention, So far SBAC bank deployed 22 ATMs, 2 CDMs in
anti-email spoofing framework, security analytics, different branch locations of the country and more
advanced behavior based anti-malware solution and ATMs are yet to be set up with new and existing
dynamic URL filtering solution.
branches soon. Though initially we have introduced
Over the years, Bank has built a strong foundation of Proprietorship Debit card but for wider acceptability
cyber security comprising a comprehensive set of and ensure more security, we have introduced VISA
information security measures to counter against Debit & Credit Cards for our customers. Till the date we
cyber-attacks. To further strengthen security posture, have issued 16,000 Debit Cards & approximately 700
Bank is in process of implementing advanced credit cards.
technology solutions in the area of Network Security,
Server Security, Application Security and Security
Analytics. Bank has captive Security Operations
Centre, which is equipped with advanced tools to
monitor Cyber security events. Out Security operations
centre continuously monitors activities on Servers,
Network devices, Security devices, Critical databases
etc. for security violations. In compliance with Central
Bank mandates, ATM security and surveillance were
enhanced with new anti-skimming devices adding
further protection for ATMs. Security enhancements
were also implemented on all online banking channels Opening Ceremony of an ATM booth.
to mitigate the risk of cyber-attack.

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VISA Membership: For issuing credit cards, it is a VISA Platinum Multi Currency Credit Cards.
pre-requisite to have affiliation with International
We have also customized products for frequent
payment processing organization like VISA,
travelers and Businessmen, like International Credit
MasterCard or Amex. This type of affiliation is not only
Card against RFCD account and ERQ account.
helpful for payment processing but also improves the
However with complete range of Credit card products
image, marketability and rating of the bank towards
SBAC bank cardholders can enjoy seamless
local and international financial institutions. As VISA is
shopping, dining, health service and other services
a well-accepted international payment brand and has
from different service outlets all over the country.
a larger market share in local & international card
market, so initially we have pursued with VISA We have also introduced multifactor authentication &
worldwide for their affiliation and membership. On 1st OTP (one time password) for online purchase, hotel
March 2016 we have got Associate Membership from booking, railway ticket purchase and e-commerce
VISA Worldwide Pte. Ltd. After completing all sorts of transactions to protect fraudulent transactions and
formalities and system level parameter settings in un-authorized use of cards. Our Card also support
Card Management system, we have started issuing dynamic currency transaction by which our
VISA Debit & Credit Cards from 9th June 2016. international cardholder can by online game or
software.
Implementation of EMV Chip Card: EMV is a global
standard for credit and debit cards based on chip card Card Loyalty Program: Under corporate discount tie
technology. The standard covers the processing of up program our valued cardholder can enjoy
credit and debit card payments using a card that privileged services and attractive discounts while
contains a microprocessor chip. These transactions using their Debit & Credit cards in selected merchant
are often referred to as "Chip and PIN" because PIN outlets including Hospitals, Hotels, restaurants and
entry is required to verify the customer is the genuine shopping malls. Customer can enjoy interest free EMI
cardholder. Rather than physically signing a receipt (Equal Monthly Installment) facility for purchasing
for identification purposes, the user just enters a goods or services from selective merchant outlets.
personal identification number (PIN). This number Cardholder can also enjoy EMI facility of his/her
must correspond to the information stored on the chip. card’s un-used balance with an attractive &
Chip and PIN technology makes it much harder for competitive interest rate.
fraudsters to replicate the card, so if someone steals Other facilities: We have fund transfer facility with
a card, they can't make fraudulent purchases unless reduced flat interest rate, customer can avail this
they know the four-digit PIN. facility by using their Card Cheque, SBAC Bank
So to protect the cardholder’s transactions from the account transfer, other bank account transfer through
fraudster and secure the card data, we have BEFTN.
implemented the latest processor based card 24 Hours Customer service: To provide 24 hours
technology for our valued cardholders. seamless card services, we have introduced 24 hours
Joining to National Payment switch (NPSB): To comply customer service with intelligent monitoring tools. Our
& accommodate with the great initiative of Bangladesh customer service are providing 24 hours support to
Bank, we have joined National Payment Switch the cardholder by answering their query and
Bangladesh (NPSB) In October 2014. As a result our executing the requests. We are going to introduce call
Cardholder can withdraw cash from any Bank ATM center solution and interactive chatting apps for our
countrywide, at the same way other Bank Cardholder customers soon applying artificial intelligence and
can withdraw money from SBAC Bank ATMs. Now historical data.
SBAC Bank Cardholder can get access to more than E statement & SMS alert: SBAC Bank provides
7,600 ATMs countrywide for using their Debit cards. E-statement and SMS alert for every transactions,
Introducing VISA Debit & Credit Cards: After having statement notification, payment alert and greetings
VISA membership licensing we have introduced latest SMS to all Credit Cardholders. By SMS transaction
technology based EMV Debit & Credit Cards for our notification a cardholder can secure his/her card from
valued customers. We have implemented a full range un authorized or fraudulent use.
of Credit products like 1) SBAC VISA Classic Credit For ensuring more security and providing customized
Card 2) VISA Gold multi currency Credit Card & 3)

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features to our card holders, SBAC Bank is working Bank & its Agent registering growth of 14.14 percent.
for implementation of own processing card centre with The growth in deposits increased the Cash Reserve
world class card management system with robust Requirement of the bank which is maintained with the
switch, ATM & POS controller. Transforming the Bangladesh Bank and its agent.
conventional banking in digital banking & diversifying
Balance with other banks and financial
the present banking products, expansion of ATM &
institutions:
CDM network, installation of ATMs to all branches and
prime public places are under process. The position of balance with other banks and
financial institutions is Tk. 4,147.77 million in 2017 of
Corporate Sustainability:
which Tk.4,001.75 million in Bangladesh and
In respect of corporate sustainability, SBAC Bank Tk.146,02 million outside Bangladesh as against Tk.
Limited has focused on specific key areas namely, 6,346.27 million in 2016 of which Tk. 6,211.06 million
nation building, and enhancement of market place, in Bangladesh and Tk. 135.21 million outside
promotion of the work place, support to the Bangladesh. The balance with other banks and
community and protection of environment. financial institutions in Bangladesh increased by Tk.
1,012.79 million (Tk. 6,346.26 million - Tk. 5,333.47
Performance of SBAC Bank Limited In 2017:
million) in 2016 due to investment in Government
Performance of the Bank In 2017: Securities . The balance in outside Bangladesh
South Bangla Agriculture and Commerce Bank increased by Tk. 10.81 million (Tk.146.02 million – Tk.
Limited along with eight other new Banks started its 135.21million) in 2017 due to increase in both number
journey in 2013 which heightened the competition in and balance of nostro accounts maintained with
the Banking arena. Despite various challenges, the overseas banks. Adequate funds were maintained
Bank has been able to record progress in almost all with correspondent banks for payment against LC
the areas of operation in 2017. The bank earned Tk. commitments.
1,819.30 million operating profit, maintained Investment:
adequate capital adequacy ratio, established branch
The position of Investment of the Bank is Tk. 6,390.88
network, upheld asset qualities. Trade finance,
million in 2017 as against Tk. 4,681.49 million in 2016.
remittances and other ancillary businesses have also
The investment increased during the year 2017 by Tk.
been expanded compare to the operation in 2016.
1,709.39 million (Tk. 6,390.88 million - Tk. 4,681.49
The Financial performances of the Bank are as follow:
million). The bank purchased government treasury
Total Assets: bills to cover the increased SLR requirement and for
Total assets of the bank stood at Tk. 58,940.78 million high yield. In addition, as a primary dealer, Bank had
in 2017 as against Tk. 45,599.98 million in 2016 to buy government treasury bills/bonds which were
registering a growth of 29.26 percent. The increase in devolved by Bangladesh Bank.
assets was mainly driven by growth of customer Loans and Advances:
deposits. The growth of deposits was used for funding
The SBAC Bank Limited since its inauguration has
growth in credit and holding of securities for SLR
been trying to select good borrowers/projects by
purpose and as a primary dealer. The economy
offering its better customer services to finance and
witnessed a satisfactory growth scenario in credit and
came out successful in 2017. The loans and
deposits mobilization.
advances stood at 43,284.97 million in 2017 against
Cash and Balance with Bangladesh Bank & its Tk. 30,174.09 million in 2016 registering growth of
Agent: 43.45 percent. The growth of deposits was used for
The position of Cash and Balance with Bangladesh funding growth in credit. Yield on loans and advances
Bank & its Agent of the bank is Tk. 3,524.05 million in of the Bank decreased to 12.67 percent from the level
2017 of which Tk. 463.17 million in the form of cash of 14.80 percent of previous year due to decrease of
and rest of Tk. 3,060.88 million held with Bangladesh lending rates.
Bank & its Agent as against Tk. 2,709.47 million in To minimize risks, the loan and advances has been
2016 of which Tk. 351.41 million in the form of cash given to diversified sectors. The sector wise
and rest of Tk. 2,373.81 million held with Bangladesh disbursed loan and advances are shown below:

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Liabilities: in 2017 as against Tk. 39,983.65 million in 2016

registering growth of 25.35 percent. The growth was
The liabilities (excluding equity) of the Bank stood at
supported by branch network and high standard
Tk. 52,401.79 million in 2017 of which Tk. 50,121.49
service provided to customers along with concerted
million (95.64%) was deposit and rest Tk. 1,881.89
and unwavering efforts of the employees of the Bank.
million (4.36%) was borrowing & other liabilities as
Fixed deposits remained the main component of
against Tk. 39,983.65 million in 2016 of which Tk.
deposits contributing 76.71 percent of the total
38,337.20 million (95.87%) was deposit and rest
deposits. Interest cost of deposit increased to 6.69
Tk. 1,364.39 million (4.13%) was other liabilities
percent as against 6.34 percent as against of the
registering growth of 25.70%. The increase in liability
previous year as a result of increase in rates of high
was mainly due to growth in deposits. The borrowings
cost term deposits fueled by the liquidity position in
from other banks, financial institutions and agents
the market. The clientele group of the Bank was
stood at Tk. 398.41 million in 2017 which represents
individuals, corporation, NGO, NBFI, government
Bank’s borrowing from Bangladesh Bank under
bodies etc.
various Refinance Scheme & EDF.
The Growth and Deposit Mix of the Bank is as follows:
Deposits:
The deposits of the Bank stood Tk. 50,121.49 million

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Shareholders’ Equity: Interest Income:

The shareholders’ equity of the Bank stood Tk. The interest income stood at Tk. 4,764.89 million in
6,538.99 million in 2017 as against Tk. 2017 as against Tk. 3,843.96 million in 2016 showing
5,616.33million in 2016 registering growth of 16.43%. growth of 23.96 percent. Interest income consists of
The shareholders’ equity of the Bank consists of Interest earned from loans & advances amounting Tk.
Paid-up capital, Statutory Reserve, Revaluation 4,343.00 million and Interest received on FDR & SND
Reserve on Govt. Securities and Retained Earning account kept with other banks and financial
.The strong growth in shareholders’ equity will help institutions amounting Tk. 421.89 million. The
the bank to expand its business. reasons for growth of Interest Income are due to
increase of loans and advances and investment in
Total Property & Assets & Total Liabilities And
banks and financial institutions. Details of Interest
Shareholders’ Equity of the Bank
Income are as follows:
Amount in million Taka

Interest Expense:
The interest expense stood at Tk. 2,802.47 million in
2017 as against Tk. 2,307.33 million in 2016 showing
growth of 21.46 percent. Interest cost of deposits was
the main component of interest expenses whereas

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interest cost of borrowings also had impact in 2017. percent. The growth was due to overall growth of
Interest cost of deposits increased to 6.69 percent in banking business of the bank in 2017.
2017 from 6.34 percent in the previous year due to
Total Operating Income:
increase in rates of interest on deposits arising from
high liquidity in the market. Moreover, high liquidity in The operating income stood at Tk. 3,476.12million in
the market induced the bank, a Primary Dealer, to go 2017 as against Tk. 2,961.35 million in 2016 showing
for mobilization of deposits at low cost. Details of growth of 17.38 percent. The operating income
Interest Expense are as follows: increased due to increase in interest income, investment
income and other operating & non interest income.
Total Operating Expense:
Total operating expenses include salary and
allowances, rent, taxes, insurance, electricity, legal
expenses, postage, stamp, telecommunication,
stationery, printing, advertisement, Managing Director's
salary and allowances, Directors' fees, Auditors' fees,
depreciation, amortization and repair of fixed assets etc
which stood at Tk. 1,656.82 million in 2017 as against
Net Interest Income: Tk. 1,441.46 million in 2017 registering growth of 14.94
The net interest income stood at Tk. 1,962.41 million percent. The item wise expenses including Directors
in 2017 as against Tk. 1,536.63 million in 2016 fees are disclosed in the Financial Statements section
showing growth of 27.71 percent. Net Interest Income of this Annual Report. The operating expenses
increased due to increase in Interest earned from increased during the year 2017 mainly due to increase
loans & advances and Interest received from Banks & in manpower expenses for 10 new branches and other
Financial Institutions and decrease of interest operating expenses. The bank has recruited efficient
expense on deposits. Officials to perform the banking activities. The total
regular employees of the Bank stood at 716 as on
Investment Income: December 31, 2017. The productivity of the employees
The investment income of the bank consists of is measured in the following ratio:
interest / discount earned on treasury bills / bonds, (Amount in Million Taka)
gain on government security trading, dividend
received on shares and capital gain from sale of
securities of listed companies. The investment
income stood at Tk. 1,006.84 million in 2017 as
against Tk. 1,143.57 million in 2016. Net Interest
Income decreased due to decrease in Investment in
Government Securities and capital gain on sale of
shares of listed companies.
Non-Interest Income & Other Operating Income:
Non-interest income consists of Commission,
Exchange earnings, Brokerage etc and other
operating income consists of appraisal fees, accounts Provision of Classified Loans (Specific provision):
maintenance charge, postage & SWIFT recovery
In 2017, the amount of Non Performing Loan (NPL) was
charge etc. The Non-Interest Income & Other
Tk. 375.15 million. The specific provision for classified
Operating Income stood at Tk. 506.87 million in 2017
loans for the year 2017 was Tk. 82.92 million.
of which Tk. 281.14 million was non-interest income
and Tk. 87.88 million was other operating income as General Provision:
against Tk. 68.12 million in 2016 of which Non-interest
The provision against unclassified loans and
income was Tk. 213.02 million and other operating
advances including off-balance sheet exposures was
income was Tk. 68.12 million showing growth of 80.29
made to the tune of Tk. 598.64 million during 2017 of

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which Tk. 481.00 million was made for unclassified million in 2016. The requirement was increased due
loans and advances and Tk. 117.64 million was made to increase of net profit before tax in 2017.
for off- balance sheet exposures as against Tk.
Net Profit after Tax:
302.27 million in 2016 of which Tk. 209.82 million was
made for unclassified loans and advances and Tk. Net profit after tax stood at Tk. 982.06 million in 2017
92.45 million was made for off- balance sheet as against Tk. 949.45 million in 2016 showing growth
exposures. The additional requirement of General of 3.43 percent. The growth was due to overall growth
Provision was required due to increase in loans & of banking business of the bank in 2017. EPS, ROA
advances and off-balance sheet exposures. and ROE stood at Tk. 1.97, 1.88 percent & 16.16
percent respectively in 2017 as against Tk. 2.19, 2.31
Provision for diminution in value of investment:
percent and 16.90 percent respectively in 2016.
The was no provision for diminution in value of
Statutory Reserve:
investment for the year 2017 since there was no
diminution in value of investment in 2016. As per Bank Companies Act 1991 (amended in 2013),
20 percent of profit before tax is required to be
Net Profit before Tax:
transferred to statutory reserve. As such an amount of
After making above provisions, net profit before tax of Tk. 303.59 million has been transferred to statutory
SBAC Bank Limited stood at Tk. 1,517.93 million in reserve in 2017 which was Tk. 289.17 million in 2016.
2017 as against Tk. 1,445.88 million in 2016 showing Total statutory reserve stood at Tk. 798.66 million as
growth of 4.98 percent. The growth was due to overall on December 31, 2017 which was Tk. 495.07 million
growth of banking business of the bank in 2017. as on December 31, 2016.
Provision for Income Tax: Operating Performance of the Bank:
Provision against income tax of SBAC Bank Limited
was Tk. 535.90 million in 2017 as against Tk. 496.43
Amount in million Taka

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Corporate Governance: the Board of Directors. Green banking considers all

the social and environmental factors along with
The bank adheres strictly to the regulatory guidelines
financial priorities with an aim to protect the
on corporate governance. Details of Corporate
environment as well as to foster the economic
Governance of the Bank are given in the
development in a more environment friendly way. It is
“CORPORATE GOVERNANCE” section of this
an opportunity to make a positive contribution to
Annual Report.
environmental and social concerns by enacting
CSR Acitivities: policies designed so that the business operations do
The Bank is a socially responsible corporate citizen. not degrade the environment or turns harmful for the
We are committed to work for the people and are society. It covers a multitude of areas from a bank
actively engaged in social projects throughout. The being environment friendly to how their money is
Board of SBAC Bank Ltd. has approved a policy for invested. Details of Green Banking of the Bank are
Corporate Social Responsibility (CSR). Under the CSR given in the “GREEN BANKING” section of this
program, the Bank has a remarkable contribution Annual Report.
towards Education, Preventive and Curative Inclusive Banking:
Healthcare, Emergency Disaster Relief, Financial
Financial inclusion is one of the mottos of SBAC Bank
Inclusion, Community Investments by way of donations
Ltd. It believes in inclusive banking by including the
etc. Under CSR Program the Bank has distributed Tk.
disadvantageous section of the society in the formal
8.10 (eight point one crore) among the areas
financial systems. The bank has introduced Tk.10
mentioned above including Prime Minister’s Relief
privileged savings account, senior citizen savings
Fund 1.75 crore, Muktijoddha Sangshad Krira Chakra,
account and students savings account. Besides the
Father of the Nation Sheikh Mujibur Rahman Memorial
bank has already obtained “AGENT BANKING”
Trust, Muktijoddha Shanshad, Child Day Care Centre
operation approval from Bangladesh Bank which shall
for Private Banks, Prime Minister’s Education
be come in to operation very soon.
Assistance Trust, BN Ashar Alo School & Rehabilitation
Centre (BN Central Welfare Fund) etc. Blankets worth Contribution To National Exchequer:
Tk. 73,60,000 for the cold bitten people, particularly in
Being a responsible corporate citizen, SBAC Bank
the northern districts of the Country.
Limited regularly pays corporate tax on time. We also
(Amount in million Taka) deposit excise duty, withheld tax and VAT to Govt.
exchequer on time deducted from employees’ salary
Particulars 2017 2016 2015 2014
as well as payments to customers and vendors.
CSR 80.98 32.80 6.61 4.64 During the calendar year 2017, our contributions are
as follows:
(Amount in Million Taka)

The Chairman of the Bank handing over cheque to the honorable Prime
Minister’s relief fund as part of CSR program. General Services Performance:
Green Banking:
The General Services Division (GSD) is the office
Under the guidance of Bangladesh Bank and we, responsible for the procurement and acquisition of
being a socially responsible Bank, “A Green Banking supplies and services in support of the Bank’s
Policy” of South Bangla Agriculture & Commerce business as per board approved procurement policy
Bank Limited has been formulated and approved by of the bank.

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GSD works with following objectives: GSD Target in 2018:

• To procure required services, goods, materials • Expanding our network through inauguration
and equipments by ensuring quality, safety, of new Branches at strategic points around
and cost-effectiveness. Bangladesh.
• To ensure that procurement transactions are • Creating a strong and wide network of ATM
conducted in a manner providing full and booths to create values in the mind of our
open competition whenever practicable. customers.
• To comply with procurement policies. • Strengthening the internal database for asset
• To solicit the participation of all qualified and management.
responsible bidders and suppliers in the • Shifting of our Head Office to Bangladesh
procurement process. Shipping Corporation(BSC) Tower, a
• To enhance accountability of the GSD and its luxurious& lucrative building, for ensuring
participating officers for their procurement modern amenities & customer friendly
decisions and actions. services to the clients through our Branches,
• To assure equity for all parties involved in the which indicatesthe gradual financial growth
procurement process. of our Bank.
• To obtain the best value for the money spent. Human Resources:
• To eliminate the possibility of corruption or
A talented and skilled workforce is the lifeblood of
unethical practices in the procurement
every organization. In support of that, SBAC Bank
process.
therefore aims to create a work environment that
Achievements of GSD for the year 2017: enables employees to realize their full capabilities and
• Commencement of banking operation through build for themselves a fulfilling career. Through the
collecting licenses and NOCs from different Human Resources Division, SBAC Bank Limited is
government organizations. committed to provide human resource leadership and
• Timely inauguration of 10 new Branches expertise that promotes excellence in Banking
around the urban areas as well as rural areas Service built on the values of competence, impartial-
of our country. ity, integrity, respect, and service.
• Introducing more secured newly designed Human Resources Division sets it’s goal to help
security instruments (i.e. cheque leaves) in SBAC Bank Limited achieve its strategic mission,
compliance with Bangladesh Bank while ensuring employees are engaged and moti-
instructions and equipping the branches with vated to help the Bank succeed. HR has targeted its
proper and modern state of the art technology operational initiatives to align to the SBAC Strategic
to make banking more secure for our Plan by converting human resources into human
customers. capital through appropriate knowledge, skills, abilities
• Working as active participant with Bangladesh and personal attribution.
Bank during CSR activities around the
The HR Division has a focus on establish SBAC Bank
extremities of Bangladesh.
Limited as the best employer of choice in the banking
sector by creating an attractive, inclusive and safe
environment that recognizes the talents and encour-
ages employees to take ownership for their profes-
sional and personal growth. HR Division has been
coming up with relentless recommendations and
contributions in each stage of employee life cycle
starting from hiring to retirement. The Division has
undertaken an initiative to align its core HR functions
including but not limiting to attracting, developing,
retaining talents with the strategy of the bank.
The following factors differentiate SBAC Bank Ltd. as
Amin Bazar Branch opening.

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an excellent work place from generally good work

places around the country.
 Compensation & Benefit policy
The Bank offers following financial and non-financial
benefits for the employees of the bank to ensure a
better lifestyle and better career growth.

 Excellent Working environment

A healthy environment has been created where
employees enjoy working with pride. Believing that
human resources are main elements behind success
and future sustainability of the bank, the bank is
developing and motivating the workforce with contem-
porary HR policies and attractive benefits. The bank is
not only offering a job but also creating opportunities
for learning, challenging and rewarding career.
Quality of working relations:
To improve productivity and employee satisfaction,
within four years of journey, SBAC Bank Limited People treat each other as friends, colleagues and
revised its pay scale in 2017. co-workers; support and help each other to get the job
done.
 Diversity in workforce
Having a say:
Human Resource Division is committed to attracting
and retaining a talented and diverse workforce. Employees can participate in decision making
Therefore, the bank is trying to bring diversity in work- process which will build up their confidence and also
force in context of age, gender, ethnicity and locality. help the Bank to get innovative ideas for developing
There is an increasing trend in workforce along with new products and improvement of existing operations
the business and span of service. With 64 branches, in an effective and efficient manner.
the bank is a proud employer of a diversified pull of
 Training, Learning and Development
people.
To transform the human resources into human asset,
Total Workforce by Age Group
South Bangla Agriculture & Commerce Bank Limited
Age: established its Training Institute at the beginning of
Age ranges Age: Age: Total
2014. Since inception, the Training Institute of the
Above 30-50 Below
Bank took initiatives for arranging different training
50 Years Years 30 Years
programs and workshops to turn the employees into
Number of 11 464 241 716
useful and effective workforce. In 2017, the Institute
employees
arranged 01 Foundation Training course for Trainee
Officers where 26 Trainee officers participated and
completed the programs. Another 7 training
programs/workshops were arranged by the Training
Total Workforce by Gender: Institute in 2017 where 270 employees of different
Number of Female Employees 136 grades of the Bank participated. Details of the training
programs/workshops, no. of participants are as
Number of Male Employees 580
follows:
Total 716

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Details of Training Courses/Workshops (In-house)  Recruitment and Selection

held in 2017:
The recruitment and selection unit of HR Division has
carried out a massive talent acquisition during 2017.
Along with developing an internal pool of competent
workforce, HR Division also ensures that there is
steady flow of skilled and experienced employees
from the job market who can deal with the new
challenges of time. HR also contributes in the man-
agement and leadership development in every area of
the bank.
Recruitment in 2017
Particular 2017
Entry Level Entrance 93%
Mid Level Entrance 6%
Management Level Entrance 1%
Total 100%

Instead of simply filling up the employee gap in certain

positions of the bank, the recruitment and selection
team emphasized on the “Best Fit” philosophy that
can assure placing right people in right place at the
right time. For the expansion of Branch Network the
HR Division has facilitated the recruitment for a total
of 67 including both fresh and lateral candidates in
2017.
Annual General Meeting:
Closing Ceremony of Foundation Course.
The 5th Annual General Meeting will be held on May
In addition to Training Institute trainings, Human 10, 2018 at Antara Hall of Radisson Blu Dhaka Water
Resources Division nominated employees training Garden, Airport Road, Dhaka Cantonment,
Courses, workshops and seminars on different topics in Dhaka-1206. The Financial Statements were
different organizations in 2017. A total of 68 employees reviewed and recommended for final approval of the
of SBAC Bank participated in training in different 5th AGM in the 75th meeting of Board of Directors of
resourceful places like BIBM, BAB, Bangladesh Bank, the Bank held March 21, 2018.
BAFEDA, PDBL etc.

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Additional Disclosure as per Corporate Governance

Guidelines issue the Bangladesh Securities and
Exchange Commission (Notifiation No.
SEC/CMRRCD/2006-158/134/ Admin/44 dated 07
August 2012)
An industry outlook and possible future
developments in the industry.
i) Banking Industry Outlook:

A view of the 4th AGM of SBAC Bank. Distress in the banking sector continues. The banking
sector, which dominates the financial sector in
Appoinment/ Re-appoinment Of Auditors: Bangladesh, has continued to struggle. While the
KHAN WAHAB SHAFIQUE RAHMAN & CO., sector’s capital adequacy ratio (CAR) is above the 10
Chartered Accountants was appointed as external percent requirement of the Basel II framework, the
auditors of the bank for the year 2017 in the 4th AGM overall asset quality deteriorated in 2016. Seven
held on May 10, 2017. They have completed 02 (two) banks failed to maintain the regulatory capital
years as external auditors. They have expressed their requirement and this problem is acute amongst the
willingness to continue as external auditors for the State-Owned Banks (SOB). In 2016, the CAR of
year 2018. As per provision of laws they are eligible State-Owned Commercial Banks (SCB) and State
for re-appointment. Owned Development Banks (SDB) was 5.9 percent
and -33.7 percent respectively. The magnitude of their
Election Of Directors:
capital shortfall has prompted the government to once
In compliance with the section 91(2) of the again keep a budgetary provision for their
Companies Act 1994, regulation 79-82 of First recapitalization. Asset quality has deteriorated. The
Schedule of the Companies Act 1994 and Article gross non-performing loan (NPL) ratio increased to
101(2) of Articles of Association of the Bank the 9.2 percent in 2016 from 8.8 percent in 2015
following persons (one third of the Directors) shall (Figure-8). The asset quality of the SCBs continues to
retire from the office of the Directors effective from the remain poor and is the main driver behind the
close of business of the 5th Annual General Meeting deterioration of the asset quality within the sector. In
of the Bank to be held on May 10, 2018 but they will
2016, the NPL ratio for SCBs increased by 3.6
be eligible for re-election:
percentage points whereas it decreased by 0.6
1. Captain M. Moazzam Hossain percentage points for Private Commercial Banks
2. Mr. Maksudur Rahman (PCB). Since 2013, the NPL has continued to rise in
3. Mr. Hafizur Rahman Babu the SCBs which has also been accompanied by a
4. Mr. Anwar Hussain greater concentration of default loans within them.
The rise in NPLs as well as the increase in default
5. Mrs. Tahmina Afroz
loans explain the stickiness of the interest rate spread
6. Ms. Kamrun Nahar within the banking sector. Despite a decline in both
ending and deposit rates, the interest rate spread has
been stagnant at 4.7 percent (Figure 9). Protecting
profitability amidst the default loan culture makes
banks reluctant to decrease the spread on the interest
rate despite holding a high level of liquidity. The
absence of good borrowers and a poor legal
framework to recover default loans has also been
instrumental in the banking sector’s increase in risk
aversion.

