Private commercial banks (PCBs) now target closed-end mutual fund flotation, a business beyond conventional banking.
At least six commercial banks have announced their interests to go for such mutual funds, which are considered risk-free investment tools in stock trading.
A closed-end fund is a collective investment scheme with a limited number of shares for a stipulated period.
Southeast Bank is the latest among the PCBs that have joined the rally, with sponsoring a Tk 100 crore mutual fund.
The bank will subscribe at least 25 percent of the "Southeast Bank 1st Mutual Fund", while the rest is to be raised through pre-IPO placement and IPO (initial public offering).
Prior to Southeast, Prime Bank, Eastern Bank, Trust Bank, IFIC Bank and Mercantile Bank disclosed their plans to float closed-end mutual funds, which are subject to approval from the Securities and Exchange Commission.
"We have moved to float mutual fund with two objectives in mind. One is to bring a new product for our capital market, and the second is creation of an alternative source of revenue earning," said Ali Reza Iftekhar, managing director of Eastern Bank Limited, pointing to the high demand for this 'risk-free investment tool' in the capital market.
A senior official of Southeast Bank said bankers are now eager to look for diversified business tools or derivatives in addition to conventional banking, to sustain competition.
"The mutual fund floatation will ultimately strengthen our balance sheet," he said.
New mutual funds means more demand for long term investment, Sheikh Mortuza Ahmed, head of merchant banking and investment division of Prime Bank, told The Daily Star recently.
"Moreover, the more mutual funds will help the market move from retailers-driven to institutional," he said, pointing to the high volatility in retailer-driven market.
As per plan, Prime Bank will sponsor a Tk 100 crore closed-end mutual fund, of which the bank will subscribe at least 20 percent. The rest 80 percent of the "Prime Bank 1st ICB Mutual Fund", a 10-yearly one, will be raised through a placement prior to IPO, or pre-IPO placement. Per unit price of the mutual fund will be Tk 10.
Mercantile Bank will also sponsor a Tk 100 crore "MBL 1st Mutual Fund", wherein the bank's stake as sponsor will be 20 percent or Tk 20 crore.
Eastern Bank last month decided to sponsor a Tk 100 crore mutual fund for the local capital market. Of the fund, the bank will subscribe Tk 20 crore as sponsor.
Another Tk 100 crore mutual fund from IFIC Bank will hit the market as per the bank's decision last month. The bank will sponsor Tk 25 crore, or 25 percent.
Trust Bank is going to sponsor a Tk 200 crore mutual fund named "Trust Bank 1st Mutual Fund", wherein the bank's stake as sponsor will be Tk 40 crore, or 20 percent.
As many as 17 mutual funds are now listed on bourses. Of them, ICB and its subsidiaries manage 13 mutual funds, AIMS Bangladesh three and BSRS one.
The Grameen Mutual Fund One: Scheme Two amounting to Tk 125 crore is the largest listed mutual fund and the ICB 2nd NRB Mutual Fund worth Tk 100 crore the second. Mutual funds take up 5.54 percent of the total market capitalization.
Source: The Daily Star, April 29, 2009
April 29, 2009
April 26, 2009
Dr. Atiur Rahman made Bangladesh Bank governor
Dr. Atiur Rahman, a former BIDS research fellow who now runs an NGO and teaches development studies at Dhaka University, would be the governor of Bangladesh Bank.
When asked to confirm, the finance minister, AMA Muhith, did not give a direct reply. "Wait until tomorrow," a smiling Muhith told bdnews24.com senior correspondent Abdur Rahim Harmachi as he left his secretariat office Sunday.
An aide to the finance minister, speaking anonymously, told bdnews24.com that Muhith had "already congratulated Atiur Rahman on his appointment".
The decision is to come just days before the incumbent governor, Salehuddin Ahmed, ends his four-year tenure on Apr 30. It would also put to rest speculation about an extension to Salehuddin's tenure in the context of the on-ongoing global recession.
Atiur Rahman, who served as a director of Bangladesh's largest Sonali Bank and then chairman of the state-owned Janata Bank, will now have to deal with monetary economics as central bank supremo.
Atiur's research focussed more on poverty, and the most acclaimed included work on char dwellers and poverty alleviation.
His appointment would create a unique situation at the central bank—the governor and all three deputy governors (DGs) coming from same class of the DU economics department.
The three DGs—Nazrul Huda, Ziual Hasan Siddiqui and Murshid Kuli Khan—and their likely boss Atiur Rahman did their Masters as students of the 1973-4 batch and actually came out in 1976.
Salehuddin, a former civil service officer, was appointed to the top job by the BNP government on May 1, 2005 when his predecessor Fakhruddin Ahmed saw out his central bank contract.
The two—both Dhaka University economics graduates—swapped their positions. Fakhruddin, who was later made head of the army-installed caretaker government in 2007, took up Salehuddin's job of managing director at Palli Karma Shayahak Foundation, the government's micro-credit lending arm.
Salehuddin had earlier served as director general of NGO Bureau before landing the PKSF job.
Source: bdnews24.com, April 26, 2009
When asked to confirm, the finance minister, AMA Muhith, did not give a direct reply. "Wait until tomorrow," a smiling Muhith told bdnews24.com senior correspondent Abdur Rahim Harmachi as he left his secretariat office Sunday.
An aide to the finance minister, speaking anonymously, told bdnews24.com that Muhith had "already congratulated Atiur Rahman on his appointment".
The decision is to come just days before the incumbent governor, Salehuddin Ahmed, ends his four-year tenure on Apr 30. It would also put to rest speculation about an extension to Salehuddin's tenure in the context of the on-ongoing global recession.
Atiur Rahman, who served as a director of Bangladesh's largest Sonali Bank and then chairman of the state-owned Janata Bank, will now have to deal with monetary economics as central bank supremo.
Atiur's research focussed more on poverty, and the most acclaimed included work on char dwellers and poverty alleviation.
His appointment would create a unique situation at the central bank—the governor and all three deputy governors (DGs) coming from same class of the DU economics department.
The three DGs—Nazrul Huda, Ziual Hasan Siddiqui and Murshid Kuli Khan—and their likely boss Atiur Rahman did their Masters as students of the 1973-4 batch and actually came out in 1976.
Salehuddin, a former civil service officer, was appointed to the top job by the BNP government on May 1, 2005 when his predecessor Fakhruddin Ahmed saw out his central bank contract.
The two—both Dhaka University economics graduates—swapped their positions. Fakhruddin, who was later made head of the army-installed caretaker government in 2007, took up Salehuddin's job of managing director at Palli Karma Shayahak Foundation, the government's micro-credit lending arm.
Salehuddin had earlier served as director general of NGO Bureau before landing the PKSF job.
Source: bdnews24.com, April 26, 2009
April 22, 2009
Private Banks cap Deposit Rate at 10%
Private commercial banks (PCBs) have capped the interest rate for fixed deposit at 10 percent following the central bank's order to fix the lending rate at a maximum 13 percent, bankers said.
“Punitive actions will be taken if any bank offers more than 10 percent against a fixed deposit scheme,” said a top office bearer of Association of Bankers Bangladesh (ABB), a platform of PCBs' chief executive officers.
Actions include no transaction in call money market and keeping no deposit in those banks, he said.
Officials said ABB took the decision at a meeting on April 15, but did not disclose it on Bangladesh Bank's delay in issuing the lending rate cut circular. The BB issued the circular on Sunday.
