The government has finally come up with a preliminary information memorandum (PIM) for privatisation of Rupali Bank, five months behind the schedule due to a protracted wrangling with International Monetary Fund over the mode of privatisation.

The Privatisation Commission at a meeting today will discuss and finalise the PIM. The meeting will also decide a timeframe for the privatisation of the bank including "when the government will publish advertisements seeking investors," said a source.

The finance ministry, which designed the PIM, in a proposal also laid down the prerequisites for private sector investors, besides opening the doors for foreign investment, in the bank.

The proposal suggests amendments to the Bank Company Act to attract and facilitate foreign investment in the bank by lifting certain restrictions like the limit on expatriate management staff.

The ministry also recommends a radical change in the human resources policy of the nationalised commercial bank that employs some 5,300 people and runs 491 branches across the country.

According to the PIM, 79 percent staff of Rupali Bank are aged over 40, 19.4 percent from 31 to 40 and only 1.3 percent below 30. In 2004, the bank earned a Tk 1.68 billion operating income and a Tk 200 million profit before tax.

As per a condition of the IMF against its $80-million fourth tranche of the Poverty Reduction Growth Facility (PRGF), the PIM was scheduled to be finalised in December last. But the government could not do that as it had differences of opinion with the IMF over how the bank should be privatised. Consequently, the IMF has kept the PRGF loan suspended since January.

Sources said the new privatisation drive would help Bangladesh get the PRGF again.

According to the PIM, Rupali Bank needs to get back the huge amount of loans defaulted by state-owned enterprises. To repay these loans, the government will issue bonds and raise money from the public.

The PIM requires the strategic investor to inject new capital proportionate to its shareholding to push up Rupali Bank's capital adequacy ratio under the Bangladesh Bank guidelines to 9 percent. The government will participate in this capital injection in proportion to its remaining shares. The investor may be a banking, non-banking or bank investment company. It should have at least five years of business record and, in case of a foreign investor, it should have no objections for the investment from its home banking regulatory authorities.

The investor will also be required to provide information on the sources of funding for the acquisition along with a clear indication of the level of capital investment over the next five years.