Cheif Election Commissioner declaring the result of Election of Directors in

the 4th AGM.

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Crisis in the Banking Sector: Table 4.1: Overall Banking Sector Performance
during 2012-2017
Performance of the banking sector of Bangladesh has
been quite disappointing in recent times (Table 4.1 2016 (J) 2017 (P)
and Figures 4.1-4.4). Track record of many of the
banks has been unsatisfactory. There is a wealth of
empirical research which indicates that the
relationship between financial development and
economic growth is positive However, the banking
sector of Bangladesh has been plagued by financial
scams, non-performing loans, inefficiency, and slack
monitoring and supervision. This has posed serious
threats to the sustainability of the sector. This section
of the IRBD report provides a brief overview of the
situation of the banking sector, highlights a few issues
that are detrimental to the development of the sector
and makes recommendations for way forward.
Overview of performance of the banking sector:
State owned Commercial Banks (SCBs) performed
miserably (Annex Table 4.1) with a dismal record of
large non-performing loans, bad governance, and
embarrassing recapitalisation. The setback from
several major financial scams was taking a heavy toll
on both the health and reputation of SCBs. The fourth
generation banks (9 newly approved commercial
banks) are beset with large amounts of
non-performing loans (NPLs) (Annex Table 4.2) and
are making losses. Research has shown that 65 per
cent of banks faced financial crimes during the years
2014-2016, whilst financial statements of borrowers
was always available to the banks only 17 per cent of
the time. Capital adequacy was still below BASEL III
requirements for some banks, and the prospects of
full BASEL III implementation by 2019 seem bleak.
Two detrimental amendments of dubious nature have
been proposed to the Banking Company Act which
undermined the cause of good governance. The
tenure of board of directors is proposed to increase
from 6 years to 9 years, and up to four family
members would be allowed to be on the Board,
instead of the earlier two per family. These changes
are apprehended to reinforce crony capitalism in a
sector of the economy already impaired by poor
governance. Major changes were made to Islami
Bank management, which had already been suffering
from poor governance, on allegations of terror
financing and political violence. A bank once known to
be a high performer in the banking sector was now in
disarray.

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In the backdrop of consistent private investment, the

classified loans in Bangladesh banking sector had
come down during the first half of FY2017 (to 9.23 per
cent of total loans outstanding) due to several
provisioning and rescheduling measures concerning
bad loans. However, at the end of June 2017, the
figure once again stood at double digit level (10.1 per
cent of total loans outstanding).
Banking sector experience was a major setback for
the Bangladesh economy in FY2017. A number of
new scams were exposed, which pushed the sector
deeper into risky terrain in FY2017. Rise of NPL,
lower capital adequacy and the overall lack of
governance evinced banking sector’s growing
weaknesses in FY2017. State-owned commercial Non-performing loans (NPLs), in gross terms,
banks (SCBs) faced serious capital deficit which in increased at the end of December 2016 to Tk.621,700
turn created additional fiscal pressure for the million (9.20 percent of total loans) which was Tk.
government. Government had to spend Tk. 1,585 513,710 million (8.30 percent of total loans) at the end
crore for recapitalization of the SCBs; however, the of December 2015. The provision maintenance ratio
default loan situation of the SCBs failed to improve. It at end of December 2016 reached 84.98 percent
goes without saying that, there is hardly any which was 86.10 percent in December 2015. The
justification to use public money towards banking sector aggregate CRAR under BASEL-III at
compensating for the greed of bank defaulters and end of December 2016 stood 10.80 percent. Both the
inefficient management of the sector. A number of return on assets (ROA) and return on equity (ROE)
private commercial banks have joined the ranks of increased to 0.60% & 8.30% respectively in
those affected by poor banking governance. Inspite of September 2016 which were 0.57 and 6.57 percent
repeated calls to strengthen its supervisory-regulatory respectively in September 2015.
role, the central bank was not able to make any
tangible dent in terms of improving the performance of ii) The segment-wise or product-wise performances:
the banking sector and state of financial sector Banking means the accepting, for the purpose of
governance. (Section 4.1 will discuss in details on lending or investment, of deposits of money from the
governance in the banking sector.) public, repayable on demand or otherwise, and
Total Deposits (excluding interbank deposits and withdrawable by cheque, draft, order or otherwise.
Government deposits) in the banking system stood at Thus the Banking product may be classified into two;
Tk. 8,402,682million in December 2016 registering Liability Products (Deposit Products) and Asset
12.78 % increase and total Bank Credits including Products (lending products). In this context our bank
Investments stood at Tk. 8,834,160 million in has well-designed Liability and Asset Products. The
December 2016 registering 11.62% increase over the segment-wise or product-wise performances are as
year. under:

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Liability Products: Deposit is the main source of b. Credit Card- Local Card, International Card, Dual
finance. Our Bank has some lucrative deoposit product Currency Card
offereing attractive profit rate such as: Saving Account, 3. SME Financing
Surokkha Sonchoyi Hisab, Short Term Notice Deposit, a. Working Capital Loan [ CC(Hypo), CC(Pledge)]
Term Notice Deposit, Student Savings Account Tk. 10, b. Trade Finance (L/C, LTR, IDBP)
50 & 100 Privileged Account, Senior Citizen Account c. Transport Loan
as Checking Accounts. There are several types of d. Commercial/Residential House Building Loan
Term Deposit Products such as Fixed Deposit e. Work Order Loan
Accounts (01 month,03 months, 6 months 12 month f. Bidder's Loan
etc.), Monthly Benefit Scheme (Appropriate for those g. Project Loan
who want to get a specific monthly return for their h. Women Entrepreneur's Loan
deposited amount), Special Benefit Scheme: i. Small Business Loan
(Deposited amount will be double/triple at maturity). j. Green Financing
Monthly Savings Scheme: Lakhopoti Savings Scheme,
4. Agriculture Credit
Surokkha Millenium Scheme.
a. General Agricultural Credit
It is mentionable that Customers can deposit in any b. 10.00 Taka Account Loan
branches of SBAC Bank Ltd. For the Account holder,
there will be Insurance Coverage up to Tk.
5,00,000.00 (five lac) in case of Accidental Death and
Tk. 50,000.00 (fifty thousand) for normal death (in
some cases). Annual Insurance Premium will be paid
by the bank for each accountholder.
Performance:
The deposits of the Bank stood Tk. 50,121.49 million
in 2017 as against Tk. 39,983.65 million in 2016
registering growth of 25.35 percent. The growth was
supported by branch network and high standard
service provided to customers along with concerted A rice mill financed by our bank.

and unwavering efforts of the employees of the Bank. 01. Corporate Financing:
Fixed deposits remained the main component of SBAC Bank Ltd. is providing a wide range of financial
deposits contributing 76.71 percent of the total services, offering specialist advice and loan products
deposits. Interest cost of deposit increased to 6.69 to corporate clients to meet diverse demands of
percent as against 6.34 percent as against of the changing market scenario. We have expertise to
previous year as a result of increase in rates of high customize products & services to meet specific
cost term deposits fueled by the liquidity position in requirements of our clients. We are committed to
the market. The clientele group of the Bank was serve our customer with extensive branch network all
individuals, corporation, NGO, NBFI, government over the country to expedite our client's business
bodies etc. growth. We facilitate your business to face the
Asset Product: The Bank has the following asset challenges and realize opportunities, now and in the
products: future. Our main focus is relationship based banking
1. Corporate Financing and understanding corporate & institutional business
a. Working Capital Finance environments.
b. Project Finance Our experienced Branch Managers & their team can
c. Term Finance respond to and anticipate customer needs and give
d. Trade Finance competitive business advantages to them. Products
e. Lease Finance and services for commercial and business customers
f. Syndication Loan include: Working Capital Finance, Project Finance,
2. Retail Credit Term Finance, Trade Finance, Lease Finance,
a. Consumer Finance Syndication Loan etc.

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i) Working Capital Finance iii) Term Finance

Business Enterprises engaged in manufacturing/ SBAC Bank Ltd. is offering short term & mid term
trading/ service business are eligible to avail Working finance to the customers to meet emergency financial
Capital Loan to meet day to day expenses for needs of our project/business.
processing of manufacturing and selling product & iv) Trade Finance:
services. Working capital products include both fund
and non-fund based products. Fund-based working Import
capital products include secured over draft, cash 1. Letter of Credit
credit, packing credit, short-term loans payable on
demand bank guarantees. Non-fund based products Business Enterprises can avail Non-funded facility for
include bank guarantee; performance guarantees and import / procurement of raw materials, machinery,
bid bonds are also supporting the business of our equipment, merchandise item.
customers. 2. Loan against Imported Merchandize (LIM)and
ii) Project Finance Trust Receipt (LTR)
Business Enterprises engaged in import merchandise
SBAC Bank Ltd. provides project loan to set up
can avail working capital for retirement of import
/BMRE of long-term infrastructure and industrial
documents.
projects/ service unit on the basis of debt and equity
rather than the balance sheets of project sponsors. Export:
Project financing have been recognized as an
1) Pre-shipment finance:
important and crucial mode of finance for a financial
institution for substantial growth of its industrial credit Back to Back L/C, EDF, ECC, SOD (Working Capital
vis-à-vis managing long term finance. Growth of Finance), Packing Credit.
project finance/Industrial credit of a developing
2) Post-shipment finance:
country like Bangladesh is considered as a key
parameter for transforming her dream into a mid Foreign Documentary Bills Purchase, Inward
income country group. Documentary Bill Purchase.

Hence, apart from trade and commercial finance; v) Lease Financing

SBAC Bank Ltd. from the very beginning has been an
Lease financing became a thrust sector for individual
active partner of the private sector in developing large
and small enterprise besides medium and large
and medium scale industry of the country. The Bank
enterprises. SBAC Bank Ltd. has been providing
has been financing Term Loan (Industrial) facility for
lease finance facility to its customer for acquisition of
establishing new project and/or BMRE of various
manufacturing and service equipments for all major
projects in the sectors viz. textile, garments, power,
industrial sectors. The facility helps the customer to
steel, telecom, pharmaceuticals, packaging,
have better financial flexibility under budgetary
consumer products, health, CNG refueling, Real
constraints and to enjoy tax benefit. SBAC Bank Ltd.
estate.
offers financing vehicles/ CNG conversion/ refueling
plant/ sea or river transport, capital machinery/ plat/
equipment/ lift / generator/ boiler, construction
equipment/ computer for IT education center, medical
equipment etc.

vi) Syndication Finance

SBAC Bank Ltd. along with other commercial banks

have been financing large scale projects under
syndication arrangement to raise and meet huge
credit need of a company. This arrangement allows
the Banks to share expertise among them and
A steel Re-rolling Mills Finance by the Bank. diversify its credit risks. To cater the need of leading
corporate house SBAC Bank Ltd. has been raising

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fund from the banking sector on behalf of the In order to achieve desired growth in agriculture
customer through syndication arrangement. sector of the country, we are committed to increase
our present loan portfolio in agricultural sector. SBAC
02. Retail Credit:
Bank Ltd. is offering Agriculture Loan to the various
Retail Credit is mass- credit services for individual Agricultural sectors like Fishery, Dairy, Beef
customers to avail credit facilities directly from our Fattening, Poultry etc. for individuals & group at micro
wide branch network all over the country. With a view level.
to provide faster and more convenient centralized
Performance: Loans and Advances:
online banking services, most of our branches have
been brought under the real time online banking The SBAC Bank Limited since its inauguration has
system. been trying to select good borrowers/projects by
offering its better customer services to finance and
SBAC Bank Ltd. offers a wide variety of loan product
came out successful in 2017. The loans and
& value added services to suit banking requirements
advances stood at 43,284.97 million in 2017 against
of the individual clients. Products and services for
Tk. 30,174.09 million in 2016 registering growth of
individual customer include: Consumer Finance, Any
43.45 percent. The growth of deposits was used for
Purpose Loan, Auto Loan, Professionals’ Loan,
funding growth in credit. Yield on loans and advances
Education Loan , Home Renovation Loan, Credit
of the Bank decreased to 12.67 percent from the level
Card etc.
of 14.80 percent of previous year due to decrease of
3) SME Financing: lending rates.

The growth of Small and Medium enterprises (SMEs) The detail features of the Advance and deposit are
in terms of size and number has multiple effects on stated in the section ‘Performance of the Bank’.
the national economy, specifically on employment
generation, GDP growth, and poverty alleviation in
Bangladesh. At present, Small & Medium Enterprise
sector is playing a vital role in creation of new
generation entrepreneurs and 'Entrepreneurs Culture'
in the country. Experience shows that borrowers of
small enterprise sector prefers collateral free loan
since normally they cannot offer high value security to
cover the exposure.

To facilitate SME sector of the country, SBAC Bank

Ltd. provides credit facilities to the small & medium
entrepreneurs across the country whose access to Our Bank Financed Project

traditional credit facilities are very limited. We are iii) Risks and concerns:
offering different products for selected target groups,
such as - Transport Loan, Commercial/Residential SBAC Bank Limited has always been in the forefront
House Building Loan, Work Order Loan, Bidder's of implementing different risk management tools and
Loan, Working Capital Loan, Project Loan, Trade techniques. The “Risk” of any banking institution may
Finance, Women Entrepreneur's Loan, Small be defined as the possibility of incurring losses,
Business Loan, Green Financing etc. financial or otherwise. Banking business is in fact a
business of taking and administering risk. So it is vital
4) Agriculture Credit: to manage all these risks efficiently. In today’s
Bangladesh is an agro-based country and majority of challenging financial and economic environment,
our population dependant on Agriculture. Although effective risk management is must for sustainable
maximum of the total population is dependant on growth in shareholders’ value. In banking arena, key
agriculture, its contribution to GDP has gradually risks include that of credit, market, operational,
come down. Moreover, every year a huge amount of AML/CFT, liquidity, reputation, environment and other
food grain and other agricultural products are risks like strategic risk, concentration risk, compliance
imported to meet the demand of the country. risk etc. The risk management strategy of SBAC Bank

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Limited is based on a clear understanding of various (RPO), Rights Offer, Direct Listing, etc.
risks, disciplined risk assessment and measurement
The Bank has not gone for Initial Public Offering (IPO)
procedures and continuous monitoring.
yet. Therefore statement of utilization of proceeds
We have taken sufficient measures to prevent money from public issues (IPO/RPO), rights issues, private
laundering and terrorist finance. The implementation placement and/or through any others instruments is
of goAML software is on the track. Details of risk not applicable for us.
management are given in the “Risk Management”
ix) If significant variance occurs between Quarterly
section of this Annual Report.
Financial performance and Annual Financial
iv) A discussion on Cost of Fund, Gross Profit Statements the management shall explain about
Margin and Net Profit Margin. the variance on their Annual Report.

As of 31-12-2017 the Bank’s cost of fund was 9.91%. The Bank has faced a little variance occurred
Interest bearing asset was Tk. 53,823,609,375. between Quarterly Financial performance and Annual
Interest Income was Tk. 4,767,986,602 and interest Financial Statements. No significant variance
expense Tk. 2,802,476,484. Considering the others occurred in spite of greater volatility in the financial
incomes and expenses Bank’s operating income sectors.
stood at Tk. 3,479,216,267. Bank’s Gross profit
x) Remuneration to directors including
margin was and Net Profit Margin was Tk.
independent directors.
v) A discussion on continuity of any
Directors are not eligible to any remuneration other
extra-ordinary gain or loss:
than fees for attending meetings of the Board and its
There is no incident of any extra-ordinary activities Committee. As per BRPD Circular letter No. 11 dated
(gain or loss) October 04, 2015 and Article 95 of Articles of
Association of the Bank directors are eligible to the
vi) Basis for related party transactions- a
remuneration of BDT 8,000 only for each meeting
statement of all related party transactions should
attended by them. The following conditions are
be disclosed in the annual report:
applicable as under:
As per Bank Companies Act 1991(amended up to • Meeting should be held in the same town or
2018) and Corporate Governance Guide Lines issue city where the Bank is head quartered.
by Bangladesh Securities and Exchange Commission However, the meetings may be held other
(Notification No. SEC/CMRRCD/2006-158/134/ places subject to intimation to Bangladesh
Admin/4407 dated August 2012) have provided the Bank in advance;
necessary provisions for related party transactions.
• Remuneration is applicable for 2 (two)
As per general instruction in the First Schedule of
meetings of Board of Directors, 4 (four)
Bank Companies Act 1991 (amended up to 2018)
meetings of Executive Committee (EC) and 1
{general instruction Kha 11(ka)}. A statement of all
(one) meeting for Risk Management
related party transactions has been disclosed in the
Committee (RMC) and Audit Committee (AC)
Financial Statements as Annex A
monthly.
vii) Utilization of proceeds from public issues • Travel Bill and two days Hotel bill is payable for
(IPO/RPO), rights issues, private placement the directors traveling within the country and
and/or through any others instruments: three days Hotel bill for directors (foreigners)
coming from out of the country subject to
The Bank has not gone for Initial Public Offering (IPO)
submission of bills of actual expenditures to
yet. Therefore statement of utilization of proceeds
the bank for preserve;
from public issues (IPO/RPO), rights issues, private
placement and/or through any others instruments is Statement of Remuneration to Directors including
not relevant for us. Independent Directors with Details of Meetings
attended by the Board Members during the year
viii) An explanation if the financial results
2017:
deteriorate after the company goes for Initial
Public Offering (IPO), Repeat Public Offering

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Mr. Md. Mizanur Rahman

Mst. Nasima Begum

xi) REVIEW OF FINANCIAL REPORTING: of Changes of Ownership and Cash flow Statement
etc. are presented in Annual Report under respective
The financial statements prepared by the
heads.
management of the issuer company present fairly its
state of affairs, the result of its operations, cash flows The Board of Directors is responsible for the
and changes in equity. preparation and fair presentation of financial
statements in accordance with applicable financial
The financial statements prepared by the
reporting framework, laws and regulations. The
management has presented fairly its state of affairs,
Financial Statements have been audited by the
the result of its operations, cash flows and changes in
External Auditor and reviewed by the Audit
equity. Balance Sheet, Income Statement, Statement
Committee of the Board of Directors of the Bank. The

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financial Statements have been recommended for statements and any departure there-from has
final approval of the shareholders by the Board of been adequately disclosed:
Directors of the Bank.
The financial statements of the bank as at 31st
Fair Presentation of Financial Statements December, 2017 have been prepared on going
concern basis under historical cost convention and in
Financial Statements for the year ended on 31
accordance with the “First Schedule” of the Bank
December 2017 have been prepared in a very fair
Companies Act, 1991(amended up to 2018) and
way with inclusion of all material aspects viz, it’s state
BRPD Circular No. 14 dated 25th June 2003, other
of affairs, the results of its operations, cash flows and
Circulars of Bangladesh Bank, Bangladesh Financial
changes in equity. Opinion of the External Auditors,
Reporting Standards (BFRS), Bangladesh
KHAN WAHAB SHAFIQUE RAHMAN & CO. has
Accounting Standards (BASs), the Companies Act
been incorporated in the report.
1994, the Securities and Exchange Rules 1987, and
xii) Maintenance of Proper Books of Accounts: other laws and rules applicable for Banks in
Bangladesh. In case of any requirement of the Bank
The bank is fully complied in keeping the proper
Companies Act 1991, and provisions and circulars
books of accounts with the International Accounting
issued by Bangladesh Bank differ with those of other
Standard (IAS), Bangladesh Accounting Standard
regulatory authorities and BFRS, the requirements of
(BAS), International Financial Reporting Standard
the Bank Companies Act 1991, and provisions and
(IFRS) and Bangladesh Financial Reporting Standard
circulars issued by Bangladesh Bank will prevail.
(BFRS). Details are disclosed in the section 2.0 of
notes of Financial Statements in the Auditors Report. xv) Review of Internal Control Systems:
In this regards External Auditors KHAN WAHAB
The bank has Board approved Internal Control and
SHAFIQUE RAHMAN & CO., Chartered Accountants
Compliance (ICC) Policy/Guidelines. The ICC
have provided their positive opinion in their report in
Guidelines are being used to an effective internal
the “Opinion Paragraph”.
control mechanism to safeguard shareholders’
xiii) Application of appropriate Accounting investments, the depositors’ assets and other
Policies and Accounting Estimates: stakeholders’ interest as well. The Board retains the
ultimate responsibility for its operations, though has
Appropriate accounting policies have been
delegated to the Audit Committee for the review of the
consistently applied in preparation of the financial
adequacy and effectiveness of the system of internal
statements and that the accounting estimates are
controls. The Internal Control and Compliance
based on reasonable and prudent judgment.
practices of SBAC Bank Limited include - control
Appropriate accounting policies have been environment, risk assessment, control activities,
consistently applied in preparation of the financial segregation & rotation of duties, accounting
statements of the Bank and the accounting estimates information and reconciliation, IT security and
are based on reasonable and prudent judgment. self-assessment/monitoring.
Estimates and underlying assumptions are reviewed
Effective information system – the key component of
on ongoing basis and any revisions to these are
an effective internal control mechanism is already in
recognized in the period in which the estimate is
place, which is being periodically reviewed towards
revised and in any future period affected. The
making it still effective. In addition, the Bank has
significant accounting policies applied and accounting
established the following internal control measures:
estimates used for preparation of the financial
statements of the Bank have been stated in details in • Strengthened the Internal Control and
notes of the Financial Statement 2017. Compliance Department to ensure
comprehensive audit of the branches and
xiv) International Accounting Standards Corporate HQ at periodic intervals;
(IAS)/Bangladesh Accounting Standards • Review of the Bank’s performance on a
(BAS)/International Financial Reporting quarterly basis at Board level;
Standards (IFRS)/Bangladesh Financial Reporting
• Established authority limits for transactions
Standards (BFRS), as applicable in Bangladesh,
and expenses;
have been followed in preparation of the financial

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• Review of Bangladesh Bank’s audit report and preceding 5 (five) years shall be summarized.
Management’s compliance thereof at regular
Key operating and financial data of at least preceding
intervals;
5 (five) years has been disclosed in the section
• Ensuring strict compliance to all regulatory ‘Financial Highlights’.
requirements, both existing and new.
xix) If the issuer company has not declared
xvi) Going Concern of Bank’s Business: dividend (cash or stock) for the year, the reasons
There are no significant doubts upon the Bank’s thereof shall be given.
ability to continue as a going concern. The financial The Board of Directors recommended 13.50% stock
statements of the Bank have been prepared on the Dividend for the year 2017 in it’s 75th meeting held on
assumption that the entity (i.e. SBAC Bank Limited) is March 21, 2018. The recommended dividend shall be
a going concern and will continue operation in the finally approved in the 5th Annual General Meeting to
foreseeable future. Hence, it is assumed that SBAC be held on May 10, 2018.
Bank Limited has neither intention nor the need to
liquidate or curtail materially the scale of its xx) The number of Board/Committee meetings
operations. held during the year and attendance by each
director shall be disclosed:
xvii) Significant deviations from the last year’s
operating and Key operating and financial data of Meetings In 2017:
at least preceding 5 (five) years. During the year 2017, 16 Board Meetings, 17
There is no significant deviations occurred from the Executive Committee (EC) Meetings, 05 Audit
last year’s operating results of your Bank. Committee (AC) Meetings and 04 Risk Management
Committee (RMC) Meetings were held. Details of the
xviii) Key operating and financial data of at least participation are as follows:

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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:
a) Parent/Subsidiary/Associated Companies and other related parties (name wise details): Nil
b) Shareholding of Directors, Chief Executive Officer/Managing Director, Company Secretary, Chief
Financial Officer, Head of Internal Audit and their spouses and minor children:

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Ms.

Mrs. Rokeya Begum

Mrs. Mahmuda Akram

Mr. Md. Khalequzzaman AVP & Head
of ICC Abdullah Al Mukaddim

c. Executives [top five salaried employees other re-appointment of a director the company
than the Directors, Chief Executive Officer, shall disclose the following information to
Company Secretary, Chief Financial Officer and the shareholders:
Head of Internal Audit]
a) A brief resume of the director:
b) Nature of his/her expertise in specific
functional areas:
c) names of companies in which the person also
holds the directorship and the membership of
committees of the board:
A brief resume of the directors, Nature of his/her
expertise in specific functional areas and names
of companies in which the person also holds the
directorship and the membership of committees
of the board have been published in section
Explanation: For the purpose of this clause, the ‘Directors’ Profile.
expression “executive” means top 5 (five) Strategic Plan for 2018-2019:
salaried employees of the company, other than
the Directors, Chief Executive Officer, Company The strategic priorities and actions plans as
Secretary, Chief Financial Officer and Head of stated in the bank’s Strategic Plan (2018-2019)
Internal Audit. are mentioned below:

d) Shareholders holding ten percent (10%) or  We believe in compliance culture. Our

more voting interest in the company: philosophy is ‘compliance first; profit is its
logical consequence’. We must do
There is no Shareholders holding ten percent business in compliance with the laws of
(10%) or more voting interest in the company. the country.
xxii) In case of the appointment/

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SBAC Bank Business Conference.

deposit in total deposit, increase

 Expansion of branch network to make
non-funded (non-interest fee based)
banking services available at important
business.
locations throughout the country. The
Bank has already opened 64 branches up  Maintaining required level of liquidity
to December 31, 2017 and opening of 10 through skillfully managing asset-liability
more branches is under process which to mismatch and recovery of past due loans.
be completed by June 2018. The bank
has a plan to increase number of  Administering regular and effective
branches to 75 by December 31, 2018 monitoring and conducting recovery drive
and 80 branches by December 31, 2019. to ensure that loans and advances do not
turn non-performing.
 Maintaining highest quality of customer
services by offering best products  Diversification of products and services
compatible with customers’ needs. We by introducing IT based innovative
have already re-designed our products products and engaging alternate delivery
and services. Some lucrative liability channels.
products have been launched.  Expediting delivery of inward remittance
 Financial inclusion through widening the to increase the flow of foreign remittance.
coverage of banking services specially by  Continuously improving internal
including the disadvantaged section of governance through strengthening good
society. The operation of Agent Banking corporate cultures, motivation, training
will come into operation very soon. and supervision at all levels of
 Continuation of diversification of credit management.
portfolio in corporate exposure, focus on  Conduct Business Process
retail, SME, direct green finance and Re-engineering in different functional
agricultural loans, gender issues by areas to improve efficiency and bring in
providing loans to women entrepreneurs required structural changes.
in SME segment and emphasize on
geographical dispersion.  Develop Human Resources
Management system to motivate and
 Improvement of deposit mix by retain Human Resources and transform
penetrating board-based customers, them into Human Assets through
increase share of low cost and no cost continuous skill development.

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 Cost minimization and efficiency  Increasing brand visibility by creating

optimization at all levels of operation by positive image of the Bank.
ensuring budgetary control.
 To add value for all stakeholders.
 Expansion of activities related to
Corporate Social Responsibility and
 To be compliant with all organizational
and regulatory requirements by
Green Banking within the framework of
adherence to all laws, rules, regulations
organizational goals.
relating to banking.
 Maintain strong capital base by ensuring
borrowers’ rating, concentrating on
lending portfolio having lower capital On behalf of the Board of Directors
charge, strengthening Internal Capital
Adequacy Assessment Process (ICAAP).
 Ensuring efficient and effective risks
management for sustainable business S.M Amzad Hossain
growth. Chairman of the Board of Directors

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Glimpse of diversified sectoral financing

An Agro based business financed by the bank. A bank financed spining mills.

A factory of poultry feed financed by our bank. A bank financed garments factory.

A Showroom of Durable Plastic products financed by our bank. An agro project financed by the bank.

A Bank financed ship. Renowned Drinking water bottling factory financed by the bank.

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Glimpse of Miscellaneous Activities

Meet with Prime Minister. Donation to Hnorable Prime Minister's Relief Fund.

Inaugural ceremony of School Banking Conference-2017. Agreement Signing Ceremony for JICA Fund.