Currently PCBs offer up to 13.50 percent for fixed deposits. A bank offered even 14 percent, the highest ever in the country, in May last year and fuelled an uneven competition among the banks.
In an interview with The Daily Star last week, Kaiser A Chowdhury, president and managing director of AB Bank, blamed the third generation banks for a spike in deposit rates.
“We set the highest rate for our three-month fixed deposit scheme at 10 percent yesterday,” said Shahjahan Bhuiyan, managing director of United Commercial Bank. The previous rate was 13 percent, he added.
The rate would be 9.75 percent for six-month scheme and 9.50 percent for one year and above, Bhuiyan, also the vice president of ABB, said.
Helal Ahmed Chowdhury, managing director of Pubali Bank, also admitted the cap of the fixed deposit rate at 10 percent.
Chowdhury however hailed the BB for allowing commercial banks to change the lending and deposit rates more than once in a month. Earlier banks could change the rates once in a month.
The government and the BB had long been asking the private banks to reduce the spread by cutting the lending rate, which was at least 14.75 percent depending on the banks. Finally the central bank forced these banks to charge a maximum 13 percent for lending to help private sector offset the impacts of global recession.
Source: The Daily Star, April 22, 2009
“Punitive actions will be taken if any bank offers more than 10 percent against a fixed deposit scheme,” said a top office bearer of Association of Bankers Bangladesh (ABB), a platform of PCBs' chief executive officers.
Actions include no transaction in call money market and keeping no deposit in those banks, he said.
Officials said ABB took the decision at a meeting on April 15, but did not disclose it on Bangladesh Bank's delay in issuing the lending rate cut circular. The BB issued the circular on Sunday.
Currently PCBs offer up to 13.50 percent for fixed deposits. A bank offered even 14 percent, the highest ever in the country, in May last year and fuelled an uneven competition among the banks.
In an interview with The Daily Star last week, Kaiser A Chowdhury, president and managing director of AB Bank, blamed the third generation banks for a spike in deposit rates.
“We set the highest rate for our three-month fixed deposit scheme at 10 percent yesterday,” said Shahjahan Bhuiyan, managing director of United Commercial Bank. The previous rate was 13 percent, he added.
The rate would be 9.75 percent for six-month scheme and 9.50 percent for one year and above, Bhuiyan, also the vice president of ABB, said.
Helal Ahmed Chowdhury, managing director of Pubali Bank, also admitted the cap of the fixed deposit rate at 10 percent.
Chowdhury however hailed the BB for allowing commercial banks to change the lending and deposit rates more than once in a month. Earlier banks could change the rates once in a month.
The government and the BB had long been asking the private banks to reduce the spread by cutting the lending rate, which was at least 14.75 percent depending on the banks. Finally the central bank forced these banks to charge a maximum 13 percent for lending to help private sector offset the impacts of global recession.
Source: The Daily Star, April 22, 2009
April 20, 2009
BB issues lending rate at 13% notices
With the announcement of the government's stimulus package yesterday, the central bank simultaneously issued two circulars relating to limiting lending rate and loan rescheduling.
The Bangladesh Bank (BB) issued a circular asking the commercial banks to cap the lending rate except credit card and consumer loans at 13 percent to offset the fallout of global financial meltdown.
Another circular asked the banks to ease rescheduling of loans for recession-hit export sectors, such as frozen food, leather and jute goods, without any down payment.
Both the decisions would be implemented immediately and remain valid until the next order, the BB circulars said.
Finance Minister AMA Muhith yesterday unveiled the much-hyped stimulus package amounting to Tk 3,424 crore for the current fiscal year to tackle the immediate impacts of the global recession.
The BB issued both the circulars as part of the government's policy support to keep the economy vibrant amid the global financial crisis.
The circular regarding lending rate ceiling said the commercial banks charge high interest rates for productive industrial sectors, which is an impediment to the country's development.
“Lending rate cut has become urgent considering the present inflationary pressure and global economic situation,” said the circular.
So lending rate for agriculture, term loan and working capital for large and medium industries, housing and trading has been capped at maximum 13 percent, it said.
Interest rate for export credit will remain unchanged at 7 percent, the circular said.
The BB also allowed the banks to change interest rate for lending and deposit for more than once in a month. Before the circular banks could change the rate just once in a month.
In the second circular loan rescheduling has been made flexible for export-oriented sectors, such as frozen food, leather and leather goods, jute and jute goods, and textile including spinning and readymade garment.
The banks have been asked to reschedule loans for these sectors without any down payment. Earlier banks took 10 percent of outstanding loans as down payment to reschedule loans.
Announcing the stimulus package, the finance minister said the banks will take necessary measures if any other export-oriented sectors are hit by the onslaught of the global recession. The BB would look into the matter, he added.
Source: The Daily Star, April 20, 2009
The Bangladesh Bank (BB) issued a circular asking the commercial banks to cap the lending rate except credit card and consumer loans at 13 percent to offset the fallout of global financial meltdown.
Another circular asked the banks to ease rescheduling of loans for recession-hit export sectors, such as frozen food, leather and jute goods, without any down payment.
Both the decisions would be implemented immediately and remain valid until the next order, the BB circulars said.
Finance Minister AMA Muhith yesterday unveiled the much-hyped stimulus package amounting to Tk 3,424 crore for the current fiscal year to tackle the immediate impacts of the global recession.
The BB issued both the circulars as part of the government's policy support to keep the economy vibrant amid the global financial crisis.
The circular regarding lending rate ceiling said the commercial banks charge high interest rates for productive industrial sectors, which is an impediment to the country's development.
“Lending rate cut has become urgent considering the present inflationary pressure and global economic situation,” said the circular.
So lending rate for agriculture, term loan and working capital for large and medium industries, housing and trading has been capped at maximum 13 percent, it said.
Interest rate for export credit will remain unchanged at 7 percent, the circular said.
The BB also allowed the banks to change interest rate for lending and deposit for more than once in a month. Before the circular banks could change the rate just once in a month.
In the second circular loan rescheduling has been made flexible for export-oriented sectors, such as frozen food, leather and leather goods, jute and jute goods, and textile including spinning and readymade garment.
The banks have been asked to reschedule loans for these sectors without any down payment. Earlier banks took 10 percent of outstanding loans as down payment to reschedule loans.
Announcing the stimulus package, the finance minister said the banks will take necessary measures if any other export-oriented sectors are hit by the onslaught of the global recession. The BB would look into the matter, he added.
Source: The Daily Star, April 20, 2009
April 16, 2009
Collateral-free loans for SMEs at 9% interest
The Small and Medium Enterprise Foundation (SMEF) yesterday began disbursing collateral-free loans at an interest rate of 9 percent, the lowest in the country, to help promote small and medium entrepreneurs.
“The government sincerely wants to support the country's small and medium entrepreneurs. Therefore, we are constantly working to disburse loans to them at a low interest rate,” said Dilip Barua, industries minister and chairperson of SMEF.
“We are also trying to lower bank interest rates, the main obstacle to the country's industrial development. A lowered rate of interest would not only help the country's SME entrepreneurs but also the national economy,” he added.
He was speaking at a loan handover ceremony "Credit Wholesaling Pilot Programme" organised by SMEF at its office in Dhaka.
“The government has decided to disburse these loans for the manufacturing sector only, instead of the trading sector. We would like to encourage the manufacturing sector to develop the country's status as an industry-based economy,” he added.
Barua stressed modifying the Money Loan Court Act and said, “The act should have a balanced position, instead of favouring the lender. The major shortcoming of this act is that it does not favour the borrower."
In 2004, the government received a grant worth $50 million from the Asian Development Bank (ADB) to support the SME sector. Of the total grant, $30 million has been sanctioned as SME loans and $ 5 million spent on entrepreneur training programmes.
The Bangladesh Bank has sanctioned 78 percent of the Tk 500 crore Small Enterprise Fund (SEF) among the SME entrepreneurs, at a 10 percent rate of interest, said Barua.
Under the Credit Wholesaling Pilot Programme, SMEF would disburse Tk 2 crore to Midas Financing Limited and Shakti Foundation. Barua handed over a check for Tk 50 lakh to Rokia Afzal Rahman, chairman of Midas Financing Limited.
Rahman said the government should consider the SME sector as the backbone of the nation, to improve the country's economic condition.
“The SME sector should be the backbone of the country. It currently manufactures a wide range of essential products and recruits a large number of people,” she said.
“The government should have proper plans to nourish and support the sector with capital generation through collateral-free loans at lower interest rates and easy repayment conditions,” she suggested.
She emphasised raising the size of loans, which should be disbursed among a wide range of SME entrepreneurs, to encourage more people to get involved in such entrepreneurship.
She also stressed the need for professional training for the SME entrepreneurs, to make them more efficient.
Professor Momtaz Uddin Ahmed, acting managing director of SMEF, said the pilot programme would disburse the amounts as a pre-financing loan, which would help the entrepreneurs receive the loan in a short span of time.
SMEF was established in 2007 with an endowment of Tk 205 crore from the central bank.
Gazi Abdur Rashid, managing director of Midas Financing Limited, was also present.
Source: The Daily Star, April 16, 2009
“The government sincerely wants to support the country's small and medium entrepreneurs. Therefore, we are constantly working to disburse loans to them at a low interest rate,” said Dilip Barua, industries minister and chairperson of SMEF.
“We are also trying to lower bank interest rates, the main obstacle to the country's industrial development. A lowered rate of interest would not only help the country's SME entrepreneurs but also the national economy,” he added.
He was speaking at a loan handover ceremony "Credit Wholesaling Pilot Programme" organised by SMEF at its office in Dhaka.
“The government has decided to disburse these loans for the manufacturing sector only, instead of the trading sector. We would like to encourage the manufacturing sector to develop the country's status as an industry-based economy,” he added.
Barua stressed modifying the Money Loan Court Act and said, “The act should have a balanced position, instead of favouring the lender. The major shortcoming of this act is that it does not favour the borrower."
In 2004, the government received a grant worth $50 million from the Asian Development Bank (ADB) to support the SME sector. Of the total grant, $30 million has been sanctioned as SME loans and $ 5 million spent on entrepreneur training programmes.
The Bangladesh Bank has sanctioned 78 percent of the Tk 500 crore Small Enterprise Fund (SEF) among the SME entrepreneurs, at a 10 percent rate of interest, said Barua.
Under the Credit Wholesaling Pilot Programme, SMEF would disburse Tk 2 crore to Midas Financing Limited and Shakti Foundation. Barua handed over a check for Tk 50 lakh to Rokia Afzal Rahman, chairman of Midas Financing Limited.
Rahman said the government should consider the SME sector as the backbone of the nation, to improve the country's economic condition.
“The SME sector should be the backbone of the country. It currently manufactures a wide range of essential products and recruits a large number of people,” she said.
“The government should have proper plans to nourish and support the sector with capital generation through collateral-free loans at lower interest rates and easy repayment conditions,” she suggested.
She emphasised raising the size of loans, which should be disbursed among a wide range of SME entrepreneurs, to encourage more people to get involved in such entrepreneurship.
She also stressed the need for professional training for the SME entrepreneurs, to make them more efficient.
Professor Momtaz Uddin Ahmed, acting managing director of SMEF, said the pilot programme would disburse the amounts as a pre-financing loan, which would help the entrepreneurs receive the loan in a short span of time.
SMEF was established in 2007 with an endowment of Tk 205 crore from the central bank.
Gazi Abdur Rashid, managing director of Midas Financing Limited, was also present.
Source: The Daily Star, April 16, 2009
Banks go SME-focused
The banking industry has increased focus on loans to small and medium enterprises (SMEs), which have been remained ignored for years despite the sector's huge contribution to the economy, as banks would set up 139 SME service centres by this year.
Bankers believe the move would help banks cope with the declining demand from big corporate clients mainly due to the global financial turmoil.
Besides four state-owned commercial banks, nearly half a dozen private banks have planned to boost lending to the SMEs this year through setting up separate divisions, officials said.
These private banks are Prime, The City, Eastern, United Commercial and Pubali banks. BRAC Bank is the pioneer and by far the market leader in SME lending in the country.
“Prime Bank has decided to develop a quality and dedicated team this year to serve the SME clients,” said the bank's Managing Director M Ehsanul Haque.
Prime Bank has planned to more than double its SME loan portfolio to Tk 1,000 crore this year from around Tk 400 crore in 2008.
“SME financing can give a thrust to the banks at the moment when there is a declining demand from big investors,” said Helal Ahmed Chowdhury, managing director of Pubali Bank.
United Commercial Bank is also considering setting up a separate division for SME credit.
Officials said other banks including AB, Bank Asia, Dhaka, Dutch-Bangla, Islami, National and Standard banks would also boost SME credit this year.
Bangladesh's banking industry has long been ignoring the much-needed credit to the SMEs despite the sector's enormous contribution to the national economy.
Data show that industrial sector contributed around one-fourth of the country's gross domestic product worth $80 billion. Of the industrial contribution, SMEs alone account for around 90 percent.
Banks disregarded lending to the SMEs terming it an informal sector that is even unable to maintain the books of account. Higher management cost and risk have also discouraged the banks not to lend to the SMEs.
But the global financial crisis and its impacts on the local economy have made the banking industry think about giving large loans.
“SMEs are the future of Bangladesh. Although there is a high risk there, the return is better than other areas,” said AEA Muhaimen, managing director of BRAC Bank that has lent nearly Tk 8,000 crore to the SMEs since its inception in 2001.
The bankers however said the lending rate for SMEs must be higher than the corporate ones.
“Lending to SMEs at 10-12 percent is not viable,” the Prime Bank boss said.
On an average BRAC Bank lends some 8,000 SME customers annually.
“Over 90 percent of our SME loans are collateral-free. We cannot take the risk at 13 percent,” said AEA Muhaimen.
The Bangladesh Bank (BB) has recently made a highest limit of lending rate at 13 percent to help businesses survive following the impacts of the global financial crisis.
“SME loan is predominantly supervisory credit and requires more manpower to conduct supervision, monitoring and recovery works,” Helal Ahmed Chowdhury said.
Meanwhile, the BB has approved opening of 139 SME service centres by the banking sector in 2009. Last year some 88 centres were opened by different banks to help the SMEs with easy disbursement, recovery of loan and quicker delivery of remittances.
The BB also launched an SME Refinancing Scheme worth Tk 100 crore in 2004. In 2008-09 fiscal year, the fund was increased to Tk 500 crore to help the sector, which contributes more to employment generation.
Source: The Daily Star, April 16, 2009
Bankers believe the move would help banks cope with the declining demand from big corporate clients mainly due to the global financial turmoil.