A View of the Women's Day Celebration Organized by the Bank. The Managing Director & CEO handing over Cheque
to the Principal of Proyash School under CSR Programme.

Jibonnagar Branch Opening Ceremony. Opening Ceremony of Foundation Training Course (6th batch) of the Bank.

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Value Added Statement 2017

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Economic Value Added (EVA) Statement

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RESPONSIBILITY

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Report of the Risk

Management Committee
of the Board
The risk management framework incorporates active operational layer for Internal Capital Adequacy
management and monitoring of market, credit, equity, Assessment Process, arranging meeting of Board Risk
liquidity, operational, compliance, regulatory and legal Management Committee and apprise the Board/
risks. It is designed to ensure policies and procedures Executive Committee about the identified risks and
are in place to manage the risks arising within each management’s recommendations to address the risks.
division. In this context Bangladesh Bank has issued six Besides as per instruction of Bangladesh Bank DOS
core risks management guidelines (revised during Circular Letter No.13 dated September 09, 2015 Risk
2015-2016), risk based capital adequacy guideline and Management Division prepares Risk Appetite of the
stress testing guideline to ensure robustness, efficiency Bank considering the key risk areas which is approved
and effectiveness of risk management systems for the by the Board.
Banking sector. On February 15, 2012 Bangladesh Bank Risk management framework: In compliance with
issued another guideline called Risk Management Bangladesh Bank’s guidelines, SBAC Bank has formed
Guideline for Banks. This guideline promotes an a Risk Management Team comprising of members from
integrated, bank-wide approach to risk management all key business/risk areas with the objective of
which will facilitate banks in adopting contemporary analyzing and measuring business risks and taking
methods to identify, measure, monitor and control risks mitigating steps. In line with Bangladesh Bank, BRPD
throughout their institutions. Circular No. 11 dated October 27, 2013; the Board of
South Bangla Agriculture & Commerce Bank (SBAC) is Directors has formed Risk Management Committee
committed to its stakeholders to attain a sustainable headed by me (Maksudur Rahman, Director) to look
business growth commensurate with its strategies and after the risk management issues of the Bank. In the
policies. To this end, the bank has adopted Core Risk year 2017, four (4) meetings of RMC were held.
management policy issued by Bangladesh bank and is Instruction of RMC was communicated to the
implementing those meticulously. In this context, SBAC division/branches for compliance. To support this
Bank has prepared the Risk Management Guidelines strategic risk management, the Bank has put in place a
which was approved by the Board of Directors and bank risk management framework, which consists of four key
follows the guidelines for risk identification, components.
measurement, assessment and to minimize the risk of 1. Strategy and risk appetite: The Board establishes a
the Bank. strategy for the Bank and articulates a Statement of Risk
SBAC Bank is increasingly focusing on development of Appetite that is consistent with that strategy. The Bank
appropriate risk management framework for managing has set Risk Appetite of the Bank for the year 2018 as
risks of the bank. Risk Management Department (RMD) per Bangladesh Bank letter no.
has been set up in the bank headed by Chief Risk DOS(RMMS)1154/1/2018-885 dated February 18, 2018
Officer. This department monitors and reports various which contains Capital Risk, Credit Risk, Market Risk
types of risks and develops appropriate risk culture in the and Liquidity Risk which have been approved by the
bank. Major activities of RMD include preparing half Board of Directors. Besides, a Comprehensive Risk
yearly Comprehensive Risk Management Report which Management Policy has been adopted which has been
indentifies and measures potential risks in bank’s duly approved by the Board of Directors.
activities and portfolios, monthly Risk Management 2. Governance: The role of the Board, Board Executive
Report, performing Stress Testing, processing of Committee, Board Risk Management Committee, Board
manuals, developing various risk models, acting as

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Audit Committee, and Management Committees of the Team which will be constituted by the concerned
Bank in this framework is summarized in the Risk departmental heads of the bank headed by the
Management guidelines. The Board has overall Managing Director and the Team will assess the overall
responsibility for ensuring effective risk management risk profile and a strategy for maintaining adequate
within the Bank. Credit, market, liquidity, and operational capital. The formation and modification of SRP Team
risk – generally those matters regulated by the and its Terms of Reference (ToR) must be approved by
Prudential Regulation Authority – are monitored by the the Board of Directors and to be notified to Bangladesh
Core Risk Management Committee and led at the Bank. The Board of Directors in its 68th meeting on
Executive level by the Chief Risk Officer. October 04, 2017 approved re-constitution of SRP Team
3. Policies: Policies have been established for the and revised ToR of SRP Team. The operational layer of
management of each risk type and are subject to annual the Bank basically is responsible for correspondences
Board review and approval. They specify responsibility with the regulator, collection of information from
for managing each risk and requirements for branches and concerned divisions, calculation of capital
measurement and reporting. requirement under ICAAP reporting, and implementation
of the tasks assigned by the SRP Team. In the year
4. Management Information (MI): MI is produced so
2016, SBAC Bank maintained total capital Tk.582.16
that each risk type can be monitored. The MI is produced
crore where as required minimum plus additional capital
on a range of frequencies and levels of detail, as
was Tk.414.17 crore i.e. surplus capital stood at
appropriate for each risk and level of monitoring, from
Tk.167.99 crore. The bank conducts Stress Testing on
daily monitoring of liquidity by management to quarterly
its financial position on quarterly basis and reports the
updates on regulatory risk for the Board. Effective MI
outcomes to Bangladesh bank, as part of 2nd pillar of
relies on robust IT systems and high quality data.
BASEL-III Accord.
Pillar-1 of Basel –III: Minimum Capital Requirement
Pillar- 3 of Basel-III:
(MCR)
Market Discipline SBAC Bank delivers appropriate
During the establishment of the bank, SBAC Bank fully
disclosures not only to meet the regulatory requirements
complied the Revised Regulatory Capital framework for
but also as per international best banking practices.
banks in line with Basel- III. At the end of the year 2017,
Disclosures on the position of the bank’s risk profile,
SBAC Bank maintained capital requirement 16.54% of
capital adequacy and risk management system have
Risk Weighted Assets (RWA) against regulatory
been included in the Annual Report also.
requirement 11.25% including buffer capital. SBAC Bank
complied fully Pillar -1 under Credit Risk, Market Risk Conclusion:
and operational risk. From the above it appears that SBAC bank is trying to
Pillar- 2 of Basel-III: Supervisory Review Process manage all risks relating to its activities and services
(SRP) efficiently and effectively as well as improving the risk
management rating of the Bank. Risk Management
Supervisory Review Process (the 2nd Pillar of Basel-III)
Rating will have a significant effect on its CAMELS
of Risk Based Capital Adequacy Framework is intended
rating. Besides, this rating plays an important role in
to ensure that banks have adequate capital to support all
getting branch license, AD license and permission for
the risks in their business and at the same time to
dividend declaration etc. for banks. In this context, the
encourage banks to develop and use better risk
meetings of Risk Management Committee of the Board,
management techniques in monitoring and managing
Risk Management Team and SRP Team of the Bank
their risk.
were held properly to instruct the Risk Management
A sound and vibrant SRP for a bank requires three-layer Division for minimizing the risk of the Bank. Basel-III
structure: implementation in Bangladesh has been started from
1. Strategic Layer January 2016 and will end in December 2019. SBAC
2. Managerial Layer Bank is committed to take the challenge of Basel-III
implementation in the bank timely.
3. Operational Layer
Under strategic layer the Risk Management Committee
of the Board of Directors will bear the responsibility on
behalf of the Board to implement SRP in the Bank. The
Committee will supervise the activities, performance and Mr. Maksudur Rahman
monitoring of the managerial layer. Under managerial
Chairman, Risk Management Committee
layer bank must have an exclusive body naming SRP

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Risk Management

Risk management is the deliberate acceptance of risk for risks like strategic risk, concentration risk, compliance
profit-making. It requires informed decision on the risk etc. The risk management strategy of SBAC Bank is
tradeoff between risk and reward, and uses various based on a clear understanding of various risks,
financial and other tools to maximize risk-adjusted disciplined risk assessment and measurement
returns within pre-established limits. procedures and continuous monitoring. In this context,
the RMD has prepared Risk Management Guideline
Risk-taking is an inherent element of the banking
which was approved by the Board of Director.
business and, indeed, profits are in part the reward for
successful risk taking in business. On the other hand, 1. Development Process- Risk Management
excessive and poorly managed risk can lead to losses Framework
and thus endanger the safety of a bank’s depositors.
Know your business Rank portfolio of risks Quantify
Risk is an integral part of the banking business and risk appetite merge risk blueprint with organizational
SBAC Bank’s aim is to deliver superior shareholders’ strategy Established governance and management
value by achieving an appropriate tradeoff between risk structures build systems and infrastructure develop
and returns. In banking arena, key risks include credit, policies and procedures.
market, operational, liquidity, reputation risk and other

SBAC Bank Risk Management Framework

Decision
Identification of Risk
Decision Making
Making

Risk Assessment &

 Controlling Measurement
 Reporting

Decision Decision
Making Making
 Monitoring  Risk Response
 Mentoring  Information &
communication

Decision
Making

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2. Key elements of Risk Management System:

3. Principles of Risk Management: documented in order to be able to make sound business

decision.
The main principle of Risk Management is the protection
of SBAC Bank’s financial health by mitigating risks. The 3.4 Management Responsibility: The management of
key principles are described as follows: bank is responsible for its result as well as for their risks
associated with its operations. A balance is made
3.1. Protecting the Bank’s financial strength: SBAC
between risk and return, while, of course duly observing
Bank controls risks in order to limit the impact of potential
the relevant risk limits.
adverse event, both on its capital and on its financial
results. The risk appetite distributes proportional for the 3.5 Independent Risk Control: This is the structured
available capital and other appropriate base. In this process of identifying, measuring, controlling, monitoring
context, the RMD prepared the Risk Appetite which was and reporting risks. In order to ensure integrity, the Risk
approved by the Board of Directors. Management Department operates independently to
administer risks.
3.2 Protect Reputation: Reputation is essential for the
proper performance of a bank and needs to be sustained 4.1. Board Risk Management Committee:
for banking industries. SBAC Bank always tries to hold
As per directives of Bangladesh Bank circular no. 11
its reputation to sustain the banking industries.
dated November 27, 2013, SBAC Bank formed a Risk
3.3 Risk Transparency: For good insight into SBAC Management Committee consisting of 5 (five) members
Bank positions, it is vital to identify all risks. Risks must of the Board of Directors. The members of the committee
always be considered as accurately as possible and are given below:

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4. Organizational Structure of Risk Management:

Sl. Name of Directors Position of the  Supervising and assessing the establishment,
No. Committee organizational structure, working procedures
and effects of the risk management
1 Mr. Maksudur Rahman Chairman
departments, and making suggestions for
2 Mr. Muhammad Mohasin Member improvement;
3 Mr. Mohammed Ayub Member  Supervising and assessing the risk control by
the senior management in respect of credit,
4 Mr. Sakhawat Hussain Member market and operation, and making suggestions
5 Mrs. Kamrun Nahar Member for improving the Bank’s risk management and
internal control;
4.1.1: Role of the Board Risk Management
 Conducting regular assessments on the risk
Committee:
management policies, risk preference and
The major duties and powers of the Risk Management overall risk management status of the Bank, and
Committee include, among others: making suggestions in that respect to the Board
 Examining and amending risk strategies, risk of Directors;
management policies, risk preference, overall  Ensuring appropriate knowledge, experience,
risk management system and internal control and expertise of lower-level managers and staff
procedures of the Bank, supervising and involved in risk management;
assessing the implementation and effectiveness  Ensuring sufficient staff resources for each risk
thereof according to the overall strategy of the management activity;
Bank, making suggestions in that respect to the  Establishing committees and sub-committees to
Board of Directors;

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be in charge of ongoing risk management; and properly manage the risk related to changes in interest
 Other duties and powers required by laws, rates, the mix of balance sheet assets and liabilities, the
administrative regulations, rules, relevant holding of foreign currencies, and the use of derivatives.
provisions of the securities regulatory authority, These risks should be managed in a manner that
and as may be authorized by the Board of contributes adequately to earnings and limits risk to the
Directors. financial margin and member equity.

4.2. Risk Management Team with Executives of the Proper management of asset/liability risk is facilitated
Bank: through board approved policy, which sets limits on
asset and liability mix, as well as the level of interest rate
Pursuant to Bangladesh Bank Letter No: DOS
risk and foreign currency risk. Policy is also set out
(RMMS)1154/1/SBAC/2013-397 dated December 02,
guidelines for the pricing, term and maturity of loans and
2013, SBAC Bank formed Risk Management
deposits. The use of derivatives, if any, is controlled by
Department (RMD) to analyze and measure business
policy, which state among other things that derivatives
risk with taking effective steps to reduce the risks
must only be used to limit interest rate risk and must
involved in the business of Banking. The Bank also
never be used for speculative or investment purposes.
formed a Risk Management Team headed by Additional
Managing Director & CRO of the Bank along with other The scope of the ALM function of SBAC Bank covers the
related divisional heads as the member of the team. following processes:
4.3. Core Risk of the Bank: I. Liquidity risk: The current and prospective risk
arising when the bank is unable to meet its
4.3.1. Credit Risk: obligations as they come due without adversely
Credit risk refers to the risk that a borrower will default on affecting the bank's financial conditions. From
any type of debt by failing to make required payments. an ALM perspective, the focus is on the funding
The risk is primarily that of the lender and includes lost liquidity risk of the bank, meaning its ability to
principal and interest, disruption to cash flows, and meet its current and future cash-flow obligations
increased collection costs. and collateral needs, both expected and
unexpected. This mission thus includes the
Credit risk can be classified as follows:
bank liquidity's benchmark price in the market.
• Credit default risk: The risk of loss arising from a
II. Interest rate risk: The risk of losses resulting
debtor being unlikely to pay its loan obligations
from movements in interest rates and their
in full is called default risk. Default risk may
impact on future cash-flows. Generally because
impact all credit-sensitive transactions,
a bank may have a disproportionate amount of
including loans, securities and derivatives.
fixed or variable rates instruments on either side
• Concentration risk: The risk associated with any
of the balance-sheet. One of the primary causes
single exposure or group of exposures with the
is mismatches in terms of bank deposits and
potential to produce large enough losses to
loans.
threaten a bank's core operations. It may arise
III. Currency risk management: The risk of losses
in the form of single name concentration or
resulting from movements in exchanges rates-
industry concentration.
to the extent that cash-flow assets and liabilities
• Country risk: The risk of loss arising from a
are denominated in different currencies.
sovereign state freezing foreign currency
IV. Funding and capital management: It is a
payments (transfer/conversion risk) or when it
mechanism to ensure the maintenance of
defaults on its obligations (sovereign risk); this
adequate capital on a continuous basis. It is a
type of risk is prominently associated with the
dynamic and ongoing process considering both
country's macroeconomic performance and its
short- and longer-term capital needs and is
political stability.
coordinated with a bank's overall strategy and
4.3.2. Asset Liability Management Risk: planning cycles.
Asset Liability Management (ALM) can be defined as a The ALM function scope covers both a prudential
mechanism to address the risk faced by a bank due to a component (management of all possible risks and rules
mismatch between assets and liabilities either due to and regulation) and an optimization role (management of
liquidity or changes in interest rates. funding costs, generating results on balance sheet
position), within the limits of compliance (implementation
The goal of asset/liability management (ALM) is to

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and monitoring with internal rules and regulatory set of ensure that management establishes a system for
rules). ALM intervenes in these issues of current assessing the various risks, develops a system to relate
business activities but is also consulted to organic risk to the Bank’s capital level, and establishes a
development and external acquisition to analyze and method for monitoring compliance with internal policies.
validate the funding terms options, conditions of the Board’s audit committee, internal auditors, external
projects and any risks (i.e., funding issues in local auditors and Risk Management Division are actively
currencies). involved, wherever necessary, to assess compliance
status and adequacy of capital of the Bank.
4.3.3. Internal Control and Compliance Risk:
4.3.4. AML/CFT Risk:
Internal Control and Compliance is a management
process designed to achieve: Money laundering risk is defined as the loss of reputation
 Effective and efficient operations and expenses incurred as penalty for being negligent in
 Reliable financial reporting prevention of money laundering. The Bangladesh Bank
Guideline on Anti-Money Laundering contains the
 Compliance with laws and regulations
following major issues which have been incorporated in
The Board of Directors has approved updated policy bank’s policy:
guidelines on Internal Control & Compliance Risk (ICC)  Dully filled in KYC (Know Your Customer) Form
management thereby restructuring the organizational is a must for account opening;
chart of the Bank in accordance with the instructions  TP (Transition Profile) in which every customer
of Bangladesh Bank for managing core risks. Internal must specify what will be the frequency and
Control & Compliance Division of the Bank, under amount of transaction;
direct supervision of Audit Committee of the Board, has
 There should be a monitoring function to
been implementing detail guidelines on ICC risk
monitor unusual/suspicious transaction which
management to assess and mitigate risks and as part of
needs to be reported to the Bangladesh Bank;
it, the ICCD has been segregated into three (3)
independent units; namely :-  AML/TF Risk registered for customers;
a) Audit & inspection unit  Cast Transaction report (CTR) is to be sent to
the Bangladesh Bank on every month for the
b) Monitoring unit
customers depositing or withdrawing cash
c) Compliance unit above Tk.1.00 million in a day in a bank branch;
The units have been functioning independently &  Record is maintained for 5(five) years;
separately with direct reporting lines to the Head of  Appoint BAMLCO in every branch and
IC&CD. Beside Audit & Inspection Unit directly report to CAMLCO at Head Office;
the Audit Committee of the Board. In addition,  MD & CEO’s message addressing all officials of
Departmental Control Function Check List (DCFCL) the bank at regular interval to take measures
has been introduced in the branches under direct against ALM/CFT;
supervision of Monitoring Unit of IC&CD. Loan
 Train officials on AML/CFT;
Documentation Checklist and Quarterly Operation
Report have been brought in practice under supervision  STR &SAR are reported as and when needed.
of dedicated unit. 4.3.5 Information & Communication Technology
Internal audit has been conducted on branches and Risk:
departments of Head on periodical basis to ensure We are living in an era of information and communication
compliance of Banks and Regulatory authority policies. technology and the banks have become more
Core Risk Guidelines of Bangladesh Bank on Internal technology driven these days. Use of computer, internet
Control and Compliance, the MANCOM reviews on has become a common practice in the banking industry.
regular basis the overall effectiveness of internal control There are certain risks involved in the use of information
system and provide a certification on the effectiveness of and communication technology. This risk may arise from
Internal Control Policy, Practice and procedure. malfunction of system, failure of network, lack of
Effective control of the capital assessment process knowledge about the use of technology, virus attack,
includes an independent review and, where appropriate, hacking etc.
the involvement of internal or external audits. The To manage ICT related risk, SBAC Bank has adopted
Bank’s Board of Directors has the responsibility to Core Banking Software “FLORA BANK ONLINE

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BANKING SOLUTION” for its Bank management. ICT SME clients rating, non-performing loans & advances,
Department has controls over password, User ID residual risk against credit, provision against classified
maintenance, input control, network security, virus loans & advances, credit mix, Combating Terrorist
protection, internet and e-mail. Data centre has been set Financing, asset quality etc.
up and disaster recovery plan has been formulated as
4.4.2. Foreign Exchange Risk Management
part of Business Continuity Planning.
Committee: The committee oversees foreign exchange
4.3.6. Foreign Exchange Risk: risk, treasury, net open position, import & export
business, dealing room operations and antimony
Foreign exchange risk is the exposure of a bank’s
laundering aspects in foreign exchange transactions etc.
financial strength to the potential impact of movements
in foreign exchange rates. The risk is that adverse 4.4.3. Information & Communication Technology
fluctuations in exchange rates may result in a reduction Risk Management Committee: The committee monitors
in measures of financial strength. and supervises the risks related to data security, physical
i) Board of Directors and Senior Management security, network security, disaster recovery, fraud,
Oversight for mitigation of Foreign forgery, system failure and business continuity etc.
Exchange Risk: 4.4.4. AML/CFT Risk Management Committee: The
Board of Directors of the Bank: committee looks after the money laundering activities,
 Approved a policy on foreign exchange risk; STR, SAR, CTR, KYC and TP related compliances. The
committee also supervises and monitors the entire
 Review, at least once a year, the policy,
transactional activities of the Bank including money
techniques, procedures, and information
laundering aspects involved with foreign exchange
systems referred to in that policy;
transactions as well as Combating Terrorist Financing.
 Ensure adherence to the policy techniques,
procedures and informational systems 4.4.5. Internal Control and Compliance Risk
referred to in that policy; Management Committee: The committee assesses
 Ensure that qualified and competent persons and mitigates the risk related to compliance with
i.e. senior management, are employed to regulatory requirements, set rules of the Bank, internal
manage and control the bank’s exposure to checking system, lapses, fraud, forgeries, violations of
foreign exchange; and the set rules etc.

ii) Strategy, Monitoring and Control: 4.4.6. Asset Liability Committee (ALCO): The
committee looks after the asset-liability risk, liquidity risk,
SBAC bank establishes a written policy on foreign
Advance Deposit Ratio (ADR), deposit mix, credit mix,
exchange risk that:
gap analysis etc. under direct guidance of the CEO.
 Includes a statement of principles and
objectives governing the extent to which a bank 4.5. Risk Management Department: In compliance
is willing to assume foreign exchange risk; with Bangladesh Bank letter no. DOS (RMMS)
 Establishes prudent limits on a bank’s exposure 1154/1/SBAC/2013-397 dated December 02, 2013,
to foreign exchange risk; and SBAC formed a separate ‘Risk Management
 Clearly defines the levels of personnel who Department’ under Chief Risk Officer to ensure following
have the authority to trade in foreign exchange. activities in Bank:
 Clearly identifies the different currencies, which  Designing of organizational structure by
have been approved for transaction within the clearly defining roles and responsibilities of
company. individuals involved in risk taking as well as
managing it;
4.4. Core Risk Management Committees:
 Formulation of overall risk assessment and
SBAC Bank exclusively manages 6 (six) core risks and management policies, guidelines and
has designed and implemented the guidelines of procedures for risk identification, risk
Bangladesh Bank. The Bank formed six core risk measurement, risk monitoring, defining at every
management committees which conduct meeting monthly. individual unit level an acceptable level of risk,
The major concerns of the committees are as under: mitigation of all the core risks in line with their
respective guidelines as provided by
4.4.1. Credit Risk Management Committee: The
Bangladesh Bank;
committee supervises and monitors issues related with
credit concentration, credit risk grading, corporate &  Reviewing and updating risks on systematic

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basis as necessary at least annually, preferably to bank operating losses

twice a year, ensuring that adequate controls  Market confidence is important to depositors
exist and that the related returns reflect these and other bank claimants
risks and the capital allocated to support them;
4.5.1.2. Practical applications of capital assessment:
 Formulation of strategies and different models
in consistency with risk management policy Strategic:
based on IT Policy and in house IT support  Manage stock analysis, e.g., reveal
which can identify, measure, monitor and under-valued businesses
maintain acceptable risk levels of the bank;  Strategic planning, e.g., project capital needs,
 Development of information systems/MIS inflow quantify impact on capital ratios
and data management capabilities to support  Risk management, e.g., estimate probability of
the risk management functions of the bank. ruin and impact on stock price
 Ensure compliance with the core risks
Tactical:
management guidelines at the department level,
and at the individual desk level;  Funding decisions, e.g., identify stock
repurchase opportunities
 Analysis of self resilience capability by the
Basel-II & III and Stress Testing of the bank;  Risk-return tradeoff decisions
 Review Risk Appetite of the Bank;  Identifying highest value-added projects
 Initiation to measure different market  Asset-liability management (ALM)
conditions, vulnerability in investing in different  Provide incentive compensation aligned with
sectors; increasing value
 Risk Management Department of SBAC Bank 4.5.2. Capital Position of SBAC Bank Limited:
is arranging monthly meeting on various
issues to determine strategies in consistent As per directives of the Bangladesh Bank, every bank is
with risk management policy, which can required to maintain capital at 11.25% including buffer
measure, monitor, and maintain acceptable risk capital of its risk-weighted assets under Basel-III or
level of the bank. Minutes of each meeting is Tk.400.00 crore whichever is higher for the year 2017.
submitted to Bangladesh Bank on monthly & Minimum Common Equity Tire-1 (CET-1) capital should
half yearly basis; be minimum 4.5 percent of total capital. SBAC Bank
maintained total eligible capital Tk.701.27 crore as on
 Besides, Risk Management Paper is also being
31.12.2017 which was Tk. 582.16 crore as on 3.12.2016.
prepared on monthly basis and the minutes of
The Capital Adequacy Ratio of the bank was 16.54% as
the meeting is prepared to address different
on 31.12.2017 of which CET-1 was 15.31%. Where as
areas of risk and their mitigating tools &
bank maintained CRAR 18.59% as on 31.12.2017. So,
techniques guided by the members of Risk
SBAC Bank maintains excess capital as per requirement
Management Team.
of Bangladesh Bank and bank stood on strong base
The Risk Management Department (RMD) does have direct capital.
reporting line with the Risk Management Committee of the
4.5.3. Risks under the Guidelines on Risk Based
Board having dotted line to the Chief Risk Officer (CRO) of
Capital Adequacy (BASEL-III):
the Bank.
To cope up with the international best practices and
4.5.1. Capital Assessment under Basel-III:
make the bank’s capital shock absorbent, ‘Guidelines on
Capital Assessment of the bank is based on the Risk Based Capital Adequacy (RBCA) for banks’
objective of maintaining an adequate capital base to (Revised regulatory capital framework in line with Basel
support the projected business and regulatory III) was introduced by BAngladesh Bank from January
requirement. This is done by drawing an annual planned 01, 2009 as a parallel run with BRPD Circular No. 10,
business growth vis-à-vis capital requirement. dated November 25, 2002 (Basel I). At the end of parallel
run, Basel III regime started from January 2015 and the
4.5.1.1. Adequate capital:
guidelines on RBCA came fully into force with its
 Regulatory requirements to promote bank
subsequent supplements/revisions. Under RBCA
safety and soundness
guidelines, SBAC Bank considers the following risk
 Mitigate moral hazard problems of deposit against Pillar-1 & Pillar-2.
insurance by increasing shareholders’ exposure

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4.5.3.1 Capital to Risk Weighted Assets Ratio

(CRAR):

As per guidelines of Risk Based Capital Adequacy

collateral, counter-guarantees from shareholder/ third
(RBCA) of Bangladesh Bank, every scheduled bank
parties. Adequate margins are maintained on the
should maintain Capital to Risk Weighted Assets Ratio
collateral to guard against adverse fluctuation in the
including buffer capital of 11.25% of Risk Weighted
market price of collateral.
Assets (RWA). Under this requirement, Capital
Adequacy Ratio of the Bank stood at 16.41% of RWA as i) Credit Policy:
on 31.12.2017. While calculating Risk Weighted Assets,
Credit Policy of the Bank capture the core principles for
Credit Risk, Market Risk and Operational Risk are taken
identifying, measuring and managing credit risk of the
into consideration. These are described below:
bank. These policies are approved by the Board of
A) Credit Risk: Directors and are designed to meet the organizational
requirements that exist today and to provide flexibility for
Credit Risk is defined as the potential losses that bank’s
the future. The policy is also revised from time to time to
borrower or counter party will fail to meet its obligations
make it up-to-date. SBAC Bank recognizes that a critical
accordance with agreed terms. This includes
factor in the bank’s continued profitability and stability is
non-payment of capital or interest within the agreed
its effective risk management capabilities. SBAC Bank
period at the agreed rate of interest and in the agreed
also ensures its risk management strength and strives to
currency due to unwillingness of the counter party or
continuously promote a proactive risk management
decline in his/her financial abilities resulting from
culture in the bank.
adverse environment.
ii) Lending guidelines:
SBAC Bank Limited has well written procedure both for
appraisal and regular monitoring of credit risk. Regular Bank's credit strategy is to determine the risk appetite of
reviews are held and risks are identified. Risks are the Bank. So Bank's focus is to maintain a credit portfolio
mitigated in a number of ways namely recourse to keeping in mind of our risk absorbing capacity. Thus its