Besides four state-owned commercial banks, nearly half a dozen private banks have planned to boost lending to the SMEs this year through setting up separate divisions, officials said.
These private banks are Prime, The City, Eastern, United Commercial and Pubali banks. BRAC Bank is the pioneer and by far the market leader in SME lending in the country.
“Prime Bank has decided to develop a quality and dedicated team this year to serve the SME clients,” said the bank's Managing Director M Ehsanul Haque.
Prime Bank has planned to more than double its SME loan portfolio to Tk 1,000 crore this year from around Tk 400 crore in 2008.
“SME financing can give a thrust to the banks at the moment when there is a declining demand from big investors,” said Helal Ahmed Chowdhury, managing director of Pubali Bank.
United Commercial Bank is also considering setting up a separate division for SME credit.
Officials said other banks including AB, Bank Asia, Dhaka, Dutch-Bangla, Islami, National and Standard banks would also boost SME credit this year.
Bangladesh's banking industry has long been ignoring the much-needed credit to the SMEs despite the sector's enormous contribution to the national economy.
Data show that industrial sector contributed around one-fourth of the country's gross domestic product worth $80 billion. Of the industrial contribution, SMEs alone account for around 90 percent.
Banks disregarded lending to the SMEs terming it an informal sector that is even unable to maintain the books of account. Higher management cost and risk have also discouraged the banks not to lend to the SMEs.
But the global financial crisis and its impacts on the local economy have made the banking industry think about giving large loans.
“SMEs are the future of Bangladesh. Although there is a high risk there, the return is better than other areas,” said AEA Muhaimen, managing director of BRAC Bank that has lent nearly Tk 8,000 crore to the SMEs since its inception in 2001.
The bankers however said the lending rate for SMEs must be higher than the corporate ones.
“Lending to SMEs at 10-12 percent is not viable,” the Prime Bank boss said.
On an average BRAC Bank lends some 8,000 SME customers annually.
“Over 90 percent of our SME loans are collateral-free. We cannot take the risk at 13 percent,” said AEA Muhaimen.
The Bangladesh Bank (BB) has recently made a highest limit of lending rate at 13 percent to help businesses survive following the impacts of the global financial crisis.
“SME loan is predominantly supervisory credit and requires more manpower to conduct supervision, monitoring and recovery works,” Helal Ahmed Chowdhury said.
Meanwhile, the BB has approved opening of 139 SME service centres by the banking sector in 2009. Last year some 88 centres were opened by different banks to help the SMEs with easy disbursement, recovery of loan and quicker delivery of remittances.
The BB also launched an SME Refinancing Scheme worth Tk 100 crore in 2004. In 2008-09 fiscal year, the fund was increased to Tk 500 crore to help the sector, which contributes more to employment generation.
Source: The Daily Star, April 16, 2009
March 18, 2009
State banks better off, Loan recovery from top 20 defaulters at 50pc
Four state-owned banks performed better than before by realising around 50 percent of their default loans from top 20 defaulters and pulled off 94 percent of their targets from other defaulters in 2008, according to a central bank review released yesterday.
The four state banks had the target of realising Tk194 crore from top 20 loan defaulters last year but they could realise Tk98 crore, while the banks' target from other defaulters was Tk1,039 crore but they could realise Tk980 crore.
The Bangladesh Bank (BB) not only evaluated their cash recovery, it also reviewed their achievements in operating expenses, costs of deposit, manpower rationalisation, and reducing classified loans against the target fixed for them in 2008.
BB officials said the banks succeeded in reaching the targets in some areas but failed in others.
Sonali Bank had the target of retrieving Tk100 crore from top 20 defaulters but could realise only around Tk21 crore, while its cash recovery target from other defaulters was Tk484 crore but its realisation was Tk474 crore or 98 percent of the target.
In 2008 the bank's target of reducing operating costs over 2007 was 5 percent, but instead the expenditure increased by 20 percent to Tk649 crore.
Also the cost of deposit of the bank went up from 4.80 percent in 2007 to 5.04 percent in 2008.
Classified loan decreased by percentage but increased by gross amount from Tk6,859 crore in 2007 to Tk7,217 crore in 2008. However the growth in percentage went down by 2.08 percentage points to stand at 33.28 percent last year.
The bank reduced the number of cases with Artha Rin Adalat (loan court) from 7,141 in 2007 to 5,727 in 2008, and also cut manpower by 1,994 and the total number of staff stood at 20,548 in 2008. The BB said all these were positive signs.
Janata Bank though could not achieve success in realising loans from the top 20 defaulters, it exceeded the target in retrieving loans from other defaulters. Its target of realisation from top 20 was Tk30.25 crore, but the recovery was Tk20.17 crore or 66 percent of its target.
The bank's recovery target from other defaulters was Tk181.504 crore, but the realistaion was Tk258.54 crore or 142 percent of the target. It also succeeded in lowering the costs of deposit and the number of manpower. Cost of deposit was 4.79 percent in 2007 that came down to 4.53 percent in 2008.
The bank failed to reduce its operating expenses against its target of 5 percent as the expenditure increased around 15 percent to stand at Tk461 crore in 2008.
However its number of cases with the loan court decreased but the amount against the cases increased compared to December 2007. The number of cases dropped from 5,728 in 2007 to 4,720 in 2008, but the amount went up from Tk2,725 crore to Tk2,755 crore.
Agrani Bank though succeeded in realising loans from top 20 defaulters, it failed to reach the target for other defaulters. Its recovery target from the top 20 was Tk21.78 crore but the realisation was Tk37.34 crore or 171 percent of the target.
However its target from other defaulters was Tk302 crore but it recovered Tk209 crore or 69 percent of the target.
The bank could lower its cost of deposit from 3.74 percent in 2007 to 3.44 percent in 2008. It reduced manpower by 357 and its total staff stood at 2,988 in 2008.
However it failed to cut operating expenses that rose by 14 percent to Tk343 crore.
Its classified loan was Tk3,178 crore or 28 percent of its outstanding loan in 2007, which came down to Tk2,548 crore or 24 percent in 2008.
The bank's number of cases with the loan court remained almost unchanged at 7,462 in 2008. But the amount against the cases increased from Tk3,166 crore in 2007 to Tk3,630 crore in 2008.
Rupali Bank failed to reach its recovery target from all the defaulters.
The bank's target from the top 20 defaulters was around Tk42 crore but the recovery was around Tk20 crore. From other defaulters its loan recovery target was Tk72 crore, whereas it retrieved around Tk38 crore in 2008.
> Source: The Daily Star, March 18, 2009
The four state banks had the target of realising Tk194 crore from top 20 loan defaulters last year but they could realise Tk98 crore, while the banks' target from other defaulters was Tk1,039 crore but they could realise Tk980 crore.
The Bangladesh Bank (BB) not only evaluated their cash recovery, it also reviewed their achievements in operating expenses, costs of deposit, manpower rationalisation, and reducing classified loans against the target fixed for them in 2008.
BB officials said the banks succeeded in reaching the targets in some areas but failed in others.
Sonali Bank had the target of retrieving Tk100 crore from top 20 defaulters but could realise only around Tk21 crore, while its cash recovery target from other defaulters was Tk484 crore but its realisation was Tk474 crore or 98 percent of the target.
In 2008 the bank's target of reducing operating costs over 2007 was 5 percent, but instead the expenditure increased by 20 percent to Tk649 crore.