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strategy is invigorating loan processing steps including vi) Credit Risk Mitigation:
identifying, measuring, containing risks as maintaining a
The Bank believes that a key component of a disciplined
balance portfolio through minimizing loan concentration,
credit culture is adherence to internal policies and
encouraging loan diversification, expanding product
procedures. Hence, comprehensive Credit Policies have
range, streamlining security, insurance etc. as buffer
been established in the Bank to ensure quality and
against unexpected cash flow.
transparency of investment decisions at all times. A
iii) Credit Assessment: well-defined approval hierarchy supported by high
ethical standards, established policies, procedures and
A thorough credit and risk assessment is to be
practices function as the core credit risk mitigation in the
conducted prior to the granting of loans, and at least
overall investment culture of Bank.
annually thereafter for all facilities. The results of this
assessment shall be present in a Credit appraisal that B) Market Risk:
originates from the Relationship Manager ("RM") and
Market risk is the risk of potential losses in balance sheet
approved by Credit Risk Management (CRM). The RM
and off-balance sheet positions of the bank arising from
should be the owner of the customer relationship, and
adverse movements in market prices such as interest
will be held responsible to ensure the accuracy of the
rates, foreign exchange rates, equity prices and
entire credit application submitted for approval. RMs
commodity prices.
shall follow the Bank's lending guidelines and shall
conduct due diligence on new borrowers, principals and The main objective of the market risk is to ensure that
guarantors. bank’s activities which are exposed to various market
risks are generating optimum returns and downside risks
iv) Risk Assessment:
are in control and within the limit of agreed appetite.
Credit proposals shall contain summarizing of the results
i) Interest Rate Risk:
of the RMs risk assessment and include, as a minimum,
the following details: Interest Rate Risk is the potential impact on a Bank’s
 Amount and type of loan(s) proposed. earnings and net assets values due to change in market
 Purpose of loans. interest rate. Interest risk arises when a Bank’s principal
and interest cash flows (including final maturities) both
 Loan structure (Tenor, Covenants, Repayment
on and off–balance sheet, have mismatched re-pricing
schedule, Interest etc.)
dates. The amount at risk is a function of the magnitude
 Security arrangements and direction of interest rate changes and the size and
 Marketing aspects maturity structure of the mismatch position. Bank’s
 Management capability lending, funding and investment activities give rise to
interest rate risk.
v) Credit Risk Grading:
ii) Foreign Exchange Risk:
Credit risk grading is an important tool for credit risk
management as it helps to understand various Foreign Exchange Risk is the current or prospective risk
dimensions of risk involved in the underlying credit to earnings and capital arising from adverse movements
transaction. The aggregation of such grading across the in currency exchange rates. Foreign exchange risk may
borrowers, activities and the lines of business can also arise as a result of exposures of banks to profit rate
provide better assessment of the quality of credit risk arising from the maturity mismatches of foreign
portfolio of a Bank or a branch. The credit risk grading currency positions.
system is vital to take decisions both at the pre-sanction
The SBAC Bank has established Risk Tolerance limits
stage as well as at post-sanction stage.
for foreign exchange exposure within the directives of

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Central Bank of Bangladesh in order to ensure that any 4.5.3.2. Supervisory Review Process:
adverse exchange rate movements on the results of the
Supervisory Review Process is the Second Pillar of
Bank due to un-hedged foreign exchange positions are
Basel-III of Risk Based Capital Adequacy Framework
managed within acceptable parameters.
which is intended to ensure that banks have adequate
iii) Equity Price Risk: capital to support all the risks in their business and at the
same time to encourage banks to develop and use better
Equity price risk is the risk of losses caused by changes
risk management techniques in monitoring and
in equity prices. These losses could arise because of
managing their risks.
changes in the value of listed shares held directly by the
bank. Market to market is the tool bank applies for The key principle of the SRP is that “banks have a
making full provision against losses arisen from changes process for assessing overall capital adequacy in
in the market price of securities. relation to their risk profile and a strategy for maintaining
their capital at an adequate level”. Bank must be able to
iv) Commodity Risk:
demonstrate that chosen internal capital targets are well
Commodity risk refers to the uncertainties of future founded and that these targets are consistent with their
market values and of the size of the future income, overall risk profile and current operating environment.
caused by the fluctuation in the prices of commodities. Bank management will clearly bear primary
These commodities may be grains, metals, gas, responsibility and Board of Directors hold the tertiary
electricity etc. A commodity enterprise needs to deal with responsibility for ensuring that the bank has adequate
the following kinds of risks: capital to support its risks. Under SRP, there must have
 Price risk (Risk arising out of adverse three layers such as managerial layer, strategic layer
movements in the world prices, exchange rates, and operational layer.
basis between local and world prices) Under Managerial Layer SBAC Bank formed an
 Quantity risk exclusive body naming SRP Team which was constituted
by the concerned departmental heads of the bank and
 Cost risk (Input price risk)
headed by Managing Director. The SRP Team and its
 Political risk Terms of Reference (ToR) were approved by the Board
C) Operational Risk: of Directors.

Operational risk refers to the risk of losses resulting from A) Residual Risk:
the inadequacy or failure of internal process, systems Under 2nd Pillar of Basel-III, SBAC Bank always
and people or external events. Capability to carry out considers the residual risk against error in
a large number of transactions effectively and documentation and error in valuation of collateral. Risk
accurately while complying with applicable laws and Based Capital Adequacy (RBCA) framework and other
regulations constitute Operational Risk Management supervisory regulations on credit risk, the management
activities of the Bank. of SBAC Bank allows offsetting credit or counterparty
risk with collateral along with the legal and financial
Key Processes of the Management of Operational Risk
documents. Improper application of different techniques
in the Bank are based on the concept of 'Risk vs. Service
give rise to additional risks that may render the overall
vs. Cost' and Operational Risk is effectively managed
risk management less effective. Accordingly, these
with least inconvenience to the clients.
additional risks (e.g. documentation risk, valuation risk)
Mitigating operational risk: are termed as Residual Risks. Apart from the capital
Operational Risks result from inadequate or failed maintained against credit risk under Pillar 1 (Minimum
internal process, people and system or from external Capital Requirement) of RBCA, additional capital
events. Within the Bank, Operational Risk may arise requirement is to be estimated against different aspects
from negligence and dishonesty of the employees, lack of residual risk related to the loans & advances portfolio
of management supervision, inadequate operational of SBAC Bank.
control, lack of physical security, poor technology, lack of In the context of Bangladesh, Bangladesh Bank (BB)
automation, non-compliance of regularity requirements, has observed that Residual Risk arises mainly out of the
internal and external fraud etc. Operational Risk following situations:
Management Framework has been designed to provide I. Error in Documentation: Banks collect and preserve
a sound and well controlled operational environment and documents against loans and advances to have legal
thereby mitigate the degree of operational risk.

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protection in case of adverse events like default of loan. implementing business strategy, non-adaptability/less
Lack of required and duly filled-up documents and adaptability with the changes in the business
erroneous or fake or forged documents will lead to the environment and adverse business decisions. Strategic
amplification of overall risk aspects of loan portfolio and risk induces operational loss that consequentially
the reduction in the strength of legal shield that slacks hampers the capital base.
the ownership of the bank on collateral and
In this context, strategic risk possesses a significant
consequently hinders the recovery of loan.
space in the Internal Capital Adequacy Assessment
II. Error in valuation of collateral: Banks require Process (ICAAP) of the banks. The aspects of strategic
appropriate valuation of collateral (both physical and risk in respect of Pillar 2 of RBCA are as follows:
financial) and guarantee (bank guarantee and personal
 CAMELS rating
guarantee) against loans and advances for mitigation of
default probability. The improper valuation or  Operating expenses
overvaluation of collateral can lead to overstated  Classified loans ratio
scenario of risk mitigation for collateralized loan. That
 Recovery of classified loan
will raise the default probability of the loan.
 Written-off Loans
B) Liquidity Risk:
 Interest Waiver
Liquidity risk is the risk that the bank cannot promptly
fulfill its payment obligations due to unforeseen factors  Base rate calculation methodology
or be forced to placement funds on unfavorable terms.  Strategic Plans
In-addition to the more traditional Static Liquidity Gap
 Rescheduling of loans and advances
Report (prepared with certain assumptions to classify
non maturing assets and non maturing liabilities). D) Evaluation of Core Risk Management:
Dynamic Liquidity Gap Reports which incorporate all Bangladesh Bank introduced core risk management
contacted as well as anticipated inflows and outflows are system for assessing the risk management environment
regularly discussed at monthly meeting of Risk and practices in banks in 2003. In that respect, BB
Management Team to ascertain real cash flow identified 6 (six) risk areas which are termed as core
mismatches. Appropriate measures are then initiated to risks through issuing industry best practices framework.
ensure that the bank’s overall liquidity risk is maintained Those frameworks provided benchmark to be followed
at a moderate level. by the banks and suggested the banks to develop own
The Treasury Division of the Bank determines the assessment methodology for each core risks as well as
adequacy of the liquidity position by doing analysis to calculate own risk rating at least once a year. Thus,
based on the following factors: rigorous risk management framework of banks would
 Historical funding requirement require own assessment methodology and annual
review. To ensure the stability of the business model and
 Current liquidity position
the soundness of the operational structural, appraisal of
 Anticipated loan disbursement
risk management structure of a bank is necessary. In this
 Anticipated future funding needs respect, SBAC Banks has developed its own
 Present and future earning capacity methodology for assessing each core risk separately
 Sources of funds which was approved by Board of Directors. Based on
 Socio economic perspective of present and these approved methodologies, SBAC Banks conducts
near future rigorous review on annual basis and derive rating for
each risk. The capital charge against Appraisal of Core
 Regulatory guidelines
Risk Management Methodology is as follows:
 Capital planning
 GAP analysis  Capital charge is applied for each risk
separately,
 Stress Testing with minor, moderate and major
shock showing absorbing capacity  No capital charge is imposed for risk ratings of 1
(Strong) and 2 (Satisfactory),
C) Strategic Risk:
 For risk ratings of 3 (Fair), 4 (Marginal) and 5
Strategic risk means the current or prospective risk to (Unsatisfactory); capital charge is derived by
earnings and capital arising from imperfection in multiplying the MCR with 15% of minimum
business strategy formulation, inefficiencies in CRAR set by BB from time to time.

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E) Interest Rate Risk in the Banking Book (IRRBB): risk:

IRRBB is the current or potential risk to the interest rate i) Credit Concentration Risk: When the credit portfolio
sensitive assets and liabilities of a bank’s balance sheet as of a bank is concentrated within a few individuals or
well as the off-balance sheet items arising out of adverse entities or sectors, credit concentration risk arises.
or volatile movements in market interest rate. Volatile SBAC Bank has constructed well diversified credit
movements of market interest rate adversely affect the portfolio.
value of interest rate sensitive assets and liabilities that
ii) Market Concentration Risk: When the investment
consequentially results in the loss of equity value. In the
portfolio of a bank is concentrated within a few
context of Pillar 2, the assessment of loss of equity value
instruments or any instrument of few companies or any
due to IRRBB is vital as this is the outcome of poor asset
instrument of few sectors, market concentration risk
liability management that shows the inefficiency of the risk
arises. The investment portfolio of SBAC Bank is well
management framework of the bank.
diversified.
The susceptibility of banks to IRRBB can be estimated
iii) Assessment of Credit Concentration Risk: To
through Simple Sensitivity Analysis and Duration Gap
assess the credit concentration risk, following aspects of
Analysis.
SBAC Bank’s loan portfolio will be considered:
i) SBAC Bank Steps for conducting Simple  Sector wise exposure,
Sensitivity Analysis:  Division wise exposure (Geographic
 Calculate all on-balance sheets Rate Sensitive Concentration),
Assets (RSA) and Rate Sensitive Liabilities  Group wise exposure,
(RSL),
 Single borrower wise exposure,
 Plot the RSA and RSL into different time
 Top borrower wise exposure (Top 10-50
buckets on the basis of their maturity,
borrowers will be counted)
 Calculate the maturity gap by subtracting RSL
from RSA (GAP= RSL-RSA), iv) Assessment of Market Concentration Risk: To
 Calculating the changes in the Net Interest assess the market concentration risk, following aspects
Impact (NII) by multiplying the changes in of SBAC Bank’s investment portfolio are evaluated:
interest rate with the Gap.  Instrument (financial securities) wise
investment,
ii) SBAC Bank takes following steps for conducting
 Sector wise investment in listed instruments,
Duration Gap Analysis:
 Currency wise investment of foreign exchange
 Estimate the market value of all on‐balance
portfolio.
sheet rate sensitive assets and liabilities of the
bank to arrive at market value of equity, G) Reputation Risk:
 Calculate the durations of each class of asset Reputation risk is the current or prospective indirect risk
and the liability of the on‐balance sheet portfolio, to earnings and capital arising from adverse perception
 Arrive at the aggregate weighted average of the image of the Bank on the part of Customers,
duration of assets and liabilities, Shareholders, Investors, Counterparties, Business
 Calculate the duration GAP by subtracting Partners, Credit Rating Agencies, Regulators, and
aggregate duration of liabilities from that of General Public. Reputation risk may originate from the
assets, lack of compliance with industry service standards,
failure to deliver on commitments, lack of
F) Concentration Risk:
customer-friendly service and fair market practices, low
Concentration risk arises when any bank invests its most or inferior service quality, unreasonably high costs, a
or all of the assets to single or few individuals or entities service style that does not harmonize with market
or sectors or instruments. That means when any bank benchmarks or customer expectations, inappropriate
fails to diversify its loan and investment portfolios, business conduct or unfavorable authority opinion and
concentration risk emerges. Downturn in concentrated actions.
activities and/or areas may cause huge losses to a bank In context of Bangladesh, SBAC Bank is taking the
relative to its capital and can threaten the bank’s health following steps for mitigation of reputation risk:
or ability to maintain its core operations. In the context of
 Bank’s Credit Rating conducted by ECAIs
Pillar-2, SBAC Bank follows two types of concentration
 Continuous Monitoring on internal and external

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fraud. change risk can hamper the business stability of the

 Non-payment or delayed payment of accepted borrowers in respect of both- i) profitability and ii)
bills (foreign & domestic) reputation. Consequentially, the extent of risk for the
 Ensuring Quality customer service banks will be higher.

H) Settlement Risk: To evaluate this risk, SBAC Bank follows Sector

Environmental Due Diligence (EDD) Check List
Settlement risk arises when an executed transaction is specified in Guidelines on Environmental Risk
not settled at the standard settlement system suggests Management (ERM) issued vide BRPD Circular No.
or within predetermined method. The banks pose to the 01/2011 dated 30/01/2011. Besides, the Bank
risk when it fulfills its contractual obligations (payment or considered ‘Environment Risk’ as a part of core risk in its
delivery), but the counterparty fails or defaults to do the approved Credit Policy.
same. Non-receiving or delayed receiving of receivable
bills (foreign & domestic) will be evaluated to assess 4.5.3.3. Market Discipline:
settlement risk. Number of such cases and the total The purpose of Market discipline in the Revised Capital
value in taka will be examined. If total value in taka from adequacy Framework is to complement the minimum
such cases in a year (reporting year) equals at least 5% capital requirements and the supervisory review
of the total loans and advances, capital charge will be process. The aim of introducing Market discipline in the
imposed which is the multiplication of the MCR with 10% revised framework is to establish more transparent and
of minimum CRAR set by BB from time to time. more disciplined financial market so that stakeholders
I) Environmental Climate Change Risk: can assess the position of a bank regarding holding of
assets and to identify the risks relating to the assets and
Environmental and climate change risk refers to the capital adequacy to meet probable loss of assets.
uncertainty or probability of losses that originates from
any adverse environmental or climate change events 4.5.4. Stress Testing:
(natural or manmade) and/or the non-compliance of the Stress Testing is a risk management technique used to
prevailing national environmental regulations. This is a evaluate the potential effects of Bank’s financial
facilitating element of credit risk arising from condition of a specific event and/or movement in a set of
environmental issues. These can be due to financial variables. It is also an integral part of the Capital
environmental impacts caused by and/or due to the Adequacy Framework. The traditional focus of stress
prevailing environmental conditions. testing relates to exceptional but plausible events. SBAC
These increase risks as they bring an element of Bank performs quarterly basis stress testing within the
uncertainty or possibility of loss in the context of a scope of Bangladesh Bank FSD circular no. 01 dated
financing transaction. Environmental and climate September 24, 2012.

A) The position of Capital to Risk Weighted Assets (CRAR) after shocks on 31.12.2017:

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The scope of stress testing is limited to simple sensitivity 14.28%, 10.73% and 7.60% in minor, moderate and
analysis. The methodology and calibration of shocks of major respectively when considering individual shock.
stress testing are described below: The bank as a part of strategy is reducing the exposure
of large investment borrower and focusing on
B) Credit Shock:
diversification of credit portfolio like SME, Agriculture
Stress test for credit risk assesses the impact (on the and Agri-based Industries. However, the bank is
bank capital to risk weighted assets ratio or CRAR) of continuously monitoring the performance of large loan
the increase of non-performing loans triggered by five borrowers. Besides, a good amount of security coverage
predetermined shock events with three levels of shock- is also maintained against those large loans.
minor, moderate and major. The five shock events are
iv) Negative shift in NPLs categories:
given below:
It represents the shift of loans from one NPL category to
i) Performing Loans directly downgraded to
the next NPL category. It is based on the assumption of
B/L-Sectoral Concentration 1 (SME Loans):
5%, 10% and 15% downward shift in the NPLs
It is a measure of the concentration risk where the bank categories in minor, moderate and major levels of shock
has the highest loans i.e. SME loans. It assumes that respectively. Capital to Risk Weighted Assets Ratio
3%, 9% and 15% of the performing loans will be directly (CRAR) of SBAC Bank was 16.54% before applying the
downgraded to B/L category in minor, moderate and shock for December quarter 2017. After applying shock,
major levels of shock respectively. Capital to Risk the Capital to Risk Weighted Assets Ratio (CRAR) of
Weighted Assets Ratio (CRAR) of SBAC Bank was SBAC Bank would stand at 16.43%, 16.43% and
16.54% before applying the shock for December quarter 16.32% in minor, moderate and major shock respectively
2017 against the requirement of 11.25% including buffer when considering individual shock.
capital showing excess CAR 5.16%. After apply shock
v) Decrease in the Forced Sale Value (FSV) of the
the Capital to Risk Weighted Assets Ratio (CRAR) of
collateral:
SBAC Bank would stand at 16.44%, 16.22% and
16.00% in minor, moderate and major respectively when It represents the bank’s condition when FSV of collateral
considering individual shock. decreases sharply. It is based on the assumption that
FSV of collateral will fall by 10%, 20% and 40% in minor,
ii) Performing Loans directly downgraded to B/L
moderate and major levels of shock respectively. Capital
Sectoral Concentration 2 (Trade Service):
to Risk Weighted Assets Ratio (CRAR) of SBAC Bank
It is a measure of the concentration risk where the bank was 15.54% before applying the shock for December
has the highest second loans i.e. Trade Service. It quarter 2017. After applying shock the Capital to Risk
assumes that 3%, 9% and 15% of the performing loans Weighted Assets Ratio (CRAR) of SBAC Bank would
will be directly downgraded to B/L category in minor, stand at 16.49%, 16.44% and 16.35% in minor,
moderate and major levels of shock respectively. Capital moderate and major respectively when considering
to Risk Weighted Assets Ratio (CRAR) of SBAC Bank individual shock.
was 16.54% before applying the shock for December
vi) Interest rate shock:
quarter 2017. After applying shock the Capital to Risk
Weighted Assets Ratio (CRAR)) of SBAC Bank would It represents the condition of the bank when interest rate
stand at 16.44%, 16.23% and 16.02% in minor, changes significantly. It is based on the assumption that
moderate and major respectively when considering interest rate will change by 1%, 2% and 3% in minor,
individual shock. moderate and major levels of shock respectively. Capital
to Risk Weighted Assets Ratio (CRAR) of SBAC Bank
iii) Increase in NPLs due to default of top large
was 16.54% before applying the shock for December
borrowers:
quarter 2017. After applying shock the Capital to Risk
It represents the scenario of the bank when top large Weighted Assets Ratio (CRAR) of SBAC Bank would
borrowers default. It is assumed that top 3, 7 and 10 stand at 14.78%, 13.01% and 11.25% in minor,
borrowers of the bank will default in minor, moderate and moderate and major respectively when considering
major levels of shock respectively. Capital to Risk individual shock.
Weighted Assets Ratio (CRAR)) of SBAC Bank was
vii) Foreign exchange shock:
16.54% before applying the shock for December quarter
2017. After applying shock the Capital to Risk Weighted It represents the condition of the bank when exchange
Assets Ratio (CRAR) of SBAC Bank would stand at rate changes significantly. It is based on the

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assumption that exchange rate will change by 5%, 10% profile, identification of actual risks the means by which
and 15% in minor, moderate and major levels of shock they will be mitigated, and what risks will be covered by
respectively. Capital to Risk Weighted Assets Ratio capital. The ICAAP reporting must be approved by the
(CRAR) of SBAC Bank was 16.54% before applying the Board of Directors of the bank before submitting to
shock for December quarter 2017. After applying shock Bangladesh Bank. The information provided in the
the Capital to Risk Weighted Assets Ratio (CRAR) of ICAAP reporting will be verified by Inspection
SBAC Bank would stand at 16.52%, 16.50% and Department of Bangladesh Bank. In the year 2016
16.48% in minor, moderate and major respectively when SBAC Bank sent the ICAAP Report based on December
considering individual shock. 31, 2015 and Supplementary Documents after approval
of the Board of Directors which was accepted by
viii) Equity shock:
Bangladesh Bank. Besides the ICAAP Report based on
It represents the bank’s condition when market value of December 2017 will be submitted in May 2018.
share falls sharply. It is based on the assumption that
4.5.7. Policy & Strategy:
share price will change by 10%, 20% and 40% in minor,
moderate and major levels of shock respectively. Risk Management Department of SBAC Bank prepares
Capital to Risk Weighted Assets Ratio (CRAR) of SBAC different types of policy & strategy to fulfill the
Bank was 16.54% before applying the shock for compliance of Bangladesh Bank and effectively monitor
December quarter 2017. After applying shock the Capital & control the various risk of the bank. The core risks
to Risk Weighted Assets Ratio (CRAR) of SBAC Bank management committee of the bank and Risk
would stand at 16.54%, 16.54% and 16.54% in minor, Management Team take necessary strategy for
moderate and major respectively when considering CAMELS rating, operating expenses, and classified
individual shock. loans ratio, recovery of classified loan, written-off loans,
interest waiver, and base rate calculation methodology.
C) Combined Shock:
5. Preparedness in Implementation of Basel-III:
The stress test also measures effect of combined shocks
on Capital Adequacy Ratio (CAR) for assumptions that Basel III reforms are the response of Basel Committee
includes: decrease in the FSV of the collateral, increase on Banking Supervision (BCBS) to improve the banking
in Non Performing Loans, negative shift in NPL sector’s ability to absorb shocks arising from financial
categories, change in interest rate, change in foreign and economic stress, whatever the source, thus
exchange rate and change in the market value of shares reducing the risk of spillover from the financial sector to
and securities. Capital to Risk Weighted Assets Ratio the real economy. These new global regulatory and
(CRAR) of SBAC Bank was 16.54% before applying the supervisory standards mainly address the following
shock for December quarter 2017. After applying shock areas:
the Capital to Risk Weighted Assets Ratio (CRAR) of
 Raise the quality and level of capital to ensure
SBAC Bank would stand at 13.94%, 10.00% and 3.96%
banks are better able to absorb losses on both a
in minor, moderate and major shock respectively when
going concern and a gone concern basis;
considering combined shock.
 Increase the risk coverage of the capital
4.5.5. Risk Management Paper & Comprehensive
framework;
Risk Management Report:
 Introduce leverage ratio to serve as a backstop
In compliance with Bangladesh Bank, Risk Management
to the risk-based capital measure;
Department prepares Risk Management Report (RMR)
& Comprehensive Risk Management Report and  Raise the standards for the supervisory review
presents it before Risk Management Team on monthly process (Pillar 2); and
basis & half yearly basis for taking necessary steps to
mitigate various risks which are being submitted to  Public disclosures (Pillar 3) etc.
Bangladesh Bank in time. Bangladesh Bank vide BRPD Circular No. 18 dated
4.5.6. Internal Capital Adequacy Assessment December 21, 2014 issued Guidelines on Risk Based
Process (ICAAP) Report: Capital Adequacy (Revised Regulatory Capital
Framework for Banks in line with Basel-III). The Bank’s
Internal capital adequacy assessment process (ICAAP), implementation status of Basel-III guidelines is as under:
includes an evaluation of the bank's preferred risk

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Therefore, in the context of capital adequacy for hold the position for implementation of Basel-III to
implementation of Basel-III, SBAC Bank is in a secured emphasis for lending the rated corporate clients.
position. Moreover, the management of the Bank tries to

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GREEN BANKING

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Green Banking:
Over the period of time, human being, as part of energy and other resources.
civilization, improves his life styles and life condition. The following Green Banking Activities/Initiatives
But, in most cases these affect adversely on the have been carried out throughout the year:
environment. The opulence costs on environmental
deterioration. But change is the only constant, and in a) Green Initiatives:
the recent, past there has been a tremendous change • Print on reusable sheets
in our attitude towards the environment. It perceived • Print multiple pages on single sheets of paper
necessity for protection and preservation of the • Set defaults to print double-sided and print on
environment. both sides
The banking industry influences economic growth and • Print only the pages required
development, both in terms of quality and quantity, • Preview documents before printing
leading to a change in the nature of economic growth. • Increase margin width of the documents
Therefore, banking sector plays a crucial role in
• Change the default font size from 12 point to
promoting environmentally sustainable and socially
10 which would shrink your document by
responsible finance. Banks may not be the polluters
about 10%
themselves but they usually have a banking
• Use e-mail statements
relationship with some companies/finance projects
that are polluters or could be in future. Banking sector b) Green Governance:
is reckoned as environmental friendly in terms of “Green Banking Policy Implementation Unit (GBPIU)”
emissions and pollutions. Internal environmental is formed entrusting with the responsibilities of
impact of the banking sector such as use of energy, designing, evaluating and administering related green
paper and water is comparatively low and clean. banking issues of the bank in line of Board approved
Environmental impact of banks is not physically policy. Total available fund for direct green finance for
related to the banking activities but with its customer’s 2018 is Tk. 436.00 million being 5% of total new loan
activities. Therefore, environmental impact of bank’s to be disbursed in 2018.
external activity is huge, though difficult to estimate.
Environment management in the banking business is c) Inclusion of Environmental Risk Rating
considered likely to be risk management. It increases (EnvRR) for Credit Risk Management
the enterprise value and lowers loss ratio as higher SBAC Bank takes into account the Environment Risk
quality loan portfolio results in higher earnings. while assessing credit proposals as per
Therefore encouraging environmentally responsible Environmental Risk Management (ERM) guidelines of
finance and prudent lending should be one of the Bangladesh Bank. In the year 2017, there were 30
responsibilities of the banking sector. nos. of bank financed projects applicable for
Bangladesh Bank as part of their responsibilities has Environment Due Diligence and the Bank assessed
formed Sustainable Finance Department and the Environmental Risk of those projects and found
subsequent launching this unit in our bank who low Environment Risk. The Bank financed Tk.
monitors and protect environment through formulating 3103.20 million for 30 projects in 2017 having status
time worthy policies and guidelines to safeguard “Standard” .
environment by adapting green financing. d) Electronic Payment System:
To this tune, SBAC Bank limited recognizes that SBAC Bank is such a platform where all customers
balancing non-financial factors such as environmental receive a wide range of customer service relating to
and social issues with financial priorities are essential electronic payment system like Online Banking,
with a view to demonstrating the characteristics of RTGS, BEFTN, e-GP, utility bill payment etc. In 2017,
good corporate governance. There are direct impacts total 21,474 nos. of transaction has been made
on the environment through the daily consumption of through e-GP service.