Also the cost of deposit of the bank went up from 4.80 percent in 2007 to 5.04 percent in 2008.
Classified loan decreased by percentage but increased by gross amount from Tk6,859 crore in 2007 to Tk7,217 crore in 2008. However the growth in percentage went down by 2.08 percentage points to stand at 33.28 percent last year.
The bank reduced the number of cases with Artha Rin Adalat (loan court) from 7,141 in 2007 to 5,727 in 2008, and also cut manpower by 1,994 and the total number of staff stood at 20,548 in 2008. The BB said all these were positive signs.
Janata Bank though could not achieve success in realising loans from the top 20 defaulters, it exceeded the target in retrieving loans from other defaulters. Its target of realisation from top 20 was Tk30.25 crore, but the recovery was Tk20.17 crore or 66 percent of its target.
The bank's recovery target from other defaulters was Tk181.504 crore, but the realistaion was Tk258.54 crore or 142 percent of the target. It also succeeded in lowering the costs of deposit and the number of manpower. Cost of deposit was 4.79 percent in 2007 that came down to 4.53 percent in 2008.
The bank failed to reduce its operating expenses against its target of 5 percent as the expenditure increased around 15 percent to stand at Tk461 crore in 2008.
However its number of cases with the loan court decreased but the amount against the cases increased compared to December 2007. The number of cases dropped from 5,728 in 2007 to 4,720 in 2008, but the amount went up from Tk2,725 crore to Tk2,755 crore.
Agrani Bank though succeeded in realising loans from top 20 defaulters, it failed to reach the target for other defaulters. Its recovery target from the top 20 was Tk21.78 crore but the realisation was Tk37.34 crore or 171 percent of the target.
However its target from other defaulters was Tk302 crore but it recovered Tk209 crore or 69 percent of the target.
The bank could lower its cost of deposit from 3.74 percent in 2007 to 3.44 percent in 2008. It reduced manpower by 357 and its total staff stood at 2,988 in 2008.
However it failed to cut operating expenses that rose by 14 percent to Tk343 crore.
Its classified loan was Tk3,178 crore or 28 percent of its outstanding loan in 2007, which came down to Tk2,548 crore or 24 percent in 2008.
The bank's number of cases with the loan court remained almost unchanged at 7,462 in 2008. But the amount against the cases increased from Tk3,166 crore in 2007 to Tk3,630 crore in 2008.
Rupali Bank failed to reach its recovery target from all the defaulters.
The bank's target from the top 20 defaulters was around Tk42 crore but the recovery was around Tk20 crore. From other defaulters its loan recovery target was Tk72 crore, whereas it retrieved around Tk38 crore in 2008.
> Source: The Daily Star, March 18, 2009
March 17, 2009
First ever e-banking fair begins today
A daylong e-banking exhibition and conference, first of its kind in Bangladesh, begins in Dhaka today, organisers said.
State Minister for Science and Information and Communication Technology Yafes Osman is expected to open the fair.
Axiom Technologies Ltd of Bangladesh and Total Communication of Pakistan are jointly organising the event “1st e-Banking Exhibition and Conference”.
Fifteen local and overseas companies will participate in the fair and display their e-banking products and services in 25 stalls. The fair will take place at the ballroom of Dhaka Sheraton Hotel, organisers said.
They said except for foreign banks, the frontiers of e-banking in Bangladesh, only a few private banks are partly doing e-banking.
But banking services can be extended to people's doorsteps via e-banking, they added.
“We are organising the event to introduce banking technologies to local banking industry,” said Rizwan Bin Farouq, managing director of Axiom Technologies, at a press conference in Dhaka yesterday.
He said the exhibition will benefit the banking sector and its customers. The Bangladesh Association of Software Information Services, Bangladesh Leasing and Financial Companies Association (BLFCA), Association of Bankers Bangladesh Limited (ABB) and Pakistan Software Houses Association are supporting the fair.
The Daily Star is the media partner of the exhibition.
Niaz Habib, secretary of ABB, Anis A Khan, president of BLFCA, and Faisal Rahim, managing director of Total Communication, were present at the press meet.
>> Source: The Daily Star, March 17, 2009.
State Minister for Science and Information and Communication Technology Yafes Osman is expected to open the fair.
Axiom Technologies Ltd of Bangladesh and Total Communication of Pakistan are jointly organising the event “1st e-Banking Exhibition and Conference”.
Fifteen local and overseas companies will participate in the fair and display their e-banking products and services in 25 stalls. The fair will take place at the ballroom of Dhaka Sheraton Hotel, organisers said.
They said except for foreign banks, the frontiers of e-banking in Bangladesh, only a few private banks are partly doing e-banking.
But banking services can be extended to people's doorsteps via e-banking, they added.
“We are organising the event to introduce banking technologies to local banking industry,” said Rizwan Bin Farouq, managing director of Axiom Technologies, at a press conference in Dhaka yesterday.
He said the exhibition will benefit the banking sector and its customers. The Bangladesh Association of Software Information Services, Bangladesh Leasing and Financial Companies Association (BLFCA), Association of Bankers Bangladesh Limited (ABB) and Pakistan Software Houses Association are supporting the fair.
The Daily Star is the media partner of the exhibition.
Niaz Habib, secretary of ABB, Anis A Khan, president of BLFCA, and Faisal Rahim, managing director of Total Communication, were present at the press meet.
>> Source: The Daily Star, March 17, 2009.
February 22, 2009
300 Bank branches in 2009
Banks continue to expand their branches this year to net new customers for low-cost deposits.
Despite a slowdown in the global financial sector, some 300 new bank branches will be added to the country's existing network in 2009, taking the tally to over 7,000, according to Bangladesh Bank (BB) data.
“We have agreed to permit opening of around 300 new branches in 2009, assessing the demand, mainly from the private banks,” a senior BB official told The Daily Star.
The total demand was much more than the permitted number, the official said.
As of December 2008, the number of total bank branches stood at 6,886.
The banking sector of Bangladesh comprises four categories of scheduled banks -- state-owned commercial banks (SCBs), state-owned development finance institutions (DFIs), private commercial banks (PCBs) and foreign commercial banks (FCBs).
These banks had a total of 6,717 branches as of December 2007, while the number was 6,562 and 6,402 in 2006 and 2005 respectively.
With new branches banks can collect millions in cheap deposits that are lent at higher rates, bankers said.
Even though they increasingly offer technology-driven products and automated teller machines (ATMs) in convenient places, banks still hope to lure customers to a physical branch.
According to BB data, total deposits of the banks in 2008 increased by 19.19 percent to Tk 256,127 crore from Tk 214,890 crore in 2007. The growth was 15.5 percent in 2007. Banks' deposit was Tk 186,060 crore in 2006.
Share of four SCBs -- Sonali, Janata, Agrani and Rupali -- is declining on the increasing presence of PCBs, BB data shows.
Deposits of 30 PCBs increased by 26.12 percent in 2008 compared to 8.44 percent by four SCBs.
The SCBs' share in deposits decreased from 35.2 percent in 2006 to 32.6 percent in 2007. On the other hand, PCBs' deposits in 2007 amounted to Tk 115,020 crore or 53.5 percent of the total industry deposits. PCBs' deposit was Tk 95,550 crore or 51.3 percent in 2006.
FCBs' deposits in 2007 rose by Tk 3,260 crore or 21.6 percent over the previous year. The DFIs' deposits in 2007 were Tk 11,560 crore against Tk 10,020 crore in 2006 showing an increase by 15.4 percent.
“We want to reach more rural and semi-urban population. Already we have more rural branches than urban ones,” said Muhammad A Rumee Ali, chairman of BRAC Bank that has got permission to open 15 branches in 2009.
Rumee Ali, also a former deputy governor of BB, said still the bankable people in the country are much lower compared to many countries.
He urged BB to look into the issue of urban and rural branches opening by banks.
The BB approves new branch opening based on a set criteria such as capital base, provision shortfall, corporate governance, foreign exchange management and disbursement of SME loan.
This year the central bank will not allow a bank to open more than three branches in Dhaka and Chittagong, the most concentrated areas. BB encourages banks to open more branches in rural areas.
Besides BRAC Bank, Islami Bank Bangladesh has been given permission to open a total of 15 branches this year.
Source: The Daily Star, February 22, 2009
Despite a slowdown in the global financial sector, some 300 new bank branches will be added to the country's existing network in 2009, taking the tally to over 7,000, according to Bangladesh Bank (BB) data.
“We have agreed to permit opening of around 300 new branches in 2009, assessing the demand, mainly from the private banks,” a senior BB official told The Daily Star.
The total demand was much more than the permitted number, the official said.
As of December 2008, the number of total bank branches stood at 6,886.
The banking sector of Bangladesh comprises four categories of scheduled banks -- state-owned commercial banks (SCBs), state-owned development finance institutions (DFIs), private commercial banks (PCBs) and foreign commercial banks (FCBs).
These banks had a total of 6,717 branches as of December 2007, while the number was 6,562 and 6,402 in 2006 and 2005 respectively.
With new branches banks can collect millions in cheap deposits that are lent at higher rates, bankers said.
Even though they increasingly offer technology-driven products and automated teller machines (ATMs) in convenient places, banks still hope to lure customers to a physical branch.
According to BB data, total deposits of the banks in 2008 increased by 19.19 percent to Tk 256,127 crore from Tk 214,890 crore in 2007. The growth was 15.5 percent in 2007. Banks' deposit was Tk 186,060 crore in 2006.
Share of four SCBs -- Sonali, Janata, Agrani and Rupali -- is declining on the increasing presence of PCBs, BB data shows.
Deposits of 30 PCBs increased by 26.12 percent in 2008 compared to 8.44 percent by four SCBs.
The SCBs' share in deposits decreased from 35.2 percent in 2006 to 32.6 percent in 2007. On the other hand, PCBs' deposits in 2007 amounted to Tk 115,020 crore or 53.5 percent of the total industry deposits. PCBs' deposit was Tk 95,550 crore or 51.3 percent in 2006.
FCBs' deposits in 2007 rose by Tk 3,260 crore or 21.6 percent over the previous year. The DFIs' deposits in 2007 were Tk 11,560 crore against Tk 10,020 crore in 2006 showing an increase by 15.4 percent.
“We want to reach more rural and semi-urban population. Already we have more rural branches than urban ones,” said Muhammad A Rumee Ali, chairman of BRAC Bank that has got permission to open 15 branches in 2009.
Rumee Ali, also a former deputy governor of BB, said still the bankable people in the country are much lower compared to many countries.
He urged BB to look into the issue of urban and rural branches opening by banks.
The BB approves new branch opening based on a set criteria such as capital base, provision shortfall, corporate governance, foreign exchange management and disbursement of SME loan.
This year the central bank will not allow a bank to open more than three branches in Dhaka and Chittagong, the most concentrated areas. BB encourages banks to open more branches in rural areas.
Besides BRAC Bank, Islami Bank Bangladesh has been given permission to open a total of 15 branches this year.
Source: The Daily Star, February 22, 2009
February 05, 2009
Bankers fear slow loan payback from spinners
Bankers fear random import of low-cost yarn from neighbouring India will cost them heavily by making their clients defaulted.
Banks have also tightened their grip on new lending to this sector to see the bad time of the industry, which had a consistent growth for the past one decade, bankers said.
“Payment from the spinning millers is getting slowed,” said Ali Reza Iftekhar, managing director and chief executive officer of Eastern Bank.
He said banks are in a threat because they have huge exposure in spinning mills, which are capital-intensive industries.
“We are in great uncertainty. Immediate steps are needed to address the issue,” said Shahjahan Bhuiyan, managing director of United Commercial Bank.
Bhuiyan said about Tk 60,000 crore are involved in the textile sector spinning, knitting, dyeing and import of raw materials required for the industries.
The ongoing global recession has already caught up with the country's yarn industry with substantial fall in its local and export demands and a pile up of a huge amount of unsold yarn.
Easy access to import the item from India at a cheaper rate has made the local millers more worried.
According to industry people presently the Tk 27,000 crore spinning mills of the country are struggling with an inventory of 2.5 lakh tonnes of yarn worth Tk 2,500 crore that millers failed to sell for a demand decline and a flood of comparatively low cost yarn from India.
Earlier yarn import from India was restricted, but the caretaker government at its last time decision withdrew those restrictions and allowed importers to go freely.
Manufacturers are now importing Indian yarn at 15 to 20 cents per pound lower rate than that of locally produced yarn.
Bangladesh's commercial banking sector comprising 30 private banks, nine foreign banks and four state-owned banks has financed a lot to develop the country's textile industry. They have financed set up about 350 spinning mills in the country to supply yarn for manufacturing woven and knit garments. Banks also fund to import raw materials for the spinners.
“About Tk 60,000 crore bank finance are involved with the whole industry spinning, dyeing, knitting and import of raw materials,” Shahjahan Bhuiyan said.
Bhuiyan said many of their clients couldn't finance bank payment due to poor sale of the yarn produced locally.
“Now local yarn producers are forced to sell their product at a lower rate for their survival,” Ali Reza Iftekhar said.
He said Bangladesh's yarn is better in quality than the Indian product.
“Immediate corrective measures are needed, otherwise the industry will be in great difficulty,” the EBL chief executive remarked.
A senior official in Janata Bank, which has huge exposure in the sector, also admitted the fear.
“Local industry will have benefited if the government did not allow low-cost Indian yarn,” the official who requested not to be named said.
Source: The Daily Star, February 5, 2009
Banks have also tightened their grip on new lending to this sector to see the bad time of the industry, which had a consistent growth for the past one decade, bankers said.
“Payment from the spinning millers is getting slowed,” said Ali Reza Iftekhar, managing director and chief executive officer of Eastern Bank.
He said banks are in a threat because they have huge exposure in spinning mills, which are capital-intensive industries.
“We are in great uncertainty. Immediate steps are needed to address the issue,” said Shahjahan Bhuiyan, managing director of United Commercial Bank.
Bhuiyan said about Tk 60,000 crore are involved in the textile sector spinning, knitting, dyeing and import of raw materials required for the industries.
The ongoing global recession has already caught up with the country's yarn industry with substantial fall in its local and export demands and a pile up of a huge amount of unsold yarn.
Easy access to import the item from India at a cheaper rate has made the local millers more worried.
According to industry people presently the Tk 27,000 crore spinning mills of the country are struggling with an inventory of 2.5 lakh tonnes of yarn worth Tk 2,500 crore that millers failed to sell for a demand decline and a flood of comparatively low cost yarn from India.
Earlier yarn import from India was restricted, but the caretaker government at its last time decision withdrew those restrictions and allowed importers to go freely.
Manufacturers are now importing Indian yarn at 15 to 20 cents per pound lower rate than that of locally produced yarn.