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e) In-house Environment Management: v. Preserving maintenance schedule of

Generators and Air Conditioners and other
In order to develop in-house Environment
major electrical and electronic equipment for
Management, the Bank has taken the following
monitoring performance as well as
measures to
fuel/energy efficiency.
i. Saving water, paper, electricity, energy and
vi. All officials of the bank have been advised to
stationery consumption:
ensure that their PC, Fan and other office
All Branches and Head Office were strict to reduce equipment are turned off whenever those are
the consumption of paper, stationery, electricity, not in use for prolonged period of time. Office
energy, water etc. which leads to positive outcome for hour is maintained properly so that
the bank. unnecessary stay in Branch/ head office
Utility consumption during 2016-17: could be avoided and as such office hour is
utilized effectively.
Sl Particular Amount in Growth
No . Million Taka % vii. In procurement of vehicles and other
201 7 201 6 electrical and electronic equipment,
01 Consumption of water 0.74 0.5 9 25.42 fuel/energy efficient quality is considered with
02 Consumption of paper 2.96 2.11 40.28
priority.
03 Consumption Electricity 24.00 24.11 (0.4 6)
energy Gas 0.1 3 0.11 18.18 viii. All branches/divisions now focus on
Fuel 3.24 3.83 (15.40) minimizing use of resources at every possible
Total = 31.07 30.75 1.04
aspect of work. All officials of the bank is
N.B.: The expenses have been increased by 1.04% advised to discharge their duties in
since new 10 branches came into operation in the environmentally responsible ways.
year of 2017 along with the existing 54 branches.
f) Introducing Green Finance :
ii. Electronic communication is being
extensively used (wherever possible) for The Board of Directors of the Bank approved “Green
office management in place of printed Finance Policy of SBAC Bank Limited” to extend
documents, especially when multiple copies credit facilities for the environmental friendly
are required, to save papers. products/projects so far identified by Bangladesh
Bank under comparatively more favorable terms and
iii. Installation of energy efficient electronic
conditions and the Bank has allocated Tk.500.00
equipment and automatic shutdown of
million for Green Finance to encourage/support
computers, fans, lights, air coolers etc. have
environmental friendly products/projects as well as to
been implemented in consultation with
achieve target set by Bangladesh Bank.
concerned divisions of Head Office gradually
for reducing electricity consumption. g) Online Banking :
iv. Use of solar energy at the premises as an SBAC Bank has opened 64 branches at 1:1
alternative source of electricity is initiated in rural-urban ratio. Our Branches are fully equipped
consultation with and approval from with modern banking facilities having full-fledged
concerned authority of the Bank. The bank online banking facilities through renowned Florabank
has installed solar energy system in its Online Core Banking Solution.
branches. In the year of 2017, 32 branches
are powered by solar energy against 27 h) Supporting Employee Training:
branches in 2016, registering 18.52% growth.
The Training Institute of the Bank is continuously
arranging training program on Green Banking.
Besides, circulars/instructions/advices on Green
Banking have been issued to make the employees
aware of Green Banking. The Bank is also placing the
employees to participate training program/
workshop/seminar on Green Banking organized by
various organizations/institutions.

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i) Climate Risk Fund: activities and aim to protect the environment

through resource recycling as well as efficient
A fund of Tk.500.00 million has been allocated to
use of energy and resources. We are
finance green products/projects. The Bank shall also
committed to continually minimizing our
finance economic activities of the areas susceptible to
operational environmental impacts, by
flood, cyclone and drought at regular interest rates
monitoring environmental performance;
without charging additional risk premium. In 2017, the
setting improvement targets; and by
Bank distributed 38000 blankets costing Tk. 12.16
implementing and evaluating environmental
million to the cold stricken poor people in different
management programs that save energy and
areas in Bangladesh & Tk. 15.00 million for the Prime
water, manage wastes, recycle materials,
Minister’s Relief & Welfare Fund.
reduce business trips, and promote green
j) Other issues relating to Green banking: procurement and providing wide range of
e-banking services.
As a responsible corporate entity, SBAC Bank shall
reinforce its Green Banking initiatives by adopting • The bank shall improve in-house
followings policies: environmental education and support and
promote environmental protection activities of
• SBAC Bank Limited shall comply with all laws individual directors and employees both
and regulations related to environmental
during and outside working hours.
protection, green banking other requirements.
• The bank shall inform its customers,
• The Bank shall formulate sector specific shareholders, and the general public about
environmental policies to finance those
the targets and the performance of its
sectors so as to protect the environment.
environmental actions that collectively aim at
• The bank shall support economic activities of improving the quality of environment and
the flood, cyclone, and drought prone areas climate.
with soft term financing and shall create
• The bank shall support initiatives of third
“Climate Risk Fund” to support contingencies parties i.e. non-profit agencies, organizations
in adverse climatic conditions. or institutions that generate added value by
• The bank recognize the environmental benefiting both humans and the environment.
burden caused by consumption of resources • The bank shall set up Green Branches to
and release of wastes from own business expedite Green banking Activities.

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 ANNUAL REPORT 2017

Report of the
Audit Committee of the Board

Report of the Audit Committee of the Board of from among the directors of the board.
Directors in Compliance with Corporate • Audit Committee of the board shall comprise
Governance Guidelines of Bangladesh Securities maximum 05 (five) members including at
and Exchange Commission (BSEC) issued through least 2 (two) members from independent
their notification No.SEC/CMRRCD/2016-158/134/ directors;
Admin/44 dated August 07, 2012 for the year ended
• Audit Committee shall be constituted with
2017.
those members of the Board, who are not
The Present Audit Committee of the Board was duly Executive Committee Members.
reconstituted by the Board of Directors of the Bank in • Members may be elected for a term of 03
its 71st meeting held on December 12, 2017 in (three) years.
compliance with Bangladesh Bank guidelines and
Corporate Governance Guidelines of Bangladesh • Company Secretary of the Bank shall be the
Securities and Exchange Commission (BSEC). The secretary of the Committee.
Prior Committee was formed on 03.01.2016 and it Brief profile of the Audit Committee:
functioned till 11.12.2017. Audit Committee efficiently
conducted the monitoring activities as assigned by * Mr. Talukder Abdul Khaleque, Mr. Abu Zafar
the Board and also played an effective role in Mohammod Shofiuddin, Mr. Anwar Hussain and Mr.
supervision of execution of strategies and work plans Md Amzad Hossain was duly elected as a member of
so formulated towards smooth operation of the bank. the committee on December 12, 2017. Whare Mr.
The Committee Talukder was made chairman there of.
supervised whether Sl Name Status Status Educational No. No. of
banking activities were with the with the Qualification meetings meetings
carried out in line with Bank committee held attended
the prevailing laws, 1 Mr. Talukder Abdul Independent
Chairman Graduate 05 01
Khaleque Director
rules and regulations
2 Mr. Abu Zafar
imposed by the Director Member M.Com 05 01
Mohammod Shofiuddin
regulatory authorities. 3 Mr. Anwar Hussain Director Member BBA 05 01
The committee also 4 Mr. Md. Amzad Hossain Director Member Graduate 05 01
reviewed the Financial 5 Dr. Syed Hafizur Independent
Member Masters 05 04
Statements, internal Rahman Director
control management, * Mr. Talukder Abdul Khaleque assumed the Position of the Chairman on 12.12.2017 and Mr. Abu Zafar
audit system and Mohammod Shofiuddin, Mr. Anwar Hussain and Mr. Amzad Hossain assumed the Position of Member on
relevant policies the Same Day.
thereof.

Composition: Duties and responsibilities:

As per BRPD Circular No.11 dated October 27, 2013 Internal control:
and Corporate Governance Guidelines of BSEC the • Evaluate whether the bank management has
composition of the Audit Committee of a bank shall been able to build a compliance culture in
comply with the followings: accordance with the provision of laws.
• Members of the committee shall be selected • Internal control system; whether the bank

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employees/workforce have been clearly • Convene audit meetings just after completion
advised about their duties and responsibilities of the reports, rather than waiting for
in this regard and whether the management compliance from branches.
has established full control on their activities. • Review the compliance status on a regular
• Review all initiatives taken by the bank interval.
management as regards building a suitable • Proper and timely review of all quarterly and
Management Information System (MIS) along monthly statements.
with the state of the art computer application
in banking system and uses thereof; External Audit:
• Review the bank’s compliance on • Review letter of intent (LOI’s) of the Audit
recommendations made from time to time Firms and upon scrutinizing recommends for
concerning establishment of an internal appointment.
control mechanism/framework by internal as • Review auditing activities of external auditors
well as external auditors; and their audit report;
• Apprise the board of any fraud-forgery, • Examine appropriateness of management
internal control lapses found by internal or reply about observations/recommendations
external auditors and inspection team of of the external auditors regarding banking
regulatory authority or identification of such operation and mitigation of irregularities
other areas and remedial measures therein. identified.

Disclosure of financial report: • Submit recommendations for appointment of

external auditors to perform statutory audit of
• Scrutinize whether true and fair view of the
the bank.
state of affairs is reflected in annual financial
statements and prevailing rules, regulations Meeting of the committee:
and standards along with BB guidelines are
adhered for making such statements; According to applicable rules and regulations, 5(Five)
meetings of the Committee were held during the year
• Exchange views with the external auditors,
2017. The committee, from time to time invited the
Bangladesh bank and the Management of the
Managing Director, the Head of Internal Control &
bank before recommendation of the financial
Compliance Department and other responsible
statements.
officials entrusted with internal control activities or any
Internal Audit: other personnel to participate in their meeting, as
deemed necessary. All recommendations/
• Review whether internal audit activities is
observations of the committee were recorded in
able to conduct its operation and independent
minutes. The meetings held in 2017 were as under:
of Bank Management;
• Review internal audit activities and its SL Meeting No. Held on
organizational structure and ensure that no
1 19th 21.03.2017
untoward hurdles or limitations create
bottleneck to internal audit activities; 2 20th 04.04.2017
• Verify the skills and effectiveness of internal 3 21th 24.08.2017
audit system;
4 22th 30.10.2017
• Examine appropriateness of management
consideration about 5 23rd 27.12.2017
observations/recommendations of the
Key activities in 2017: The major areas focused by
internal auditors regarding banking operation
the Audit Committee of the Board during 2017 are
and mitigation of irregularities identified.
outlined below:
• Review Management Letter issued by
• Self Assessment of Anti-Fraud Internal
Bangladesh Bank & other External Auditors
Controls under DOS Circular Letter No. 17
and Management response thereto as part of
dated November 07, 2012 of Bangladesh Bank.
compliance activities.

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• Review Audit Plan for the year 2018. • Recommended for arranging video
• Review and recommendation on Annual Conference system to discuss the
Accounts (Audited) along with the reports of observations and compliance status with the
the External Auditors thereon for the year respective branch manager during Audit
ended 31st December 2017. Meetings.
• Review and recommendation of Half-yearly • Recommended for IT Test Area & Lab
Financial Statements (Un-audited) of the facilities to build up technical expertise
Bank for the period ended 30th June 2017. through practical exercises.
• Review of Quarterly Financial statements. • Directed Management to arrange special
training program to acquaint all the
• Recommendation for approval of the revised
employees about the range & use of Flora
policy of the different Divisions of the Bank.
Bank System for controlling lapses in banking
• Recommendation for approval of different system Flora Bank.
formats for Assessing Credit Applications.
• Reviewed and recommended for fortifying
• Review Stress Testing Reports of the Bank as ICC Division through experienced and trained
per Bangladesh bank guidelines. Professional manpower.
• Review summary of Loan classification and • Committee contented to set up the Task
provision as on 31.03.2017, 30.06.2017, Force for recovery the classified loan.
30.09.2017 and 31.12.2017.
• Advised to post required number of personnel
• Recommendation to the management to take to ICCD for effectively forming audit team and
necessary steps to maintain optimum security compliance team independently.
against loans to all the Branches of the Bank.
• Directed Internal Control & Compliance
• Recommendation not to provide any further Division to audit the unaudited branches with
credit facilities against Bad Loan. reasonable and justified interval.
• Recommendation for decentralization of • Advised to inform the branches/divisions to
investment portfolio to mitigate the business instantly communicate with Internal Control &
risk. Compliance Division if any financial
• Recommendation to the bank management incidence/irregularities take place.
to analyze for recruited Audit agent for • Recommended to establish a self monitoring
complete uninterrupted audit formalities. system for better and effective monitoring
• Recommendation to the bank management over the branches.
for involvement in capital market for • Reviewed the reports of internal and external
decentralization of investment portfolio. audits. During the review of reports against
• Recommendation to the bank management the internal and external audits, the Audit
to purchase land for established bank Head Committee expressed their dissatisfaction for
Office. major irregularities took on place at the
• Recommendation to the ICC Division to branches.
include Classified Loan information with • Suggested for immediate improvement
Branch Comprehensive Audit Report. against the deficiencies in operational
activities at the branches.
Steps taken for implementation on effective
internal control procedure of the Bank as advised • Advised for improvement of systems to
by the Audit Committee: promote the operational activities of Branch to
a certain efficient level.
The Committee placed its report regularly to the • Advised to immediately report the major
Board of Directors of the Bank mentioning its review irregularities to the Chairman of Audit
results and recommendations on internal control Committee through e-mail before preparation
system, compliance with rules and regulations and of audit reports.
establishment of good governance within the
• Advised to check each and every audit report
organization.

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by the line management time and again to carefully and to maintain security of ATM
ensure its reliability and standard. system very cautiously to avoid the fraudulent
• Advised to ensure implementation of transactions.
recommendations made by different • Advised to train the officers/executives of the
committee of the board meticulously. branches and to make them aware about their
• Advised for thoroughly checking the individual responsibilities in duties.
Transaction Profile of the Accounts during • Suggested for installation of Disaster
audit to ensure reliability of transactions. Recovery Site (DRS) for Date Center of the
• Recommended for taking effective initiatives Bank.
by ICCD of the Bank to strengthen overall • Advised to take necessary steps for
monitoring, so that no fraudulent activities can maintaining file management in order to keep
take place in the bank. perfect workable environment at office,
• Advised to meticulously comply with all terms radical modification of cleanliness program
and conditions of the credit approvals for and to manage fire and sudden incidence.
disbursement by the branches. • Advised to pay more attention regarding
• Advised to allow land as collateral security protection of information of the Bank.
after proper verification of its genuineness • Suggested for special monitoring on rural
from respective A.C. land office. branches of the Bank.
• Advised to recover overdue loans/Advance Approval of Financial Statements:
and to take remedial measures to restraint
further classification/bad in future. The Audit Committee reviewed and examined the
• Suggested to be more cautious regarding Bank’s Annual Financial Statements for the year
takeover loan, so that other bank may not get ended December 31, 2017, prepared by the
opportunity to transfer any classified/bad loan Management and audited by External Auditors Khan
at our end. Wahab Shafique Rahman & Co, Chartered
Accountants with a recommendation to the Board for
• Advised to decentralized loan portfolio in
consideration and approval.
order to enhance SME loans.
• Recommended for complying with the detail The Audit Committee accords its sincere thanks and
guidelines of Bangladesh Bank and other gratitude to Members of the Board, Management
Regulatory Authorities for opening of all types team and the Auditors for their continuous support to
of accounts at the branches. make the bank compliant in its journey to banking
• Recommended for complying with the detail excellence.
guidelines of Bangladesh Bank following
BRPD circular 03 dated 08.03.2016 and
BRPD circular 06 dated 04.09.2016 on
Internal Control and Compliance in Bank.
• Advised to corroborate compliance
maintaining excellence of customer services Talukder Abdul Khaleque
at Branch level. Chairman
• Advised to issue Debit and Credit cards Audit Committee of the Board

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 Corporate Governance Practices in South Bangla
Agriculture and Commerce Bank Limited
Conceptual Framework practices of local and global banks. At SBACBL we
attach a simple meaning to ‘Corporate Governance’
Corporate governance is the structure and process by
which is ‘Due Diligence’ in observing responsibilities
which companies are directed and governed. It
by the Board as well as by the Management to
makes companies more accountable and transparent
safeguard interest of key stakeholders i.e. depositors,
to investors and gives them the tools to respond to
shareholders, employees and the society at large.
stakeholders’ concerns. Corporate governance also
Two very important pillars of a good corporate
contributes to development, increased access to
governance structure are “Transparency” and
capital, encourages new investments, boosts
“Accountability” backed by strong Internal Control and
economic growth, and provides employment
Compliance Structure and MIS capabilities.
opportunities
Board of Directors
It is the set of principles, policies, procedures and
clearly defined responsibilities, accountabilities and Board of Directors of South Bangla Agriculture and
structured administration to overcome the conflicts of Commerce Bank Ltd. comprises competent and
interest inherent in the corporate bodies. Corporate in professionally skilled persons with a view to
today’s business world is subject to a variety of formulating policy-guidelines and supervising
conflicts of interest due to its inherent complexities in business activities of the bank efficiently as well as
forms and structures. Good corporate governance ensuring good governance in the bank. The
helps companies operate more efficiently, improve responsibilities of the board of directors of the Bank
access to capital, mitigate risks and safeguard against are more important than those of other companies;
mismanagement. The objectives of corporate because in case of a bank-company it is essential to
governance is to eliminate or mitigate conflicts of earn and maintain confidence of the depositors as its
interest particularly those between management and business is mainly run with the depositors' money.
shareholders. From the view point of conflicts of
Our Board of Directors is fully committed to
interest, two relationships (between management and
maintaining the highest standard in corporate
shareholders and directors and shareholders) are the
governance, professionalism and integrity in driving
primary focus of most of the systems of corporate
South Bangla Agriculture & Commerce Bank Ltd. to
governance. Board members owe a duty to make
create and deliver long-term sustainable value. In line
decisions based on what ultimately is the best for the
with the Bank’s mission and vision, the Board has
long-term interests of the shareholders. In order to do
continued to ensure that the highest standards in
this effectively, Board members need a combination of
corporate governance are upheld, with a view to
three things: independence, experience and
enhancing stakeholders’ value, increasing investors’
resources.
confidence, establishing customers’ trust in building a
Guiding Philosophy of Corporate Governance competitive organization.
Practices
SBAC Bank Limited has its own Articles of
As our Bank is incorporated as a legal entity, it is Association by which Appointment of Directors is
guided in its corporate governance practices mainly governed. Moreover the Bank always complies with
by two regulatory bodies: The Bangladesh Bank (The the prescriptions of the regulatory authorities
Central Bank of Bangladesh) and The Bangladesh regarding appointment of directors. In this connection
Securities and Exchange Commission (BSEC). Circulars of Bangladesh Bank (BB), notification of
However, the Bank’s corporate governance Bangladesh Securities and Exchange Commission
philosophy encompasses not only regulatory and (BSEC), provisions of Bank Companies Act, 1991,
legal requirements but also various internal rules, (amended up to 2018) and Companies Act 1994 are
policies, procedures and practices based on the best strictly followed. The number of the board members

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of the Bank is 20 which complies with the rules and provision of the Companies Act 1994 and Articles of
regulations mentioned above. Association of the Bank.
The following articles are adopted for ensuring good Under section 15(4) of the Bank Companies Act, 1991
governance regarding constitution of board of (amended up to 2018), prior approval is taken at the
directors, their duties & responsibilities and other time of appointment of directors from Bangladesh
related activities: Bank and along with the application following
documents are submitted:
Formation of Board of Directors:
a. Personal information of the nominated
The newly amended Section 15 of the Bank Companies
person (Appendix-ka);
Act, 1991 (amended up to 2018) includes provisions for
prior approval of Bangladesh Bank before the b. Nominated person's declaration
appointment of new directors, as well as dismissal, (Appendix-kha);
termination or removal of any director from the post; c. Declaration of confidentiality by the
director's fit & proper criteria; maximum number of nominated person (Appendix-ga);
directors; appointment of independent directors; d. In case of Independent director, the approval
appointment of maximum number of 4 (four) directors letter from Bangladesh Securities and
from a family etc. The Board of Directors of our bank is Exchange commission;
formed as per provisions of laws.
e. In case of Independent director, a declaration
Composition: of the director concerned as per Appendix-gha
(he will also submit declaration under
All directors of the Board are non-executive directors.
Appendix-ka, kha & ga);
As per section 15(9) of Bank Companies Act 1991
(amended up to 2018) we have co-opted 2 (two) f. CIB report of the nominated person;
Independent Directors. Another Independent Director g. Updated list of the directors.
is going to be appointed soon for full compliance of Retirement and Re-election of Directors
the provision of aforesaid Acts. The Chairman has
been independent of the CEO, and has been in As per section 91(2) of the Companies Act 1994,
practice from the inception of SBAC Bank. This also regulation 78-82 of First Schedule of the Companies
complies with Section 1.4 of the BSEC’s notification Act 1994 and Article 101(2) of Articles of Association
No. SEC/CMRRCD/2006-158/134/ Admin/44 dated of the Bank, each year one-third of the Directors retire
August 7, 2012 on Corporate Governance Guidelines. from office and being eligible, may offer themselves
for re-election by shareholders at the Annual General
Selection and Appointment of New Directors: Meeting.
In context to the selection and appointment of new Independent Director
directors, the existing Board of Directors has the
following obligations and duties: As per BSEC Circular No. EC/ CMRRCD/ 2006-158/
134/Admin/ 44 dated August 07, 2012, 1/5th of total
1) Frequent assessment of the size and number of Directors should be Independent Directors.
structure of the Board and the mix of But as per section 15(9) of Bank Companies Act 1991
knowledge, skills, experience and (amended up to 2018) Independent Directors shall be
perceptions that may be necessary to allow maximum 3 (three).
the Board to perform its functions
Vacation of office of Director:
2) Recognize any capabilities not sufficiently
a. The office of a director shall be vacated as
represented and approve the procedure
per provision specified in section 108 (1) of
necessary to be certain that an applicant
the Companies Act, 1994. Besides, if any
proposed by the shareholders with those
director becomes defaulter and does not
capabilities is nominated.
repay the loan within two months after getting
The directors are selected by the shareholders in the a notice under section 17 of the Bank
Annual General Meeting. Casual vacancies, if any, Companies Act, 1991(amended up to 2018);
are filled up by the Board in accordance with the provides false statement at the time of

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appointment or fails to fulfill the minimum should immediately inform it to Bangladesh

eligibility criteria, the office of the director will Bank.
be vacated;
b. The copy of the decision of the board
b. If the office of a director is vacated by a notice regarding appointment of alternate director,
under section 17 of Bank Companies Act with original director's probable date of
1991, the person will not be eligible to returning from abroad, is sent to Bangladesh
become a director of the bank for one year Bank within 7 days of taking the decision and
from the date of repayment of the total the director's arrival date is intimated to
amount due to the bank. It is mentionable Bangladesh Bank immediately after his/her
here that the dues can be adjusted with the return.
shares held by the director in the respective
c. Any loan defaulter or any person who is not
bank. When a director receives a notice under
eligible to become a director as per any rules
section 17 of Bank Companies Act,
& regulation shall not be appointed as an
1991(amended up to 2018), he/she cannot
Alternate Director.
transfer his/her shares of that bank until
he/she repays all the liabilities of the notifying d. As appointment of alternate director is a
bank or financial institution. temporary measure, therefore, he/she is not
included in any kind of committee constituted
c. Besides, Bangladesh Bank can remove a
by the board.
director or chairman of the bank for
conducting any kind of activities that is e. While in the office, an alternate director or
detrimental to the interest of the banks his/her affiliated organization will not get any
depositors or against the public interest under kind of loan facilities from his bank. In case of
Section 46 and can suspend the board of a previous loan, enhancement of limit or
Banking Company under Section 47 of BCA, extension of time period or any kind of
1991(amended up to 2018). exemption or interest waiver will not be
allowed. Moreover, all restrictions applicable
Removal of Directors from office:
to directors according to rules & regulations
According to section 106 of the Companies Act, 1994, will also be applicable to the alternate
with the prior approval of Bangladesh Bank, directors director.
may be removed from his office for the reason
Information regarding Directors:
specified in its Articles of Association. For this
purpose, the reason and grounds of the As per BRPD Circular No. 11 dated October 27, 2013
dismissal/removal and copy of the decision of the our Bank ensures the following regarding directors’
shareholders and list of directors should be submitted information:
to Bangladesh Bank. In this case, the removal will be a. the Bank keeps an updated list of banks’
effective from the date of Bangladesh Bank’s directors,
approval. A director so removed shall not be
re-appointed a director by the Board of Directors. b. Bank sends a list of directors' to other banks
or financial institutions immediately after the
Appointment of Alternate Director: appointment or release of director.
Subject to compliance of section 101 of the c. the Bank displays a list of directors in the
Companies Act, 1994, the Board of Directors may website and updates it on a regular basis.
appoint alternate directors to act for a director during
his absence for a continuous period of not less than Role and Responsibilities of the Board
three months from Bangladesh. In this context, the To ensure good governance in the bank there is a
following instructions are followed: specific demarcation of responsibilities and
a. Bank has to collect and properly maintain the authorities among controlling bodies over bank’s
documentary evidences relating to departure affairs in compliance with provisions of Bank
and arrival of the original director. If there is Companies Act, 1991 (amended up to 2018). The
any exception, the chief executive officer newly included Section 15(kha) & (ga) give

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responsibility to the board of directors for establishing The board frames policies for risk
relevant policies such as policy for investments, management and get them complied with and
procurement of assets, recruitment, risk monitors the compliance at quarterly rests
management, internal controls, internal audit and and review the concerned report of the risk
compliance and for ensuring their implementation. management team and incorporates in the
minutes of the board meeting. The board
The Board of SBAC Bank Ltd. is responsible for the
monitors the compliance of the guidelines of
periodic review and approval of the overall strategies,
Bangladesh Bank regarding core risks
business and significant policies of the Bank. The
management.
Board also sets the Bank’s core values, adopts proper
standards to ensure that the Bank operates with c) Internal control management: The board is
integrity and complies with the relevant rules and vigilant on the internal control system of the
regulations. bank in order to attain and maintain
satisfactory qualitative standard of its
Authority of the Board of Directors
loan/investment portfolio. The board
a) Work-planning and strategic management: establishes such an internal control system
The board determines the objectives and so that the internal audit process can be
goals and to this end chalks out strategies conducted independently from the
and work-plans on annual basis. It specially management. It reviews the reports submitted
engages itself in the affairs of making by its audit committee at quarterly rests
strategies consistent with the determined regarding compliance of recommendations
objectives and goals and in the issues relating made in internal and external audit reports
to structural changes and reformation for and the Bangladesh Bank inspection reports.
enhancement of institutional efficiency and
d) Human resources management and
other relevant policy matters. It
development: Policies relating to recruitment,
analyzes/monitors, at quarterly rests, the
promotion, transfer, disciplinary and punitive
development of implementation of the
measures, human resources development
work-plans.
etc. and service rules are framed and
The board has its analytical review approved by the board. The chairman or the
incorporated in the Annual Report as regards directors in no way involve themselves or
the success/failure in achieving the business interfere into or influence over any
and other targets set out in its annual administrative affairs including recruitment,
work-plan and apprises the shareholders of promotion, transfer and disciplinary measures
its opinions/ recommendations on future as executed under the set service rules. No
plans and strategies. It sets the Key member of the board of directors is included
Performance Indicators (KPIs) for the CEO & in the selection committees for recruitment
officers immediate two tiers below the CEO and promotion to different levels.
and has it evaluated from time to time. Recruitment, promotion, transfer &
punishment of the officers immediate two tiers
b) Credit and Risk management: The policies,
below the CEO shall, however, rest upon the
strategies, procedures etc. in respect of
board. Such recruitment and promotion are
appraisal of loans/investments proposals,
carried out complying with the service rules.
sanction, disbursement, recovery, reschedule
and write-off thereof are made with the board’s The board focuses its special attention to the
approval under the purview of the existing development of skills of bank’s staff in different
laws, rules and regulations. The board fields of its business activities including prudent
specifically delegates the authority of sanction appraisal of loans and investment proposals
of loan/investment and such delegations are and to the adoption of latest electronic and
desirably made among the CEO and other information technologies and the introduction
higher executives as much as possible. No of effective Management Information System
directors, however, interfere, direct or indirect, (MIS). The board gets these programmes
into the process of loan approval. incorporated in its annual work plan.