Bangladesh's commercial banking sector comprising 30 private banks, nine foreign banks and four state-owned banks has financed a lot to develop the country's textile industry. They have financed set up about 350 spinning mills in the country to supply yarn for manufacturing woven and knit garments. Banks also fund to import raw materials for the spinners.
“About Tk 60,000 crore bank finance are involved with the whole industry spinning, dyeing, knitting and import of raw materials,” Shahjahan Bhuiyan said.
Bhuiyan said many of their clients couldn't finance bank payment due to poor sale of the yarn produced locally.
“Now local yarn producers are forced to sell their product at a lower rate for their survival,” Ali Reza Iftekhar said.
He said Bangladesh's yarn is better in quality than the Indian product.
“Immediate corrective measures are needed, otherwise the industry will be in great difficulty,” the EBL chief executive remarked.
A senior official in Janata Bank, which has huge exposure in the sector, also admitted the fear.
“Local industry will have benefited if the government did not allow low-cost Indian yarn,” the official who requested not to be named said.
Source: The Daily Star, February 5, 2009
February 03, 2009
World Economic Forum in Davos & Dr Muhammad Yunus
Nobel laureate Dr Muhammad Yunus told the just-concluded World Economic Forum in Davos that world's poor people would be the most affected by the ongoing global financial crisis.
Prof Yunus, a panellist at the Davos Philanthropic Roundtable, said when the world is busy talking about bailout packages for companies, at the same time it is needed to design similar packages for the poor.
Former US President Bill Clinton, billionaire philanthropist Bill Gates and former British prime minister Tony Blair were present, among others, at the discussion, says a release from Yunus Secretariat.
The theme of the 39th World Economic Forum this year was 'Shaping the Post Crisis World.'
Prof Yunus, also founder and managing director of Grameen Bank, underlined that the crisis increased the need for special attention to the poor and the rich still had plenty of money.
"Those who had billions and have lost half of it, still have the other half. Their lifestyles will not change. But the real impact will be on the people at the bottom," said Yunus, who was awarded Nobel Peace Prize in 2006 for his efforts to lift people out of extreme poverty.
Bill Clinton also echoed his views during the roundtable saying, "The economic stimulus packages should be aimed at the poorest in society."
He also urged the world's rich nations to spend more on supporting projects in the developing world even though their own wealth has been hit.
In addition to the Philanthropic Roundtable, Prof Yunus was a lead speaker at an especially organised panel entitled 'Restoring Growth through Social Business.'
During this session, moderated by Kishore Mahbubani of the Lee Kuan Yew School of Public Policy Singapore, panellists discussed the great prospect of social business, non-loss, non-dividend companies, to address social goals ranging from improved nutrition, provision of safe drinking water, information technology for the poor and others.
They also discussed the on-the-ground experience of social businesses already being operated in Bangladesh by Grameen.
Panelist Franck Riboud, chairman and CEO of French dairy giant Danone, which has partnered with Grameen in a social business, said that all CEOs would now have to reinvent what business means in light of what is happening, and social business is a way forward for this.
In Davos from January 29 to February 1, Prof Yunus held discussions with business leaders, philanthropists, including Bill and Melinda Gates, heads of UN agencies on joint-venture collaborations in social business to address some of the world's most pressing problems, particularly healthcare for the poor.
He finalised the joint venture agreement to set up production plant in Bangladesh to produce nutrition supplement and treated mosquito nets, with Dr Humbrecht, CEO of BASF, a giant German company.
Prof Yunus, a panellist at the Davos Philanthropic Roundtable, said when the world is busy talking about bailout packages for companies, at the same time it is needed to design similar packages for the poor.
Former US President Bill Clinton, billionaire philanthropist Bill Gates and former British prime minister Tony Blair were present, among others, at the discussion, says a release from Yunus Secretariat.
The theme of the 39th World Economic Forum this year was 'Shaping the Post Crisis World.'
Prof Yunus, also founder and managing director of Grameen Bank, underlined that the crisis increased the need for special attention to the poor and the rich still had plenty of money.
"Those who had billions and have lost half of it, still have the other half. Their lifestyles will not change. But the real impact will be on the people at the bottom," said Yunus, who was awarded Nobel Peace Prize in 2006 for his efforts to lift people out of extreme poverty.
Bill Clinton also echoed his views during the roundtable saying, "The economic stimulus packages should be aimed at the poorest in society."
He also urged the world's rich nations to spend more on supporting projects in the developing world even though their own wealth has been hit.
In addition to the Philanthropic Roundtable, Prof Yunus was a lead speaker at an especially organised panel entitled 'Restoring Growth through Social Business.'
During this session, moderated by Kishore Mahbubani of the Lee Kuan Yew School of Public Policy Singapore, panellists discussed the great prospect of social business, non-loss, non-dividend companies, to address social goals ranging from improved nutrition, provision of safe drinking water, information technology for the poor and others.
They also discussed the on-the-ground experience of social businesses already being operated in Bangladesh by Grameen.
Panelist Franck Riboud, chairman and CEO of French dairy giant Danone, which has partnered with Grameen in a social business, said that all CEOs would now have to reinvent what business means in light of what is happening, and social business is a way forward for this.
In Davos from January 29 to February 1, Prof Yunus held discussions with business leaders, philanthropists, including Bill and Melinda Gates, heads of UN agencies on joint-venture collaborations in social business to address some of the world's most pressing problems, particularly healthcare for the poor.
He finalised the joint venture agreement to set up production plant in Bangladesh to produce nutrition supplement and treated mosquito nets, with Dr Humbrecht, CEO of BASF, a giant German company.
January 14, 2009
BB hikes cash reserve ratio for banks
Bangladesh Bank yesterday increased the rate for daily cash reserve requirement (CRR) against deposits by 50 basis points to help banks manage liquidity better than before.
In line with the past rules, all banks had maintained a monthly CRR of 5 percent on average. On a daily basis, the rate had been no less than 4 percent -- a ratio which was hiked to a minimum requirement of 4.5 percent by the central bank yesterday.
A high official with Bangladesh Bank said the banks had normally maintained 4 percent at the beginning of the month. In an attempt to maintain 5 percent on average throughout the month, bankers had often created a volatile situation in the call money market.
But the BB official would not see the latest move as a tight monetary policy.
The required reserve ratio is a bank regulation that sets the minimum reserves each bank must hold to customer deposits. The reserves are designed to satisfy withdrawal demands and would normally be in the form of fiat currency, or with a central bank.
The reserve ratio is sometimes used as a tool in monetary policy, influencing the economy, borrowing and interest rates.
Source: The Daily Star, January 14, 2009
In line with the past rules, all banks had maintained a monthly CRR of 5 percent on average. On a daily basis, the rate had been no less than 4 percent -- a ratio which was hiked to a minimum requirement of 4.5 percent by the central bank yesterday.
A high official with Bangladesh Bank said the banks had normally maintained 4 percent at the beginning of the month. In an attempt to maintain 5 percent on average throughout the month, bankers had often created a volatile situation in the call money market.
But the BB official would not see the latest move as a tight monetary policy.
The required reserve ratio is a bank regulation that sets the minimum reserves each bank must hold to customer deposits. The reserves are designed to satisfy withdrawal demands and would normally be in the form of fiat currency, or with a central bank.
The reserve ratio is sometimes used as a tool in monetary policy, influencing the economy, borrowing and interest rates.