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The board composes Code of Ethics for every The Board’s responsibilities include but not limited to:
tier and they follow it properly. It promotes
• Analyzing and approving the strategies and
healthy code of conducts for developing a
business plans for the Bank;
compliant culture.
• Approval of the Bank’s annual budget and
e) Financial management: The annual budget carrying out periodic review of the
and the statutory financial statements are achievements by the various operating
finalized with the approval of the Board of divisions against their respective business
Directors. The board reviews and monitors targets;
the positions in respect of bank's income,
• Setting the minimum standards and
expenditure, liquidity, non-performing asset,
establishing policies on the management of
capital base and adequacy, maintenance of
credit risks and other key areas of the Bank’s
loan loss provision and steps taken for
operations;
recovery of defaulted loans including legal
measures on a quarterly basis. • Ensuring that the operating infrastructure,
system of control, system for risk
The board frames the policies and
identification and management, financial and
procedures for bank’s purchase and
operational controls are in place and properly
procurement activities and accordingly
implemented;
approves the delegation of authority for such
expenditures. The maximum possible • Reviewing the adequacy and efficacy of the
delegation of such power of expenditure rests Bank’s internal control systems;
on the CEO and higher executives. The • Overseeing the Bank’s businesses vis-à-vis
decision on matters relating to infrastructure business plans;
development and purchase of land, building, • Succession planning including ensuring that
vehicles etc. for the purpose of bank’s all candidates appointed to senior
business shall, however, be taken with the management positions are capable and
approval of the board. experienced and program are in place to
The board reviews whether an Asset-Liability provide for the orderly succession of senior
Committee (ALCO) has been formed and it is management;
working according to Bangladesh Bank • Reviewing succession planning and talent
guidelines. management plans for the Bank and
f) Appointment of Chief Executive Officer (CEO): approving the appointment and compensation
Corporate Governance requires segregation of senior management staff;
of Management from ownership. In order to • Approving changes in the corporate
accomplish the organizational goal, one of the organization structure;
major responsibilities of the Board of • Approving policies relating to corporate
Directors is to put in place efficient branding, public relations, investor relations
Management headed by the Managing and shareholder communication programs
Director and Chief Executive Officer (CEO). and
The Board clearly define the roles, duties and
• Reviewing the Bank’s strategies on
responsibilities of CEO and other top
promotion of sustainability focusing on
executives appointed by them. While the
environmental, social and governance
Board will appoint a CEO, they must make a
aspects.
fit and proper test i.e. regarding the honesty,
integrity, efficiency, experience and other The Board duly complies with the circulars/guidelines
attributes of the incumbent. They will also issued by Bangladesh Bank, notifications issued by
ensure the compliance with provisions of laws Bangladesh Securities and Exchange Commission,
in respect of appointment of CEO. provisions of Bank Companies Act 1991 (amended up
to 2018) and the Companies Act 1994 regarding the
g) Other responsibilities of the Board: The board
responsibility and accountability of the Board, its
is entrusted with the responsibilities assigned
Chairman and Managing Director.
by Bangladesh Bank.

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Code of Conduct for the Board of Directors 9) Training opportunities/orientation/ workshops

will be arranged for the members (especially
The Board of Directors follows a Code of Conduct
for the newly inducted members) to make
which was adopted to provide guidance to directors to
them acquainted with the international best
carry out their duties and responsibilities
practices, their fiduciary obligations, Code of
due-diligently and within the scope of their authority,
Conduct etc.
as set forth in the laws of the country as well as in the
Memorandum and Articles of Association of the 10) Members shall always maintain ‘Fit and
Bank. Proper Test Criteria’, clean CIB status and
other obligations declared by the Primary and
other Regulators
The Code of Conduct states:
11) Members shall be judicious about their
1) The Members of Board of Directors shall act entitlement of benefits/privileges as per
honestly in good faith and in the best interests Banking Companies Act -1991 (amended up
of the shareholders and the company; to 2018) and all circulars issued by
2) The members shall not make improper use of Bangladesh Bank and shall be willing to
information acquired as a director; produce supporting documents, if required;

3) The members shall not take improper 12) Every Director will assure annually signing a
advantage of the position as a director; confirmation that they have gone through,
have complied with and will continue to
4) The members will be obligated to be comply with the set of codes approved by the
independent in judgment and actions and Board of Directors.
take all reasonable steps to be satisfied as to
the soundness of decision taken by the Board Directors’ Remuneration
of Directors; Directors are not eligible to any remuneration other
5) Confidential information acquired by the than fees for attending meetings of the Board and its
members in the course of exercise of Committee. As per BRPD Circular letter No. 11 dated
directorial duties shall be treated as the October 04, 2015 and Article 95 of Articles of
property of the company and it will be Association of the Bank directors are eligible to the
improper to disclose or allow it to be remuneration of BDT 8,000 only for each meeting
attended by them. The following conditions are
disclosed, unless that disclosure has been
applicable as under:
authorized by the company, or the person
from whom the information has been • Meeting should be held in the same town or
received; city where the Bank is head quartered.
6) Members shall make every effort to attend all However, the meetings may be held other
Board and Committee Meetings during their places subject to intimation to Bangladesh
tenure. They will not absent themselves Bank in advance;
without good reasons or without confirming • Remuneration is applicable for 2 (two)
leave of absence; meetings of Board of Directors, 4 (four)
meetings of Executive Committee (EC) and 1
7) To maximize effectiveness of the
Board/Committee Meetings, contribution of (one) meeting for Risk Management
individual director shall be monitored and Committee (RMC) and Audit Committee (AC)
monthly.
appraised on an annual basis;
• Travel Bill and two days Hotel bill is payable
8) Board members having interest of any nature in
for the directors traveling within the country
the agenda of the meeting shall declare
and three days Hotel bill for directors
beforehand the nature of their interest and
(foreigners) coming from out of the country
withdraw themselves from the room unless they
subject to submission of bills of actual
have a dispensation to speak;
expenditures to the bank for preserve;

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Meeting of Board: Executive committee:

The Board meets as required to discuss business Executive committee should be formed with the
strategies, financial performance, matters pertaining members of the board to continue the urgent and
to compliance and good governance as well as routine works between the intervals of two board
reports on matters deliberated by the respective meetings. Executive committee will perform
committees. The Board reviews, amongst others, the according to their terms of reference determined by
financial performance of the Bank, risk management the Board of Directors.
and compliance reports and approve the quarterly
Organizational structure:
results of the Bank at its meeting. The meetings of the
Board are scheduled in advance for the Directors to i. Members of the committee will be nominated by
plan their schedules. In addition, Special Board the board of directors from themselves;
meetings may be held when necessary, for decision ii. The executive committee will consists of
on major transactions and ad-hoc matters that require maximum 07 (seven) members;
the Board’s urgent attention and decisions. A Board
meeting is held at the beginning of the year to discuss iii. Members may be appointed for a 03
the Bank’s Business plan and Budget. (three)-year term of office;

Meeting papers on the proposals and reports are iv. Chairman of the Board of Directors may be the
delivered to the Directors prior to the meetings, giving chairman of the executive committee;
them sufficient time to evaluate the proposals and if v. Company secretary of the bank will be the
necessary, request additional information. This secretary of the executive committee.
enables the Board to function and discharge their
responsibilities effectively. The minimum information Qualifications of the Members:
required for the Board to make an informed and i. Integrity, dedication, and opportunity to spare
effective decision includes background, objective, key time in the functions of committee will have to
issues, rationale, financial and non-financial impact of be considered while nominating a director to a
the proposal. Directors who are unable to attend a committee;
meeting due to unavoidable circumstances are
encouraged to provide feedback to the Chairman on ii. Each member should be capable of making
matters to be deliberated for their views to be given valuable and effective contributions in the
due consideration at the meetings. functioning of the committee;

Board of directors may meet once or more than once ii. To perform his or her role effectively each
in a month if necessary. But Board of directors meets committee member should have adequate
at least once in every three months. As per provisions understanding of the detailed responsibilities
of laws notice of the meeting is duly served and of the committee membership as well as the
quorum is ensured before the meeting in progress. bank's business, operations and its risks.
Only the Directors attend the Board Meeting. Other Roles and Responsibilities of the Executive
than directors only Managing Director & CEO and the Committee:
Company secretary attend the Meetings. In this
i. The executive committee can decide or can act
connection BRPD Circular Letter No. 23 dated
in those cases as instructed by the Board of
December 26, 2013 is strictly complied with.
directors and those not specifically assigned
Formation of committees from the Board of on full board through the Bank Companies
Directors: Act, 1991 (amended up to 2018) and other
As per provision of laws, the bank can form an laws and regulations.
Executive Committee, an Audit Committee and a Risk ii. The executive committee can take all
Management Committee with the directors. Board necessary decisions or can approve cases
cannot form any other permanent, temporary or sub- within power delegated by the board of
committee except the above mentioned three directors.
committees.
iii. All decisions taken in the executive committee

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should are placed for ratification in the next iv. Members may be appointed for a 03 (three)
board meeting. year term of office;
Meetings v. Company secretary of the bank will be the
secretary of the audit committee.
i. The executive committee can sit any time as it
may deem fit. Qualifications of the Member:
ii. The committee may invite Chief Executive i. Integrity, dedication, and opportunity to spare
Officer, Head of internal audit or any other time in the functions of committee will have to
Officer to its meetings, if it deems necessary; be considered while nominating a director to
the committee ;
iii. To ensure active participation and contribution
by the members, a detailed memorandum ii. Each member should be capable of making
should be distributed to the committee valuable and effective contributions in the
members well in advance before each functioning of the committee;
meeting;
iii. To perform his or her role effectively each
iv. All decisions/observations of the committee committee member should have adequate
should be noted in minutes. understanding of the detailed responsibilities
of the committee membership as well as the
Audit Committee:
bank,s business, operations and its risks.
As per BSEC notification No. SEC/ CMRRC/
iv. Professionally experienced persons in
2006-158/129/ Admin/ 44 dated 7th August 2012 on
banking/financial institutions specially having
Corporate Governance and BRPD Circular No. 11
educational qualification in Finance, Banking,
dated October 27, 2013 the Audit Committee of the
Management, Economics, Accounting will get
Board is formed. The current Audit Committee
preference in forming the committee.
consists of 5 members. One of the members of the
committee is from Finance and Accounting Roles and Responsibilities of the Audit
background. The head of internal audit always has Committee
direct access to the audit committee and can express
Internal Control:
his issues in front of the committee. The Audit
Committee has a terms of reference and is i. Evaluate whether management is setting the
empowered to investigate/question employees and appropriate compliance culture by
retain external counsel as required. communicating the importance of internal
control and the management of risk and
The board will approve the objectives, strategies and
ensuring that all employees have clear
overall business plans of the bank and the audit
understanding of their roles and
committee will assist the board in fulfilling its oversight
responsibilities;
responsibilities. The committee will review the
financial reporting process, the system of internal ii. Review management's actions in
control and management of financial risks, the audit computerization of the banking activities;
process, and the bank’s process for monitoring iii. Consider whether internal control strategies
compliance with laws and regulations and its own recommended by internal and external
code of business conduct. auditors have been implemented by the
Organizational structure: management;

i. Members of the committee will be nominated by iv. Consider reports relating to fraud, forgery,
the board of directors from the directors; deficiencies in internal control or other similar
issues detected by internal and external
ii. The audit committee will comprise of maximum
auditors and inspectors of the regulatory
05 (five) members, with minimum 2 (two)
authorities and place it before the board after
independent director;
reviewing whether necessary corrective
iii. Audit committee will consist of the directors measures have been taken by the
who are not executive committee members; management.

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Financial Reporting: exchange Commission, Registrar of Joint Stock

Companies and Firms and other bodies) and internal
1. Audit committee will check whether the
regulations approved by the board are being complied
financial statements reflect the complete and
with.
concrete information and determine whether
the statements arc prepared according to Other Responsibilities:
existing rules & regulations, accounting
i. Submission of compliance report to the board
principles and standards enforced in the
on quarterly basis on regularization of the
country such as Bangladesh Accounting
omissions, frauds and forgeries and other
Standards, International Accounting
irregularities detected by the internal and
Standards, Bangladesh Financial Reporting
external auditors and inspectors of regulatory
Standards, International Financial Reporting
authorities;
Standards and as per relevant prescribed
accounting standards set by Bangladesh ii. External and internal auditors will submit item
Bank; audit report, if the committee solicit;

2. Discuss with management and the external iii. Perform other oversight functions as desired
auditors to review the financial statements by the Board of Directors and evaluate the
before its finalization. committee's own performance on a regular
basis.
Internal Audit:
Meetings:
I. Audit committee will monitor whether internal
audit functions are carried out independently i. The audit committee should hold at least 4
from the management. meetings in a year and it can sit any time as it
may deem fit;
i. Review the activities of the internal audit and
the organizational structure and ensure that ii. The committee may invite Chief Executive
no unjustified restrictions or limitations hinder Officer, Head of internal audit or any other
the internal audit process: Officer to its meetings, if it deems necessary;

ii. Examine the efficiency and effectiveness of iii. To ensure active participation and
internal audit functions; contribution by the members, a detailed
memorandum should be distributed to the
iii. Examine whether the findings and
committee members well in advance before
recommendations made by the internal
each meeting;
auditors arc duly considered by the
management. iv. All decisions/observations of the committee
should be noted in minutes.
External Audit
v. Company secretary of the bank will be the
i. Review the performance of the external
secretary of the audit committee.
auditors and their audit reports;
Reporting of the Audit Committee
ii. Examine whether the findings and
recommendations made by the external The Audit Committee of the Bank has the following
auditors arc duly considered by the reporting requirements:
management. Reporting to the Board of Directors
iii. Make recommendations to the board
The Audit Committee shall report on its activities to the
regarding the appointment of the external
Board of Directors. It shall immediately report to the
auditors.
Board of Directors on the following findings, if any:-
Compliance with existing laws and regulations:
a. report on conflicts of interests;
The Committee shall review whether the laws and
b. suspected or presumed fraud or irregularity
regulations framed by the regulatory authorities
or material defect in the internal control
(Bangladesh Bank, Bangladesh Securities and
system;

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c. suspected infringement of laws, including iii. Members may be appointed for a 03 (three)
securities related laws, rules and regulations; year term of office;
d. any other matter which shall be disclosed to iv. Company secretary of the bank will be the
the Board of Directors immediately. secretary of the Risk Management
Committee.
Reporting to the Authorities
Qualifications of the Member:
The Board of Directors will evaluate the findings and
recommendation of the Audit Committee. If the Audit i. Integrity, dedication, and opportunity to spare
Committee has reported to the Board of Directors time in the functions of committee will have to
about anything which has material impact on the be considered while nominating a director to
financial condition and results of operation and has the committee;
discussed with the Board of Directors and the
ii. Each member should be capable of making
management that any rectification is necessary and if
valuable and effective contributions in the
the Audit Committee finds that such rectification has
functioning of the committee;
been unreasonably ignored, the Audit Committee
shall report such findings to the regulatory authorities, iii. To perform his or her role effectively each
upon reporting of such matters to the Board of committee member should have adequate
Directors for three times or completion of a period of 6 understanding of the detailed responsibilities
(six) months from the date of first reporting to the of the committee membership as well as the
Board of Directors, whichever is earlier. bank’s business, operations and its risks.

Reporting to the Shareholders and General Roles and Responsibilities of the Risk
Investors Management Committee:

Report on activities carried out by the Audit Risk identification & control policy :
Committee, including any report made to the Board of Formulation and implementation of appropriate
Directors shall be signed by the Chairman of the Audit strategies for risk assessment and its control is the
Committee and disclosed in the annual report of the responsibility of Risk Management Committee. Risk
Bank. Management Committee will monitor risk
Risk Management Committee: management policies & methods and amend it if
necessary. The committee will review the risk
To play an effective role in mitigating impending risks
management process to ensure effective prevention
arising out from strategies and policies formulated by
and control measures.
the Board and to carry out the responsibilities
efficiently, a risk management committee is formed by Construction of organizational management
the Board of Directors. The present committee structure:
comprises three members. After identifying and The responsibility of Risk Management Committee is
assessing several risk factors like credit risks, foreign to ensure an adequate organizational structure for
exchange risks, internal control and compliance risks, managing risks within the bank. The Risk
money laundering risks, information and Management Committee will supervise formation of
communication risks, management risks, interest separate Risk Management Department and monitor
risks, liquidity risks etc.; the risk management their activities for the compliance with instructions of
committee shall scrutinize whether appropriate risk lending risk, foreign exchange transaction risk,
management measures are being put in place and internal control & compliance risk, money laundering
applied and whether adequate capital and provision is risk, information & communication risk including other
being maintained against the risks identified. risks related guidelines.
Organizational Structure: Analysis and approval of Risk Management
i. Members of the committee will be nominated policy:
by the board of directors from themselves; Risk management policies & guidelines of the bank
ii. The Risk Management Committee will should be reviewed annually by the committee. The
comprise maximum 05 (five) members; committee will propose amendments if necessary and

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send it to the Board of Directors for their approval. Training for the Directors:
Besides, other limits including lending limit should be
The directors shall make themselves fully aware of
reviewed at least once annually and should be
the banking laws and other related rules and
amended, if necessary.
regulations for performing duties properly. Training is
Storage of data & Reporting system: also encouraged for directors by the Board, especially
on Corporate Governance. Training is encouraged
Adequate record keeping & reporting system
both at home and abroad. Three directors of the Bank
developed by the bank management will be approved
attended in an workshop regarding Revisiting
by the risk management committee. The committee
Corporate Governance Regulations for Banks in
will ensure proper use of the system. The committee
Bangladesh organized by International Finance
will minute its proposal, suggestions & summary in a
Corporation and Bangladesh Bank jointly on January
specific format & inform the Board of Directors.
31, 2015.
Monitoring the implementation of overall Risk
Chairman of the Board of Directors:
Management Policy:
The Chairman of the Board is elected to the office of
Risk Management Committee will monitor proper
Chairman by the directors. The Board considers that
implementation of overall risk management policies.
the Chairman is independent.
They will monitor whether proper steps have been
taken to mitigate all risks including lending risk, The role and responsibilities of the Chairman:
market risk, and management risk.
a) The Chairman of the board of directors does
Other responsibilities: not personally possess the jurisdiction to
apply policy making or executive authority.
i. Committee’s decision and suggestions
He /she does not participate or interfere in
should be submitted to the Board of Directors
the administrative or operational and routine
quarterly in short form;
affairs of the bank.
ii. Comply instructions issued from time to time
b) The chairman conducts on-site inspection of
by the controlling body;
any bank-branch or financing activities under
iii. Internal & external auditor will submit the purview of the oversight responsibilities of
respective evaluation report whenever the board. He may call for any information
required by the committee. relating to bank's operation or ask for
investigation into any such affairs; he may
Meetings:
submit such information or investigation
i. The risk management committee should hold report to the meeting of the board or the
at least 4 meetings in a year and it can sit any executive committee and if deemed
time as it may deem fit; necessary, with the approval of the board, he
ii. The committee may invite Chief Executive shall initiate necessary action thereon in
Officer, Chief Risk Officer and any other accordance with the set rules through the
Officer to its meetings, if it deems necessary; CEO. However, any complaint against the
CEO shall have to be apprised to Bangladesh
iii. To ensure active participation and Bank through the board along with the
contribution by the members, a detailed statement of the CEO.
memorandum should be distributed to
committee members well in advance before c) The chairman may be offered an office-room, a
each meeting; personal secretary/ assistant, one
peon/MLSS, one telephone at the office, one
iv. All decisions/observations of the committee mobile phone to use inside the country and a
should be noted in minutes. vehicle in the business-interest of the bank
v. Company secretary of the bank will be the subject to the approval of the board.
secretary of the Risk Management Besides this, the Chairman may/shall assume any
Committee. other responsibility if the Board assigns within the
purview of the Rules, Regulations, Acts and Articles of

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the Bank. The Chairman’s responsibilities are defined service rules. Besides, under the purview of
by the Board as directed by BSEC’s notification on the human resources policy as approved by
Corporate Governance Guidelines. the board, he shall nominate officers for
training
Role of the Chairman and CEO as independent
Besides, the Managing Director shall assume any
The Chairman of the Board is not the Managing
other responsibility if the Board assigns within the
Director of the Company. The role of Chairman and
purview of the Rules, Regulations, Acts and Articles of
the Managing Director are independent and detached
the Bank.
from each other.
Appointment of Chief Financial Officer (CFO), Head of
Role and Responsibilities of the CEO
Internal Audit And Company Secretary (CS):
The responsibilities and authorities of the Managing
As per BSEC notification No. SEC/ CMRRC/
Director are as follows:
2006-158/129/ Admin/ 44 dated 7th August 2012 on
i) In terms of the financial, business and Corporate Governance, the Bank appoints a Chief
administrative authorities vested upon him by Financial Officer (CFO), a Head of Internal Audit
the board, the CEO shall discharge his own (Internal Control and Compliance) and a Company
responsibilities. He shall remain accountable Secretary (CS). The Board of Directors clearly defines
for achievement of financial and other respective roles, responsibilities and duties of the
business targets by means of business plans, CFO, the Head of Internal Audit and the CS.
efficient implementation thereof and prudent
Role of the Company Secretary
administrative and financial management.
Company Secretary is responsible for advising the
ii) The CEO shall ensure compliance of the
Board on issues relating to corporate compliance with
Bank Companies Act, 1991 (amended up to
the relevant laws, rules, procedures and regulations
2018) and/or other relevant laws and
affecting the Board and the Bank, as well as best
regulations in discharging routine functions of
practices of governance. He is also responsible for
the bank.
advising the Directors of their obligations and duties
iii) The CEO shall include information on to disclose their interest in securities, disclosure of
violation of any law, rules, regulation including any conflict of interest in a transaction involving the
Bank Companies Act, 1991 (amended up to Bank, prohibition on dealing in securities and
2018) while presenting memos before the restrictions on disclosure of price-sensitive
Board or the committee formed by the board. information.
iv) CEO will provide all sorts of information to The responsibilities of the Company Secretary
Bangladesh Bank about the violation of include:
Banking Companies Act, 1991 and/ or any
i) To act as a point of communication among
violation of Laws, rules and regulations.
the management, board of directors,
v) The recruitment and promotion of all staff of company shareholders.
the bank except those in the two tiers below ii) To ensure the Bank complies with its
him shall rest on the CEO. He shall act in governing document, policies, company law
such cases in accordance with the approved and any other relevant legislation i.e.
service rules on the basis of the human regulations of Bangladesh Bank, Bangladesh
resources policy and sanctioned strength of Securities and Exchange Commission
employees as approved by the board. The (BSEC), Registrar of Joint Stock Companies
board or the chairman of any committee of the and Firms, Bourses etc. He will support and
board or any director shall not get involved or advise the Chair by ensuring smooth
interfere in such affairs. The authority relating functioning of the Board. He will work in
to transfer of and disciplinary measures partnership with the Chief Executive Officer
against the staff, except those at two tier and other Trustees to ensure proper
below the CEO, shall rest on him, which he discharge of activities & operations of the
shall apply in accordance with the approved Bank.

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iii) To support the Chairman in the smooth accordance with the provisions of laws and
functioning of the Board. Receive agenda Bank’s governing document. This includes
items from management and ensure checking that a quorum is present, adequate
consented agenda items are tabled at Board notice is served, notice period is maintained
meetings. This is done in consultation with the etc. Also make sure that agenda and minutes
Chief Executive Officer and the Chair who are of AGMs and EGMs are circulated among the
responsible for preparing Board meeting members and submitted to the regulators in a
agenda. timely manner.
iv) In line with Bangladesh Bank guidelines the x) File the annual list of members and summary
company secretary has to act as the of share capital together with the
Secretary to the sub committees of the Board authenticated Balance Sheet and the Profit
of Directors. In this area of risk mitigation, the and Loss account. Issue Dividend Warrants,
Company Secretary has a pivotal role to play bonus share certificates and make
in support of the members of the Sub arrangement for disposal of fractional shares,
Committees, Board Audit Cell, Audit & if any
Inspection Division, Risk Management xi) Maintain strict confidentially of information,
Division and Internal Control & Compliance manage situations like conflict of interest,
Division. identify problems and implement or
v) Act as a custodian of Bank’s governing recommend solutions
documents and policies. Ensure the Bank xii) Maintain and liaise with various
pursues its objects as defined in its governing associated/regulatory bodies viz. BAB, ABB,
document. He should act as a custodian of Chambers/other bodies, BSEC, BB, RJSC
the interests of the Bank. So, it is his prime and other regulators
duty to protect and safeguard such interests
Roles and Responsibilities of Chief Financial
of the Bank at all levels: statutory,
Officer (CFO):
administrative, and arbitrational and in other
policy matters. He should also ensure that i. The Chief Financial Officer (CFO) is
Board meeting minutes are signed by the responsible for:
Chair once they have been confirmed and ii. financial strategy, financial condition and
copies filed and kept at the Bank. position of the bank.
vi) Ensure the appointment of Bank’s board iii. He will be responsible for successful
members, that those appointed are not implementation of financial system as per
disqualified in law and are eligible to be International Accounting Standards (IAS),
members under the provisions of the International Financial Reporting Standards
governing documents and policies, and that (IFRS) as applicable, Bangladesh Accounting
the appointment procedure laid down in the Standards (BAS), Bangladesh Financial
governing document and policies are Reporting Standards (BFRS), Bangladesh
followed. Bank guidelines, Bank Companies Act 1994
vii) Make sure that the Directors have information and Bangladesh Securities and Exchange
to enable them to comply with the decisions Commission (BSEC) Regulations etc.
and fulfill their responsibilities. This includes iv. The CFO will work in close touch with the
organizing the induction of new Directors Managing Director & CEO and report to him.
also.
v. The CFO will get full executive power and
viii) Ensure that Board meetings are held in hold charge of Financial Administration
compliance with Bank’s governing documents Division.
and arrangements for the meetings are made. vi. He is accountable for the financial, budgeting
ix) Confirms that Annual General Meetings and Risk Management Operations including
(AGMs) and Extraordinary General Meetings the development of financial and operational
(EGMs) are conducted effectively and in strategies and monitoring of control systems

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designed to preserve bank’s assets and Appraisal and evaluation of Board of Directors
report accurate financial positions. and CEO
Role and responsibilities of ICCD Head There is not a scheme for annual appraisal of the
i) Assess whether the controls are properly board’s performance till date, but the company is
designed, implemented and working abiding by the Code of Conduct which was formulated
effectively, and make recommendations on by the Board. There is a three year strategic Priorities
how to improve internal control. & Action Plan for the evaluation of the
CEO/Management on an annual basis and it is
ii) Ensure the quality and adequacy of the revised from time to time accordingly by the Board.
organization’s internal controls system and
risk management process, and their Management Committee
effectiveness and outcomes. SBAC Bank Ltd. has a Management Committee
iii) Overseeing whether the bank is complying (MANCOM) which comprises Managing Director,
with regulatory norms as well as internal Additional Managing Director, Deputy Managing
policies, processes, procedures, strategies Directors, Head of Human Resources Division, Head
and directives in order to achieve the of ID and Credit, Head of IT, Head of GSD, Head of
corporate objectives of the bank. ICCD, Company Secretary and CFO to review,
discuss and decide on important business issues. In
iv) Design and develop annual audit plan, addition to the regular roles and responsibilities, the
getting it approved by the bank's competent Committee also governs all related policies and
authority and arrange regular as well as practices in pursuance of the Bank’s short and
special audit/inspection of Branches and long-term objectives.
Divisions of the bank as per plan
The Committee plays an independent role, operating
v) Develop job routine, constantly explore and as an overseer; and if required, makes
assess the high risk areas, conduct special recommendations to the Board of Directors of the
audit and recommend strategies to mitigate Bank for its consideration and final approval for any
risks. policy. The role of the Committee is to assist the
vi) Communicate the irregularities identified to Board of Directors to ensure that bank is run with
the board and senior management regularly good governance. The Committee performs all the
and propose and take corrective actions for functions necessary to fulfill its roles towards the
control effectiveness. organizational goals.
vii) Maintain strong ties with central bank officials Certification of CEO and CFO Regarding Financial
as an intermediary for the bank to resolve Statements
issues safeguarding bank’s interest. The CEO and CFO shall certify to the Board of
viii) Prepare, maintain and archive all documents Directors that:
relating to financial health and risk profiling of a. they have reviewed financial statements for
bank. the year;
ix) Prepare capital based risk audit framework b. to the best of their knowledge these
that allowed streamlining the financial health statements do not contain any materially
assessment process untrue statement or omit any material fact or
x) Prepare the occasional and periodic risk contain statements that might be misleading;
reports that communicate the severity of the c. these statements together present a true and
risk as well as mitigation tools fair view of the company’s affairs and are in
compliance with existing accounting
xi) Lead the team with full satisfaction
standards and applicable laws.
optimizing the utilization of resources
b. there are, to the best of knowledge and belief,
xii) Establish and maintain guidelines for a
no transactions entered into by the company
system of internal control.
during the year which are fraudulent, illegal or
violation of the company’s code of conduct.

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Status of compliance with the conditions imposed by the Bangladesh Securities and Exchange
Commission’s Notification No. SEC/CMRRCD/2006-158/134/Admin/44 dated 07 August 2012 issued
under section 2CC of the Securities and Exchange Ordinance, 1969 (XVII of 1969):

(Report under Condition No. 7.00)

Condition No. Title Compliance Status (Put in Remarks

the appropriate column) if any)
Complied Not complied
1 Board Size
1.1 Board members should not be less than 5 (five) √
and not more than 20 (twenty)
1.2 Independent Director (ID)
1.2 (i) At least one fifth (1/5) of the total number of Partially
directors in the company’s board shall be Complied,
independent directors. Noted for Full
Compliance
1.2 (ii) Conditions of Independent director:
a) Who either does not hold any share in the
company or holds less than one percent (1%) √
shares of the total paid-up shares of the
company;
b) Who is not a sponsor of the company and is
not connected with the company’s any sponsor or
director or shareholder who holds one percent √
(1%) or more shares of the total paid-up shares of
the company on the basis of family relationship.
His/ her family members also should not hold
above mentioned shares in the company:
c) Who does not have any other relationship,
whether pecuniary or otherwise, with the √
company or its subsidiary/ associated
companies;
d) Who is not a member, director or officer of any
√
stock exchange;
e) Who is not a shareholder, director or officer of
any member of stock exchange or an √
intermediary of the capital market;
f ) Who is not a partner or an executive or was not
a Partner or an executive during the preceding 3
√
(three) years of the concerned company’s
statutory audit firm;
g) Who shall not be an independent director in
√
more than 3 (three) listed companies;
h) Who has not been convicted by a court of
competent jurisdiction as a defaulter in payment √
of any loan to a bank or a Non-Bank Financial
Institution (NBFI);
(i) Who has not been convicted for a criminal
√
offence involving moral turpitude.

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1.2 (iii) The independent director(s) shall be appointed

by the board of directors and approved by the √
shareholders in the Annual General Meeting
(AGM). The Appointments are duly approved at
AGM.
1.2 (iv) The post of independent director(s) cannot Noted for
remain vacant for more than 90(ninety) days. compliance

1.2 (v) The Board shall lay down a code of conduct of all
√
Board members 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 3(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 a knowledgeable

individual with integrity who is able to ensure
compliance with financial, regulatory and √
corporate laws and can make meaningful
contribution to business.

1.3 (ii) The person should be a Business Leader/

Corporate Leader/ Bureaucrat /University
Teacher with Economics or Business Studies or √
Law background/Professionals like Chartered
Accountants, Cost & Management Accountants,
and Chartered Secretaries. The independent
director must have at least 12(twelve) years of
corporate management/professional
experiences.

1.3 (iii) In special cases the above qualifications may be Not

relaxed subject to prior approval of the applicable
Commission. (No Special
Case arose)
1.4 Chairman of the Board and Chief Executive Officer:
The positions of the Chairman of the Board and
the Chief Executive Officer of the companies
shall be filled by different individuals. The √
Chairman of the company shall be elected from
among the directors of the company and the
Board of Directors shall clearly define respective
roles and responsibilities of the Chairman and the
Chief Executive Officer.
1.5 The Directors’ Report to Shareholders shall include following additional statements
1.5 (i) Industry outlook and possible future √
developments in the industry.
1.5 (ii) Segment-wise or product-wise performances. √
1.5 (iii) Risks and concerns. √
1.5 (iv) A discussion on Cost of Goods sold, Gross Profit √
Margin and Net Profit Margin.

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1.5 (v) Discussion on continuity of any Extra-Ordinary

√
gain or loss.
1.5 (vi) Basis for related party transactions- a statement
√
of all related party transactions should be
disclosed in the annual report.
1.5 (vii) Utilization of proceeds from public issues, rights
N/A
issues and/or through any others instruments.
1.5 (viii) An explanation if the financial results deteriorate
N/A
after the company goes for Initial Public Offering
(IPO), Repeat Public Offering (RPO), Rights
Offer, Direct Listing, etc.
1.5 (ix) If significant variance occurs between Quarterly N/A
Financial performance and Annual Financial
Statements the management shall explain about
the variance on their Annual Report.

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 result of its operations,
cash flows and changes in equity.

1.5 (xii) Proper books of account of the issuer company

√
have been maintained.
1.5 (xiii) Appropriate accounting policies have been √
consistently applied in preparation of the financial
statements and that the accounting estimates are
based on reasonable and prudent judgment.

1.5 (xiv) International Accounting Standards √

(IAS)/Bangladesh Accounting 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.
1.5 (xvi) There are no significant doubts upon the issuer √
company's ability to continue as a going concern.
If the issuer company is not considered to be a
going concern, the fact along with reasons
thereof should be disclosed.
1.5 (xvii) Significant deviations from the last year’s √
operating results of the issuer company shall be
highlighted and the reasons thereof should be
explained.
1.5 (xviii) Key operating and financial data of at least
√
preceding 5 (five) years shall be summarized.

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1.5 (xix) f the issuer company has not declared dividend

N/A
(cash or stock) for the year, the reasons thereof
shall be given.
1.5 (xx) The number of Board meetings held during the
√
year and attendance 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);
1.5 (xxi) (b) Directors, Chief Executive Officer, Company
√
Secretary, Chief Financial Officer, Head of
Internal Audit and their spouses and minor
children (name wise details);
1.5 (xxi) (c) Executives (top 5 (five) salaried employees of the
√
company, other than the Directors, Chief
Executive Officer, Company Secretary, Chief
Financial Officer and Head of Internal Audit.)
1.5 (xxi) (d) Shareholders holding ten percent (10%) or more
√
votes’ interest in the company (name wise details).
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) Names of companies in which the person also √
holds the directorship and the membership of
committees of the board.
2 Chief Financial Officer (CFO), Head of Internal Audit and Company Secretary (CS):
2.1 Appointment:
The company shall appoint a Chief Financial √
Officer (CFO), a Head of Internal Audit (Internal
Control and Compliance) and a Company
Secretary (CS). The Board of Directors should
clearly define respective roles, responsibilities
and duties of the CFO, the Head of Internal Audit
and the CS.
2.2 Requirement to attend the Board Meetings: √
Attendance of CFO and the company secretary
at Board of Directors’ meeting.
3. Audit Committee:
3 (i) The company shall have an Audit Committee as a √
sub-committee of the Board of Directors.
3 (ii) The Audit Committee shall assist the Board of √
Directors in ensuring that the financial statements
reflect true and fair view of the state of affairs of
the company and in ensuring a good monitoring
system within the business.
3 (iii) The Audit Committee shall be responsible to the √
Board of Directors. The duties of the Audit
Committee shall be clearly set forth in writing.

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3.1 Constitution of the Audit Committee:

3.1 (i) The Audit Committee shall be composed of at
√
least 3 (three) members.

3.1 (ii) Constitution of Committee with Board members

√
including at least one Independent Director.
3.1 (iii) All members of the audit committee should be
√
“financially literate” and at least 1 (one) member
shall have accounting or related financial
management experience.
3.1 (iv) Filing of casual vacancy in committee. √
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) The Board of Directors shall select 1 (one) √
member of the Audit Committee to be Chairman
of the Audit Committee, who 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. √
3.3 (viii) Review statement of significant related party √
transactions submitted by the management.
3.3 (ix) Review Management Letters/ Letter of Internal √
Control weakness issued by statutory auditors.

3.3 (x) When money is raised through Initial Public

N/A
Offering (IPO)/Repeat Public Offering
(RPO)/Rights Issue the company shall disclose
to the Audit Committee about the
uses/applications of funds by major category.

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3.4 Reporting of 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:
3.4.1 (ii) a) Reporting of conflict of Interest √
3.4.1 (ii) b) Reporting of any fraud or irregularity √
3.4.1 (ii) c) Reporting of violation of laws √
3.4.1 (ii) d) Reporting of any other matter √
3.4.2 Reporting to the Authorities
If the Audit Committee has reported to the Board
of Directors about anything which has material
impact on the financial condition and results of
operation and has discussed with the Board of
Directors and the management that any N/A
rectification is necessary and if the Audit
Committee finds that such rectification has been
unreasonably ignored, the Audit Committee shall
report such finding to the Commission, upon
reporting of such matters to the Board of
Directors for three times or completion of a period
of 6 (six) months from the date of first reporting to
the Board of Directors, whichever is earlier.
3.5 Reporting to Shareholders and General Investors
Report on activities carried out by the Audit
Committee, including any report made to the
Board of Directors under condition 3.4.1 (ii)
√
above during the year, shall be signed by the
Chairman of the Audit Committee and disclosed
in the annual report of the issuer company.
4. External/Statutory Auditors
The issuer company should not engage its external / statutory auditors to perform the
following services of the company; namely:
4 (i) Appraisal or valuation services or fairness √
opinions.
4 (ii) Financial information systems 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 service that the Audit Committee √
determines.

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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.
5. Subsidiary Company N/A
6. Duties of Chief Executive Officer (CEO) And Chief Financial Officer (CFO):
6.(i) The CEO and CFO shall certify to the Board that they have reviewed financial statements for
the year and that to the best of their knowledge and belief:
6 (i) a) These statements do not contain any materially
√
untrue statement or omit any material fact or
contain statements that might be misleading;
6 (i) b) These statements together present a true and fair
√
view of the company’s 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 by the company during
the year which are fraudulent, illegal or in
violation 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 Accountant/Secretary (Chartered
Accountant/Cost & Management
Accountant/Chartered Secretary) regarding
compliance with 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.

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Disclosures under Risk Based Capital (Basel III)

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South Bangla Agriculture and Commerce Bank Ltd.

Disclosures under Risk Based Capital (Basel III)

For the year ended on 31 December 2017

Background: These disclosures under Pillar III of Basel III are made according to revised
`Guidelines on Risk Based Capital Adequacy (RBCA)’ for banks issued by Bangladesh Bank
(Central Bank of Bangladesh) in December 2014. These quantitative and qualitative
disclosures are intended to complement the Minimum Capital Requirement (MCR) under Pillar
I and the Supervisory Review Process (SRP) under Pillar II of Basel III.

The purpose of market discipline in the Revised Capital Adequacy Framework is to disclose
relevant information on capital adequacy in relation to various risks of the bank so that
stakeholders can assess the position of a bank regarding holding of assets, identify the risks
relating to the asses and capital adequacy and can make economic decision. The disclosures
under Pillar-III of Basel III framework of the bank as on 31 December 2017 are as under:

A) Scope of Application
B) Capital Structure
C) Capital Adequacy
D) Credit Risk
E) Equities: Disclosures for Banking Book Positions
F) Interest Rate Risk in Banking Book (IRRBB)
G) Market Risk
H) Operational Risk
I) Liquidity Ratio
J) Leverage Ratio
K) Remuneration

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FINANCIAL STATEMENT

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20 March, 2018

The Board of Directors

South Bangla Agriculture and Commerce Bank Limited
37 Dilkusha C/A (Level – 10)
Dhaka-1000.

SUB: Managing Director & CEO and Chief Financial Officer (CFO) Declaration to
the Board.

The following is provided to the Board of Directors of South Bangla Agriculture and
Commerce Bank Limited in our capacity as the persons responsible for performing
the functions of Managing Director & CEO and Chief Financial Officer of the Bank.
In accordance with the notification of Bangladesh Securities and Exchange
Commission No. SEC/CMRRCD/2006-158/134/Admin/44 dated 07 August, 2012
we declare that for the financial year ended 31 December, 2017:
i) We have reviewed the financial statements for the year ended 31 December 2017
and that to the best of our Knowledge and belief:
a) these statements do not contain any materially untrue statement or omit any
material fact or contain statements that might be misleading;
b) these statements together present a true and fair view of the Bank’s affairs and are
in compliance with existing accounting standards and applicable laws;
ii) There are, to the best of knowledge and belief, no transactions entered into by the
Bank during the year which are fraudulent, illegal or violation of the Bank’s code of
conduct.

Md. Masoodur Rahman FCA Md. Golam Faruque

Chief Financial Officer Managing Director & CEO

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Independent Auditor’s Report to the Shareholders

Report on the Financial Statements An audit involves performing procedures to

obtain audit evidence about the amounts and
We have audited the accompanying financial disclosures in the financial statements of the
statements of South Bangla Agriculture and Bank. The procedures selected depend on the
Commerce Bank Limited (the Bank), which auditor’s judgment, including the assessment of
comprise the balance sheet as at 31 December, the risks of material misstatement of the financial
2017 and the profit and loss account, cash flow statements of the Bank, whether due to fraud or
statement and statement of changes in equity for error. In making those risk assessments, the
the year then ended and a summary of auditor considers internal control relevant to the
significant accounting policies and other Bank’s preparation of financial statements that
explanatory information. give a true and fair view in order to design audit
Management’s Responsibility for the procedures that are appropriate in the
Financial Statements and Internal Controls circumstances but not for the purpose of
expressing an opinion of the effectiveness of the
Management is responsible for the preparation entity’s internal control systems. An audit also
and presentation of financial statements of the includes evaluating the appropriateness of
Bank that give a true and fair view in accordance accounting policies used and the
with Bangladesh Financial Reporting Standards reasonableness of accounting estimates made
(BFRS) as explained in note 2.1 and for such by management, as well as evaluating the
internal control as management determines is overall presentation of the financial statements
necessary to enable the preparation of financial of the Bank.
statements of the Bank that are free from
material misstatements, whether due to fraud or We believe that the audit evidence we have
error. The Bank Company Act, 1991 as amended obtained is sufficient and appropriate to provide
and the Bangladesh Bank Regulations require a basis for our audit opinion.
the Management to ensure effective internal Opinion
audit, internal control and risk management
functions of the Bank. The Management is also In our opinion, the financial statements of the
required to make a self-assessment on the Bank give a true and fair view of the financial
effectiveness of anti-fraud internal controls and position of the Bank as at 31 December 2017,
reports to Bangladesh Bank on instances of and of its financial performance and its cash
fraud and forgeries. flows for the year then ended in accordance with
Bangladesh Financial Reporting Standards
Auditor’s Responsibility (BFRS) as explained in note 2.1.
Our responsibility is to express an opinion on the Report on other Legal and Regulatory
financial statements of the Bank based on our Requirements
audit. We conducted our audit in accordance
with Bangladesh Standards on Auditing (BSA). In accordance with the Companies Act 1994,
Those standards require that we comply with Securities and Exchange Rules 1987, the Bank
ethical requirements and plan and perform the Company Act 1991 as amended and the rules
audit to obtain reasonable assurance about and regulations issued by Bangladesh Bank, we
whether the financial statements of the Bank are also report the following:
free from material misstatement.
a) we have obtained all the information and

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explanation which to the best of our taken in tripartite meeting amongst

knowledge and belief were necessary for Inspection team of Bangladesh Bank,
the purpose of our audit and made due External Auditors and the Management
verification thereof; of South Bangla Agriculture and
commerce Bank Limited held on
b) to the extent noted during the course of 07.03.2018 and subsequent letter no.
our audit work performed on the basis DBI-1/132/2018-1053 dated 20.03.2018
stated under the Auditor’s responsibility issued by Bangladesh Bank;
section in forming the above opinion on
the financial statements of the Bank and f) the expenditure incurred was for the
considering the reports of the purposes of the Bank’s business;
management to Bangladesh Bank on
anti-fraud internal controls and instances g) the financial statements of the bank have
of fraud and forgeries as stated under the been drawn up in conformity with
Management’s Responsibility for the prevailing rules, regulations and
Financial Statements and Internal accounting standards as well as with
Control: related guidance issued by Bangladesh
Bank;
i. Internal audit, internal control and risk
management arrangements of the h) adequate provisions have been made for
Bank as disclosed in note 2.17 of the advances, other assets and off-balance
financial statements appeared to be sheet items which are, in our opinion,
materially adequate; doubtful of recovery;

ii. Nothing has come to our attention i) the records and statements submitted by
regarding material instances of the branches have been properly
forgery or irregularity or administrative maintained in the financial statements;
error and exception or anything j) the information and explanation required
detrimental committed by employees by us have been received and found
of the Bank; satisfactory;
c) in our opinion, proper books of account k) we have reviewed over 80% of the risk
as required by law have been kept by the weighted assets of the Bank and we have
Bank so far as it appeared from our spent around 3,944 person hours for the
examination of those books; audit of the books and account of the
d) the balance sheet and the profit and loss Bank and
account of the Bank dealt with by the l) Capital to Risk Weighted Assets Ratio
report are in agreement with the books of (CRAR) as required by the Bangladesh
account; Bank has been maintained adequately
e) the financial statements of the Bank have during the year.
been drawn up in conformity with
prevailing rules, regulations and
Bangladesh Financial Reporting
Standards as explained in note No 2.1 as Khan Wahab Shafique Rahman & Co.
well as with related guidance, Circulars Chartered Accountants
issued by Bangladesh Bank and decision

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Balance Sheet
As at 31 December 2017

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Profit and Loss Account

For the year ended 31 December 2017

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Cash Flow Statement

For the year ended 31 December 2017

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Statement of Changes in Equity

For the year ended 31 December 2017

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Liquidity Statement (asset and liabilities maturity analysis)

As at 31 December 2017

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Notes to the Financial Statements

as at and for the year ended 31 December, 2017

1 General information shares and securities generally falls either under “at
fair value through profit and loss account” or under
1.1 Status of the bank
“available for sale” where any change in the fair
South Bangla Agriculture and Commerce Bank value (as measured in accordance with BFRS 13) at
Limited (“the Bank”) was incorporated in the year end is taken to profit and loss account or
Bangladesh as a public limited company with revaluation reserve respectively.
limited liability by shares as on February 20, 2013
Bangladesh Bank: As per BRPD Circular No. 14 dated
under the Companies Act 1994 to carry out banking
25th June 2003 investments in quoted shares and
business. It obtained license from Bangladesh Bank
unquoted shares are revalued at the year end at
for carrying out banking business on March 25,
market price and as per book value of last audited
2013 under Bank Companies Act 1991. The Bank has
balance sheet respectively. Provision should be
been carrying out its business through its sixty four
made for any loss arising from diminution in value
(64) branches all over Bangladesh.
of investments; otherwise investments are
1.2 Principal activities recognized at cost.
The principal activities of the Bank are to provide a ii) Revaluation gains/losses on Government
comprehensive range of financial services; personal securities
and commercial banking, trade services, cash
BFRS: As per requirement of BAS 39 where securities
management, treasury operation, security and
fall under the category of Held for Trading (HFT),
custody services.
any change in the fair value of held for trading
2 Basis of preparation of financial statements assets is recognized through profit and loss
and significant accounting policies account. Securities designated as Held to Maturity
2.1 Basis of preparation of financial statements (HTM) are measured using amortized cost method
and interest income is recognized through profit
The financial statements of the bank as at 31st and loss account.
December, 2017 have been prepared on going
concern basis under historical cost convention and Bangladesh Bank: HFT securities are revalued on the
in accordance with the “First Schedule” of the Bank basis of mark to market and at year end any gains on
Companies Act, 1991 as amended by BRPD Circular revaluation of securities which have not matured as
No. 14 dated 25th June 2003, other Circulars of at the balance sheet date are recognized in other
Bangladesh Bank, Bangladesh Financial Reporting reserves as a part of equity and any losses on
Standards (BFRS), Bangladesh Accounting revaluation of securities which have not matured as
Standards (BASs), the Companies Act 1994, the at the balance sheet date are charged in the profit
Securities and Exchange Rules 1987, and other laws and loss account. Interest on HFT securities
and rules applicable for Banks in Bangladesh. In including amortization of discount are recognized
case of any requirement of the Bank Companies Act in the profit and loss account. HTM securities which
1991, and provisions and circulars issued by have not matured as at the balance sheet date are
Bangladesh Bank differ with those of other amortized at the year end and gains on
regulatory authorities and BFRS, the requirements amortization are recognized in other reserve as a
of the Bank Companies Act 1991, and provisions part of equity.
and circulars issued by Bangladesh Bank prevailed. iii) Provision on loans and advances/investments
Material departures from the requirements of BFRS
are as follows: BFRS: As per BAS 39 an entity should start the
impairment assessment by considering whether
i) Investment in shares and securities objective evidence of impairment exists for
BFRS: As per requirement of BAS 39 investment in financial assets that are individually significant. For

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financial assets that are not individually significant, Income (OCI) Statement. As such the Bank does not
the assessment can be performed on an individual prepare the other comprehensive income
or collective (portfolio) basis. statement. However, elements of OCI, if any, are
shown in the statements of changes in equity.
Bangladesh Bank: As per BRPD Circular No.14 (23rd
vi) Financial instruments – presentation and
September 2012), BRPD Circular No. 19 (27th
disclosure
December 2012) and BRPD Circular No. 05 (29th
May 2013) a general provision at 0.25% to 5% under In several cases Bangladesh Bank guidelines
different categories of unclassified loans categorize, recognize, measure and present
(good/standard loans) has to be maintained financial instruments differently from those
regardless of objective evidence of impairment. prescribed in BAS 39. As such full disclosure and
Also provision for sub-standard loans, doubtful presentation requirements of BFRS 7 and BAS 32
loans and bad/loss loans has to be provided at 20%, cannot be made in the financial statements.
50% and 100% respectively for loans and advances
vii) Financial guarantees
depending on the duration of overdue. Again as per
BRPD Circular No. 10 dated 18th September 2007 BFRS: As per BAS 39, financial guarantees are
and BRPD Circular No. 14 dated 23rd September contracts that require an entity to make specified
2012, a general provision at 1% is required to be payments to reimburse the holder for a loss it incurs
provided for all off-balance sheet exposures. Such because a specified debtor fails to make payment
provision policies are not specifically in line with when due in accordance with the terms of a debt
those prescribed by BAS 39. instrument. Financial guarantee liabilities are
recognized initially at their fair value, and the initial
iv) Recognition of interest in suspense
fair value is amortized over the life of the financial
BFRS: Loans and advances to customers are guarantee. The financial guarantee liabilities are
generally classified as 'loans and receivables' as per subsequently carried at the higher of this amortized
BAS 39 and interest income is recognized using amount and the present value of any expected
effective interest rate method over the term of the payment when a payment under the guarantee has
loan. Once a loan is impaired, interest income is become probable. Financial guarantees are
recognized in profit and loss account on the same included within other liabilities.
basis based on revised carrying amount.
Bangladesh Bank: As per BRPD Circular No. 14 dated
Bangladesh Bank: As per BRPD Circular No. 14 dated 25th June 2003, financial guarantees such as letters
23 September 2012, once a loan is classified, of credit, letters of guarantee will be treated as
interest on such loans are not allowed to be off-balance sheet items. No liability is recognized for
recognised as income, rather the corresponding the guarantee except the cash margin.
amount needs to be credited to an interest in
viii) Cash and cash equivalents
suspense account, which is presented as liability in
the balance sheet. BFRS: Cash and cash equivalent items should be
reported as cash item as per BAS 7.
v) Other comprehensive income
Bangladesh Bank: Some cash and cash equivalent
BFRS: As per BAS 1 Other Comprehensive Income
items such as ‘money at call and on short notice’,
(OCI) is a component of financial statements or the
treasury bills, Bangladesh Bank bills and prize bonds
elements of OCI are to be included in a single Other
are not shown as cash and cash equivalents. Money
Comprehensive Income statement.
at call and on short notice is presented on the face
Bangladesh Bank: Bangladesh Bank has issued of the balance sheet, and treasury bills, prize bonds
templates for financial statements which will strictly are shown in investments.
be followed by all banks. The templates of financial
ix) Non-banking asset
statements issued by Bangladesh Bank do not
include Other Comprehensive Income nor are the BFRS: No indication of Non-banking assets is found
elements of Other Comprehensive Income allowed in any BFRS.
to be included in a single Other Comprehensive

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Bangladesh Bank: As per BRPD Circular No. 14 dated as capital improvement and added to the original
25th June 2003, there must exist a face item named cost of software.
Non-banking assets.
d) Software is amortized using the straight line
x) Cash flow statement method over the estimated useful life or usable
license period commencing from the month of
BFRS: The Cash flow statement can be prepared
application when software is available for use.
using either the direct method or the indirect
method. The presentation is selected to present xiii) Off-balance sheet items
these cash flows in a manner that is most
BFRS: There is no concept of off-balance sheet items
appropriate for the business or industry. The
in any BFRS; hence there is no requirement for
method selected is applied consistently.
disclosure of off-balance sheet items on the face of
Bangladesh Bank: As per BRPD Circular No. 14 dated the balance sheet.
25th June 2003, cash flow is the mixture of direct
Bangladesh Bank: As per BRPD Circular No. 14 dated
and indirect methods.
25th June 2003, off balance sheet items (e.g. Letters
xi) Balance with Bangladesh Bank: (Cash Reserve of credit, Letters of guarantee etc.) must be
Requirement) disclosed separately on the face of the balance
sheet.
BFRS: Balance with Bangladesh Bank should be
treated as other asset as it is not available for use in xiv) Loans and advances net of provision
day to day operations as per BAS 7.
BFRS: Loans and advances/Investments should be
Bangladesh Bank: Balance with Bangladesh Bank is presented net of provision.
treated as cash and cash equivalents.
Bangladesh Bank: As per BRPD Circular No. 14 dated
xii) Presentation of intangible assets 25th June 2003, provision on loans and
advances/investments are presented separately as
BFRS: An intangible asset must be identified and
liability and cannot be netted off against loans and
recognized, and the disclosure must be given as per
advances.
BAS 38.
2.2 Use of estimates and judgment
Bangladesh Bank: There is no regulation for
intangible assets in BRPD Circular No. 14 dated 25th The preparation of the Financial Statements in
June 2003. conformity with BFRS/BAS requires management to
make judgments, estimates and assumptions. These
Management:
judgments, estimates and assumptions affect the
a) An intangible asset is recognized if it is probable application of accounting policies and the reported
that the future economic benefits that are amount of assets and liabilities as well as income
attributable to the asset will flow to the entity and and expenses in the Financial Statements
the cost of the asset can be measured reliably. presented. Actual result may differ from the
estimates and assumptions made.
b) Software represents the value of computer
application software licensed for use of the Bank. Estimates and underlying assumptions are
Intangible assets are carried at cost, less reviewed on an ongoing basis which will be
accumulated amortization and any impairment disclosed in the financial statements as and when
losses. Initial cost comprises license fees paid at the required. Revisions to accounting estimates are
time of purchase and other directly attributable recognized in the period in which the estimate is
expenditure that are incurred in customizing the revised and in any future period affected.
software for its intended use.
2.3 Consistency
c) Expenditure incurred on software is capitalized
In accordance with BFRS framework for the
only when it enhances and extends the economic
presentation of financial statements together with
benefits of computer software beyond their original
BAS – 1 and BAS – 8, the Bank discloses its
specifications and lives and such cost is recognized

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information consistently from one period to the accordance with BAS 7 – “Statement of Cash Flows”
next. Where selecting and applying new accounting under direct method for the period classified by
policies, changes in accounting policies, correction operating activities, investing and financing
of errors, the amount involved are accounted for activities as recommended in the Bangladesh Bank
and disclosed retrospectively in accordance with BRPD Circular no. 14 dated 25th June 2003. The
the requirement of BAS – 8. However, for changes in Statement shows the structure of changes in cash
the accounting estimates the related amount is and cash equivalents during the financial year.
recognized prospectively in the current period and
2.6 Statement of changes in equity
in the next period or periods.
Statement of changes in equity has been prepared
2.4 Foreign currency transactions
in accordance with BAS 1 – “Presentation of
a) Functional and presentation currency Financial Statements” and as per the guidelines of
Bangladesh Bank BRPD Circular No.14 dated 25th
Items included in the financial statements are
June, 2003. The statement reflects information
measured using the currency of the primary
about the increase or decrease in net assets or
economic environment in which the entity
wealth. The statement also shows item-wise
operates, i e. the functional currency. The financial
movement along with the description of changes
statements of the Bank are presented in
from the end of last year to the end of current year.
Bangladeshi Taka which is the Bank’s functional and
presentation currency. 2.7 Statement of liquidity
b) Foreign currencies translation The liquidity statement has been prepared in
accordance with remaining maturity grouping of
Amounts in foreign currency are translated in
Assets and Liabilities as at the close of the year as
accordance with the principles set forth in BAS 21 --
per following basis:
“The Effects of Changes in Foreign Exchange Rates”.
As per this standard monetary items not Particulars Basis of Use
denominated in BDT and cash transactions not Cash, Balance with Maturity/behavioral trend.
completed at the reporting date are translated into Bangladesh Bank and its
BDT using current market rates. Non-monetary agent banks, Balance with
other banks and financial
items carried at fair value are translated into BDT
institutions, money at call
using current market price at the reporting date and and short notice etc.
non-monetary items carried at cost are translated Investments Residual maturity term.
using the rate applicable at the time of acquisition. Loans and advances Repayment/maturity
Transaction rates are used to translate the items schedule and behavioral
related to income and expenses. trend (non-maturity
products).
c) Commitments Fixed assets Useful life.
Other assets Realization/amor tization
Commitments for outstanding forward foreign
basis.
exchange contracts disclosed in these financial Borrowings from other banks Maturity/repayment term.
statements are translated at contracted rates. and financial institutions
Contingent liabilities / commitments for letters of Deposits and other accounts Maturity and behavioral
credit and letters of guarantee denominated in trend (non-maturity
products).
foreign currencies are expressed in Taka terms at the
Other long term liabilities Maturity term.
rates of exchange ruling on the balance sheet date.
Provision and other liabilities Settlement/adjustment
d) Transaction gains and losses schedule basis.

The resulting exchange transaction gains and losses 2.8 Reporting period
are included in the profit and loss account.
These financial statements of the Bank cover one
2.5 Cash flow statement calendar year from 1 January to 31 December 2017.
Cash flow statement has been prepared in

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Significant Accounting Policies and discounted are recognized at the time of

realization.
2.9 Assets and basis of their valuation
c) Loans and advances are written off to the extent
2.9.1 Investment in Govt. Securities
that (i) there is no realistic prospect of recovery, (ii)
All investment securities are initially recognized at and against which legal cases are pending for more
cost, being fair value of the consideration given, than five years as per guidelines of Bangladesh
including acquisition charges associated with the Bank. These written off accounts however will not
investment. Premiums are amortized and discounts undermine / affect the claimed amount against the
accredited, using the effective yield method and are borrower. Detailed memorandum records for all
taken to discount income. The valuation method of such written off accounts are meticulously
investments used are: maintained and followed up. Before being written
Held to Maturity (HTM): Investments which have off 100% provision is made against loans and
‘fixed or determinable payments’, and are intended advances.
to be ‘held to maturity’, other than those that meet
2.9.4 Lease finance
the definition of ‘held at amortized cost-others’ are
classified as held to maturity. Leases are classified as finance leases whenever the
terms of the lease transfer substantially all the risks
Held for Trading (HFT): Investments classified in this
and rewards of ownership to the lessee as per BAS
category are acquired principally for the purpose of
17 - “Leases”. All other leases are classified as
selling or repurchasing -- in short -- trading or if
operating leases as per BAS 17 - “Leases”.
designated as such by the management. After initial
recognition, investments are measured at fair value Amount due from lessees under finance leases are
and any change in the fair value is recognized in recorded as receivables at the amount of the Bank’s
other reserve as a part of equity. net investment in the leases. Finance lease income
is allocated to accounting periods so as to reflect a
Applicable
Items constant periodic rate of return on the bank’s net
accounting value
Government Securities - Treasury Bills-HTM Amortized value
investment outstanding in respect of the leases.
Government Securities - Treasury Bills-HFT Market value 2.9.5 Property, plant and equipment
Government Securities - Treasury Bonds-HTM Amortized value
Property, plant & equipment are recognized if it is
Government Securities - Treasury Bonds-HFT Market value probable that future economic benefits associated
Prize Bond At cost with the assets will flow to the Bank and the cost of
the assets can be reliably measured.
2.9.2 Investment in listed / quoted securities a) All fixed assets are stated at cost less accumulated
These securities are bought and held primarily for depreciation as per BAS-16 “Property, Plant and
the purpose of selling them in future or hold for Equipment”. The cost of acquisition of an asset
dividend income. These are reported at cost. comprises its purchase price and any directly
Unrealized gains are not recognized in the profit attributable cost of bringing the asset to its working
and loss account. But provision for diminution in condition for its intended use inclusive of inward
value of investment is recognized in the profit and freight, duties and non-refundable taxes.
loss account. Expenditure incurred after the assets have been put
into operation, such as repairs and maintenance, is
2.9.3 Loans and advances normally charged off as revenue expenditure in the
a) Loans and advances are stated in the balance period in which it is incurred.
sheet on gross basis. b) Depreciation is charged for the period at the
b) Commission and discounts on bills purchased following rates using straight-line method on all
fixed assets:

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Category of fixed assets Rate 2.9.9 Securities purchased under re-sale

Motor vehicles 20% agreement
Machinery & equipments 20% Securities purchased under re-sale agreements are
Furniture & Fixture 10% treated as collateralized lending and recorded at the
Interior Decoration 10% consideration paid and interest accrued thereon.
Computer & Accessories 20%
The amount lent is shown as an asset either as loans
and advances to customers or loans to other banks.
Software 20% or for remaining
usable periods The difference between purchase price and re-sale
Other tools 20% price is treated as interest received and accrued
c) For additions during the period, depreciation is evenly over the life of Repo agreement.
charged from the month those have been booked 2.9.10 Receivables
and for disposal depreciation is charged up to the
previous month of disposal. Receivables are recognized when there is a
contractual right to receive cash or another financial
d) On disposal of fixed assets, the book value of the asset from another entity.
assets are eliminated from the fixed assets schedule
and gain or loss on such disposal is reflected in the 2.9.11 Reconciliation of inter-bank and
income statement, which is determined with inter-branch account
reference to the book value of the asset and net sale Accounts with regard to inter-bank are reconciled
proceeds. regularly and there are no material differences
e) Borrowing costs that are directly attributable to which may affect the financial statements
the acquisition, construction or production of a significantly. Un-reconciled entries / balances in the
qualifying asset have been capitalized as part of the case of inter-branch transactions as on the
cost of the asset as per BAS 23. reporting date are insignificant.

2.9.6 Intangible asset 2.10 Share capital

An intangible asset is to be recognized only if it is Ordinary shares are classified as equity when there
probable the future economic benefits attributable is no contractual obligation to transfer cash or other
to the asset will flow to the bank and the cost of the financial assets.
asset can be measured reliably. Recognition & 2.11 Statutory reserve
measurement of intangible asset are guided by BAS
38 – “Intangible Asset”. Due to following BRPD Bank Companies Act, 1991 requires the Bank to
circular no. 14 dated 25th June 2003 intangible transfer 20% of its current year’s profit before tax to
assets are not disclosed in a separate line rather in is reserve until such reserve equals to its paid up
reported under fixed assets. However, separate line capital.
item along with the rate of amortization is 2.12 Other reserve
identifiable in the detail schedule of fixed assets.
Other reserve comprises investment revaluation
2.9.7 Other assets reserve and fixed assets revaluation reserve. When
Other assets include all balance sheet accounts not carrying amount of an item of property, plant and
covered specifically in other areas of the supervisory equipment is increased as a result of revaluation,
activity and such accounts may be quite the increased amount is classified directly to equity
insignificant considering the overall financial under heading of assets revaluation reserve as per
condition of the Bank. BAS 16 – “Property, Plant and Equipment”. As per
Bangladesh Bank DOS circular no. 5 dated 26th May
2.9.8 Non banking assets 2008, revaluation gain arising from revaluation of
There are no assets acquired in exchange for loan government securities under HFT category is kept
during the period of financial statements. directly in equity under revaluation gain account

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which is disclosed with other reserve while period of 7 (seven) years in the Bank but in case of
preparing the financial statements. experienced banker recruited through head
hunting the admissible period is 5 (five) years. The
2.13 Deposits and other accounts
amount of gratuity shall be calculated at the rate of
Deposits by customers and banks are recognized 2 (two) months’ last drawn basic pay for each
when the Bank enters into contractual provisions of completed years of service. The Bank is developing
the arrangements with the counterparties, which is the fund to meet up its future obligation. National
generally on trade date, and initially measured at Board of Revenue recognized the gratuity fund on
the consideration received. 10 April 2016.
2.14 Borrowings from other banks, financial d. Other benefits
institutions and agents
Other benefits include house building, consumer
Borrowed funds include call money deposits, finance and car loan at a concessional rate.
borrowings, re-finance borrowings and other term
2.15.2 Provision for liabilities
borrowings from banks. These are stated in the
balance sheet at amounts payable. Interest paid / Provision are recognized in the Balance Sheet when
payable on these borrowings is charged to the the Bank has a legal or constructive obligation as a
profit & loss account. result of a past event and it is probable that an
outflow of economic benefit will be required to
2.15 Basis for valuation of liabilities and
settle the obligations, in accordance with BAS 37 -
provisions
“Provisions, Contingent Liabilities and Contingent
2.15.1 Employees benefits Assets”.
a. Short term benefits 2.15.3 Provision for Off-balance sheet items:
Short-term benefits are employee benefits which Off-balance sheet items have been disclosed under
fall due wholly within twelve month after the end of contingent liabilities and other commitments as per
the period in which the employees render the Bangladesh Bank guidelines. Provision @1% against
related service. The Bank provides various short off-balance sheet exposures (L/Cs and Guarantees
term benefits to its employees like incentive bonus, etc) in addition to the existing provisioning
leave fare assistance etc. arrangement is made as per BRPD Circular No. 14
dated 23rd September, 2012.
b. Provident fund
2.15.4 Provision for current taxation
The benefits of provident fund are given to the
employees of the Bank in accordance with the Provision for current income tax has been made as
Provident Fund Rules as per section 2(52) of Income per prescribed rate in the Finance Act, 2017 on the
Tax Ordinance, 1984. The Provident Fund was accounting profit made by the Bank after
recognized by National Board of Revenue on 12th considering some of the add backs to income and
May 2015. Separate bank account is maintained to disallowances of expenditure as per income tax
manage the fund. All confirmed employees of the laws in compliance with BAS 12 - “ Income Taxes”.
Bank contribute 10% of their basic salary as
2.15.5 Provision for deferred tax
subscription to the Fund. The Bank also contributes
equal amount to the Fund. Interest earned from the Deferred tax is accounted for all temporary timing
investments of fund is credited to the members’ differences arising between the tax base of assets
accounts on yearly basis. and liabilities and their carrying value for financial
reporting purpose. Tax rate prevailing at the balance
c. Gratuity
sheet date is used to determine deferred tax.
As per the Employees Service Rules of the Bank,
2.16 Revenue recognition
gratuity shall be admissible to all regular employees
who have completed continuous service for a The revenues during the period are recognized

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complying with all conditions of revenue Compliance Division undertakes periodic and
recognition as prescribed in BAS 18 – “Revenue special audit of the branches and departments at
Recognition”. Head Office for review of the operation and
compliance with statutory requirements. The Audit
2.16.1 Interest income
Committee of the Board reviews the reports of the
In terms of the provision of the BAS 18 – “Revenue”, Internal Control and Compliance Division.
the interest income is recognized on accrual basis. 2.17.2 Foreign Exchange Risk Management
Interest on loans and advances ceases to be taken
into income when such advances are classified. It is Foreign exchange risk is defined as the potential
then kept in interest suspense account. After the change in earnings arising due to change in market
loan is classified as bad, interest ceases to be prices. The foreign exchange risk of the Bank is
applied and recorded in the memorandum account. minimal as all the transactions are carried out on
Interest on classified advances is accounted for on a behalf of the customers against underlying L/C
cash receipt basis. commitments and other remittance requirements.

2.16.2 Investment income Treasury Department independently conducts the

transactions and the Back Office of treasury is
Interest income on investments is recognized on responsible for verification of the deals and
accrual basis. Capital gain on investments in shares recording of their entries in the books of account. All
is also included in investment income. Capital gain foreign exchange transactions are revalued at Mark
is recognized when it is realized. to Market rate at the month end. All Nostro
2.16.3 Fees and commission income accounts are reconciled on monthly basis and
outstanding entries are reviewed on regular basis.
Fees and commission income arising on services
2.17.3 Credit Risk Management
provided by the Bank are recognized on a cash
receipt basis. Commission charged to customers on Credit Risk is defined as potential loss arising from
letters of credit and letters of guarantee are credited
the failure of a counter-party to meet financial
to income at the time of affecting the transactions.obligations as per contractual agreement with the
Bank. Bank manages credit risk meticulously. The
2.16.4 Dividend income on shares
Bank extends credit facilities to different clients in
Dividend income on shares is recognized during the different sectors after ensuring due diligence and
period in which it is declared and ascertained. mitigating risk factors as per guidelines set by
Bangladesh Bank, the Board of Directors and
2.16.5 Interest paid on borrowings and deposits Management Credit Committee of the Bank.
Interest paid on borrowings and deposits is The Bank has segregated duties of the
calculated on daily basis and recognized on accrual executives/officers involved in credit related
basis. activities. A separate marketing division is there at
2.16.6 Management and other expenses Head Office entrusted with the duties of
maintaining effective relationship with the
Expenses incurred by the Bank are recognized on customer, marketing of credit products, exploring
accrual basis whenever necessary. new business opportunities etc. Moreover, credit
2.17 Risk management approval, administration, monitoring and recovery
functions have been segregated. For this purpose,
2.17.1 Internal Control and Compliance two separate units have been formed namely Credit
Management Risk Management Division, Credit Administration
Operational loss may arise from error and fraud due Division. Credit Risk Management Division is
to weakness of internal control and compliance. entrusted with the duties of maintaining asset
Management through Internal Control and quality, assessing risks involved in lending,
Compliance Division controls operational sanctioning credit and formulating
procedure of the Bank. Internal Control and policies/strategies for lending operation. Credit Risk

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Grading (CRG) is also made for individual borrowers. assurance and consulting activity designed to add
value and to detect human errors and
2.17.4 Asset Liability Management
non-compliance with Internal Control Procedures.
The Asset Liability Committee (ALCO) of the Bank The bank has formed an Internal Audit Department
monitors market risks and liquidity risks of the Bank. under Internal Control & Compliance Division which
The market risks emanate from potential change in are conducting internal audit on a regular basis of
earnings due to change in rate of interest, foreign every branch and division at Head Office and report
exchange rates which are not of trading nature. the findings to the Audit Committee of the Board of
ALCO reviews liquidity requirements of the Bank, Directors. The Audit Department takes necessary
the maturity of assets and liabilities, deposit and steps to regularize the irregularities detected at the
lending, pricing strategies and the liquidity time of audit.
contingency plan. The primary objective of the
2.17.8 Fraud and Forgeries Management
ALCO is to monitor and avert significant volatility in
Net Interest Income (NII), return on assets, The Internal Control and Compliance Division takes
investment value and exchange earnings. The ALCO initiatives for preparing guidelines / instructions on
also monitors the Capital Adequacy Ratio on a regular basis to prevent and detect frauds &
monthly/quarterly basis. forgeries. The ICCD communicate the guidelines /
instructions to the branches and divisions at Head
2.17.5 Money Laundering Risk Management
Office on a regular basis. The division is constantly
Money laundering risk is defined as the loss of monitoring and supervising for compliance with
reputation and expenses incurred as penalty for the guidelines / instructions so that the occurrence
being negligent in prevention of money laundering. of fraud & forgeries comes to nil.
For mitigating the risks, the Bank has a designated
2.18 Earnings per share (EPS)
Chief Anti Money Laundering Compliance Officer at
Head Office and Branch Anti Money Laundering Earnings per share (EPS) have been calculated in
Compliance Officers at branches, who accordance with BAS 33 – “Earnings per Share”,
independently review the transactions of the which is shown on the face of the Profit & Loss
accounts to verify suspicious transactions. Manuals Account. This has been calculated by dividing the
for prevention of money laundering have been net profit after tax by the weighted average number
compiled and transaction profile has been of ordinary shares outstanding as on December
introduced. Training has been continuously 31st 2017.
imparted to all categories of officers and executives
No diluted earnings per share are required to be
for developing awareness and skills for identifying
calculated for the period, as there was no element
suspicious activities.
or scope for dilution during the period under
2.17.6 Information and Communication review.
Technology Security Risk Management
2.19 Off-setting financial assets and financial
Transformation of business processes in response to liabilities
technology-driven customers’ needs and services
Financial assets and financial liabilities are set off
has brought in tremendous change in information
and the net amount reported in the Balance Sheet
technology platform in the bank. The bank has
when and only when the Bank has a legal right to
adopted measures to protect the information and
offset the recognized amount and intends either to
communication platform from unauthorized access,
settle on a net basis or to realize the asset and settle
modification, virus, disclosure and destruction in
the liability simultaneously.
order to ensure business continuity, data safety and
security thereby protecting customers’ interest at Income and expenses are presented on a net basis
large. only when permitted by the accounting standards
or for gains or losses arising from a group of similar
2.17.7 Internal Audit Management
transactions.
Internal audit is an independent, objective

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List of Existing Branches
SL. NO. Branch Name Address Phone Number
1 Principal Branch Zaman Chamber 47, Dilkusha C/A, Dhaka - 1000 (02) 9587346-48
2 Hemayetpur Branch Ashraf Shoping Complex, Jadurchar, Hemayetpur Bazar,
Savar, Dhaka. (02) 7724939
3 Agrabad Branch 96, Agrabad Ba/A Agrabad, Chittagong. (031) 2516183-85
4 Bhatiary Branch N.D. Bhaban, DT Road, Bhatiary, Shitakunda, Chittagong (037) 2781271
5 Khulna Branch Chamber Building Complex, 05, KDA Avenue Khan
a Sobur Road,Khulna. 733464,733426
6 Katakhali Branch Katakhali More, Khulna Mongla Road, Fakirhat, Bagerhat. (046) 6356117
7 Keranigonj Branch Aktar Tower, Bridze Road, South Kadamtoli Aganagar,
South Keranigonj, Dhaka (02) 7764456-57
8 Uttara Branch Plot-71, Sector-07, Cosmo Shopping Centre, Azampur (02)7911951
Uttara, Dhaka. 7911863, 7911471
9 Gulshan Branch Casablanca 114, Gulshan Avenue, Dhaka-1212. (02) 9853091
10 Velanagar Branch Mahbub Molla Concord Tower, Jailkhana More, DC Road
Narshingdi Sadar, Narshingdi. (02) 9452487-88
11 Imamgonj Branch Crown Bhaban 59, Midford Road, Imamgonj, Dhaka. (02) 7342223
12 Ashulia Branch Holding: 4104 Baipile, Bashundhara, Ashulia, Dhaka. (02) 7789414-15
13 Dhanmondi Branch A M M Center, Shat Masjid Road Road: 3/A, House:56/A, (02) 9665264
Dhanmondi, Dhaka. 9665267
14 Sylhet Branch 11, Naya Shorok, Sylmart Complex, East Zinda Bazar,Sylhet. (0821)-726297-98
15 Jubilee Road Branch Ali Building (2nd Floor), 837, Jubilee Road, Chittagong. (031) 2856695-96
16 Bogra Branch Padma Mansion, Dutta Store (2nd Floor) 742, Jhautola (051) 69727,
Rajabazar, Bogra. 62412,62108
17 Mawna Branch Hazi Abdul Khaleque Master Super Market, Mulaid
Telihati, Sreepur, Gazipur. (0447) 8984788
18 Islampur Branch Siddik Mansion, Islampur Bazar, Thana:Shahporan, Sylhet. (0821)-762168
19 Modunaghat Branch South Madarsha, Rashid Bari, Hathazari,Chittagong. (031) 671552, 671542
20 Shyamnagar Branch 469, Moti Morol Super Market Badghata, Shyamnagar, (04726)-44182,
Satkhira. 44063
21 Gazipur Branch Tajpur Tower (2nd Floor), Bhaoal College Road,
Chandura Square, Gazipur. (02) 9294506-07
22 Moynamoti Branch Mostafa Palace and Hazi Faruk Plaza, Nischintopur,
Moynamoti Cantonment,Comilla. (081) 73740
23 Bangla Bazar Branch Patowari Plaza (1st Floor), Nadna, Bangla Bazar,
Sonaimuri, Noakhali. 01787-693618
24 Banani Branch 28 & 30, Kemal Ataturk Avenue, Banani, Dhaka. (02) 9822365-68
25 Chuknagar Branch Holding # 240 (1st Floor), Chuknagar, Dumuria, Khulna 01787-693625
26 Satkhira Branch Holding # 44/46 (Gr. Floor), Sultanpur, Satkhira Sadar (0471)-63806,
Satkhira. 63804,63810
27 Barisal Branch City Plaza (1st & 2nd Floor), 449 K.B. Hemayet (0431)2177718,
Uddin Road,Barisal. 2177714
28 Sarbolokkhona Branch Holding #26 (1st Floor), Bagher Bita Bazar
Sarbolokkhona, Manohardi, Narsingdi. 01787-693621
29 Rajshahi Branch ARC Bijoy Tower, 30 (New), Rani Bazar, Boalia,Rajshahi. (0721)-773375
773395, 773693

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SL. NO. Branch Address Phone Number

30 Nababpur Branch Holding:219/220 (Old), 42 (New), Nababpur Road, (02) 9512007, 9512016,
Sutrapur, Dhaka. 9512047, 9512059
31 Mirpur Branch Galaxy Hospital Bhaban, Holding:29 & 30, Section:6
Main Road:1, Mirpur, Dhaka. (02) 9032960-63
32 Shibu Market Branch Kutub Ail, Khijirpur, Fatullah, Narayangonj. 7635122, 7635123
33 Ghonapara Branch Ghonapara, Vate Dour, Gopalgonj. 01714-747065
34 Digraj Branch Shaheen Market, Digraj, Biddar Baon, 2 Burir Danga- (0466) 275208,
Union, Mongla, Bagerhat. 275209
35 Baburhat Branch 1st Lane, Manchester City(1st Floor), Shakerchar,
Baburhat, Narsingdi. 02-9446060
36 Narayanganj Branch Building:71, 99 Bangabandu Road, Ukil Para, Narayanganj. 02-7647593
37 Motijheel Branch 64 Purana Paltan,Motijheel, Dhaka. 02-9511241
38 Rangpur Branch Paper Palace Tower(1st Floor), Paira Chattar,Rangpur. (0521) 56481-3
39 Jessore Branch 36 (Old), 84 (New) Rabindranath Road (1st Floor), Jessore. 042172124
40 Takerhat Branch Takerhat Mor, Takerhat, Madaripur. (066)-23563991
41 Fatikchhari Branch S A Centre (1st Floor), College Road, Bibirhat
Fatikchhari, Chittagong. (030) 2256345
42 Nasirabad Branch Yakub Trade Centre, 89/304 East Nasirabad, Chittagong. (031) 2550321
43 Bhomra Branch C&F Association Bhaban (1st Floor), Bhomra, Satkhira. 047181133-35
44 Morrelganj Branch Morrelganj Bazar Main Road, Morrelganj Bagerhat. 0465-656418
45 Hasnabad Branch Shamsu Rani Vila, Hasnabad, Ekuria, South Keranigonj Dhaka 01787 693 620
46 Kharabad Baintola Branch Kharabad Baintola, Amirpur, Botiaghata,Khulna. 01711 398 751
47 Chalakchor Branch Chalakchor Bazar Near Chalakchor Bus Stand Monohordi, Narshingdi
48 Panthapath Branch Selim Center, 19/2 West Panthapath, Dhaka 02-9134139
49 Mouchak Branch Mouchak, Kaliakair, Gazipur 01787 693 645
50 Maligram Branch Maligram Bazar, Vanga, Faridpur 01714 084 822
51 Chittagong EPZ Branch Amin Tower, Bondortila, EPZ Chittagong 01787 693 604
52 Dinajpur Branch Moniza Khatun Complex Buti Babur More,
South Munchipara, Dinajpur 01787 693 643
53 KDA C/A Branch A 51, Mojid Avenue, Shib Bari, Khulna
54 Natore Branch House: 555 (1st floor) Nahar Market, Kanaikhali, Natore. 0771-67010
55 Feni Branch House:371(1st floor), Opposite to Feni Tower, SSK Road,Feni. 0331-73144
56 Kushtia Branch Nurul Islam Tower, 262/2 (1st floor), NS Road, Kushtia. 01712-699291
57 Labonchora Branch Madina Tower, Banda Bazar,Labonchora, Main Road, Khulna. 01673-825757
58 Pragati Sarani Branch G-99/3/A&B, Manama M.S.Toren, Pragati Sarani,
Middle Badda,Dhaka. 01730434793
59 Khatungonj Branch Achiya Manson, 282 Khatungonj, Kotowali, Chittagong. 01787693608
60 Amin Bazar Branch Haji Shafiullah Community Center 2nd Floor, Amin Bazar,
Savar, Dhaka. 01714038319
61 Banari Para Branch 261, Shanto Shisto Complex Thana: Banari Para, Barisal. 01745265876
62 Faltita Branch Battola Bazar, Faltita, Fakirhat, Bagerhat. 01711507244
63 Addabazar Branch Union: Adda, Upazila:Barura, Comilla. 01787693707
64 Jibonnagar Branch Torofder new market, Jibannagar Bazar, Jibannagar, Chuadanga 01718279646

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Head Office, Sun Moon Star Tower, 37 Dilkusha Commercial Area, Dhaka-1000.

PROXY FORM
I/We ……………………………………………………………………..................……………………………………..
Of (Address) ……………………………………………………………………………………………..................…….
being a Member(s) of South Bangla Agriculture & Commerce Bank Limited and entitled to vote, hereby appoint
Mr./Mrs./Ms/Miss ………………………………………………………………..........................................…………..
………………………………………………………………………………………..................………………….……
Of (Address) ………………………………………………………………….......................…….………. as my/our
Proxy to attend and vote on my/our behalf at the 5th AGM of the Company to be held at 11:30 a.m. on
Thursday, May, 10, 2018 or at any adjournment thereof.
Signed this …………………………….. day of …………………….., 2018.

Signature of Proxy …………………………………………….

Revenue
Signature of Member …………………………………………. Stamp
Folio No. ………………………………………………………..
No. of Shares held …………………………………………….. Tk. 20/-

N.B: This Proxy Form, duly completed (as recorded with the Bank) and signed (in accordance with the
specimen signature recorded with Bank), must be deposited at the Registered Office of the Company at least
48 (forty eight) hours before the Meeting. Proxy is invalid if not signed and stamped as explained above.

ATTENDANCE SLIP
I hereby record my attendance at the 5th AGM of the Company being held on Thursday, May, 10, 2018 at 11:30
a.m. at Antara Hall of Radisson Blu Dhaka Water Garden, Airport Road, Dhaka Cantonment, Dhaka 1206.
Name of Member/Proxy (In Block Letters)………………………………………..........................…………………..
Folio No. ………………………………………………………
No. of Shares held ……………………………………………
Signature of the Member/Proxy ………………………........
Date …………………………………….................................

N.B: 1. Members attending the Meeting in person or by proxy are requested to complete the Attendance Slip
and deposit the same at the registration counter on the day of the Meeting.
2. Please note that AGM can be attended only by the Members or properly constituted Proxy. Therefore, any
friend or children accompanying the Members or Proxy cannot be allowed in the Meeting.

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