Source: The Daily Star, January 14, 2009
January 11, 2009
Local firms zoom in on bank software
Domestic software developers are slowly making a niche in the local banking software market.
Presently, the banking software used for a particular branch is mostly made by local information technology (IT) firms. Also, at least six local private commercial banks (PCBs) with online banking services use locally developed online real-time software, according to sector people.
Thanks to the flourishing IT industry, the market for real-time banking software, once totally captured by foreign companies, is now being grabbed by the local firms. However, the industry has been catering to the domestic needs for branch banking solutions since the 1990s.
Branch banking software is used for a branch of a bank, while a single real-time banking software is used for keeping, processing and updating information and data of all branches of a bank.
"We have been working for a long time with real time software for banks and we have so far supplied the product to four private banks," said SM Waesh, senior vice president of Flora Systems, a local software and data entry company.
Four PCBs such as Trust Bank Ltd, NCC Bank Ltd, Jamuna Bank and Mutual Trust Bank now use 'Flora Bank', a centralised banking software, said Flora Systems officials.
According to software developers, said the cost of such a locally developed varies between Tk 1 crore and Tk 3 crore, while a foreign software costs between Tk 30 crore and Tk 40 crore.
"Apart from such cost-effectiveness, this local centralised banking software saves our hard-earned foreign currency and creates job opportunities for many,” Waesh added.
Flora and five or six local software developers, including Beximco Computers Ltd, a concern of Beximco Group, Leads, are the local players who are working to build online and branch banking software.
In addition, some banks have developed their own banking software for their own use.
After building the software for its own use, Bank Asia now markets it for other banks.
Pubali Bank Limited, Islami Bank Bangladesh Ltd and Uttara Bank Limited have also developed their branch banking and online banking software by their own to meet their needs.
Bank Asia has developed its centralised software through ERA- InfoTech Ltd, a joint venture company. Bank Asia Ltd, Ranks IT Ltd and a Dubai based IT firm are funding this project.
"We are using the software successfully and also supplied it to the locally owned Standard Bank," Irfan Uddin Ahmed, deputy managing director of Bank Asia, said, adding that the software would be exhibited in an international fair in Dubai soon to attract foreign customers.
Officials with Beximco Computers Ltd, a concern of Beximco Group, said the company supplies branch banking solutions, but it is now thinking of developing a centralised banking solution to meet the market demand.
Now over 300 branches of 15 major banks of the country use the company's software, according to the official website of Beximco Group.
Talking to The Daily Star, Shaikh Abdul Aziz, chief executive officer and managing director of LEADS Corporation Limited, a software company, said his company has developed both branch and centralized banking software including PcBANK2000 and BankUltimus. As many as 21 banks and financial institutions are using the products, he added.
Sector people attributed the competitive price and extensive after-sales-service to the increased use of local software. They said foreign solutions are dearer.
"Generally the annual service and maintenance fees account for 10-20 per cent of the total cost of a software. As the cost of local software is low, its service charge is also low," said Subodh Kumar Bhowmik, chief technical officer of Flora Systems.
He said it takes two-three years to fully customise a foreign made software because these software are made for different use in different countries. But local software are developed targeting the local market, he added.
But local customers sometimes undermine the local solutions thanking that it would not serve company purposes, Bhowmik lamented.
Source: The Daily Star, January 11, 2009
Presently, the banking software used for a particular branch is mostly made by local information technology (IT) firms. Also, at least six local private commercial banks (PCBs) with online banking services use locally developed online real-time software, according to sector people.
Thanks to the flourishing IT industry, the market for real-time banking software, once totally captured by foreign companies, is now being grabbed by the local firms. However, the industry has been catering to the domestic needs for branch banking solutions since the 1990s.
Branch banking software is used for a branch of a bank, while a single real-time banking software is used for keeping, processing and updating information and data of all branches of a bank.
"We have been working for a long time with real time software for banks and we have so far supplied the product to four private banks," said SM Waesh, senior vice president of Flora Systems, a local software and data entry company.
Four PCBs such as Trust Bank Ltd, NCC Bank Ltd, Jamuna Bank and Mutual Trust Bank now use 'Flora Bank', a centralised banking software, said Flora Systems officials.
According to software developers, said the cost of such a locally developed varies between Tk 1 crore and Tk 3 crore, while a foreign software costs between Tk 30 crore and Tk 40 crore.
"Apart from such cost-effectiveness, this local centralised banking software saves our hard-earned foreign currency and creates job opportunities for many,” Waesh added.
Flora and five or six local software developers, including Beximco Computers Ltd, a concern of Beximco Group, Leads, are the local players who are working to build online and branch banking software.
In addition, some banks have developed their own banking software for their own use.
After building the software for its own use, Bank Asia now markets it for other banks.
Pubali Bank Limited, Islami Bank Bangladesh Ltd and Uttara Bank Limited have also developed their branch banking and online banking software by their own to meet their needs.
Bank Asia has developed its centralised software through ERA- InfoTech Ltd, a joint venture company. Bank Asia Ltd, Ranks IT Ltd and a Dubai based IT firm are funding this project.
"We are using the software successfully and also supplied it to the locally owned Standard Bank," Irfan Uddin Ahmed, deputy managing director of Bank Asia, said, adding that the software would be exhibited in an international fair in Dubai soon to attract foreign customers.
Officials with Beximco Computers Ltd, a concern of Beximco Group, said the company supplies branch banking solutions, but it is now thinking of developing a centralised banking solution to meet the market demand.
Now over 300 branches of 15 major banks of the country use the company's software, according to the official website of Beximco Group.
Talking to The Daily Star, Shaikh Abdul Aziz, chief executive officer and managing director of LEADS Corporation Limited, a software company, said his company has developed both branch and centralized banking software including PcBANK2000 and BankUltimus. As many as 21 banks and financial institutions are using the products, he added.
Sector people attributed the competitive price and extensive after-sales-service to the increased use of local software. They said foreign solutions are dearer.
"Generally the annual service and maintenance fees account for 10-20 per cent of the total cost of a software. As the cost of local software is low, its service charge is also low," said Subodh Kumar Bhowmik, chief technical officer of Flora Systems.
He said it takes two-three years to fully customise a foreign made software because these software are made for different use in different countries. But local software are developed targeting the local market, he added.
But local customers sometimes undermine the local solutions thanking that it would not serve company purposes, Bhowmik lamented.
Source: The Daily Star, January 11, 2009
January 10, 2009
PCBs post rise in profit
Private commercial banks (PCBs) kept up a good show in 2008 despite a global and domestic slowdown in business activity, according to data received from different PCBs.
The operating profit of a PCB was as high as 97 percent and the lowest margin was 23 percent for 2008.
Bankers put the growth down to higher import payments following a huge rise in the prices of commodities from the beginning of 2008.
“The commodity price hike that lasted through the third quarter of 2008 pushed the banks' profit up in 2008,” said Shahjahan Bhuiyan, managing director of United Commercial Bank (UCB).
“Banks' commission income increased significantly because of a price rise in 2008,” said AKM Shafiqur Rahman, executive vice president and secretary of National Bank Limited (NBL).
The operating profit of Al-Arafah Islami Bank rose by 97.5 percent to Tk 158 crore in 2008 from Tk 80 crore in 2007. Shahjalal Bank and Islami Bank saw operating profit increasing by 57 percent and 55 percent respectively in 2008, from a year earlier.
National Credit and Commerce Bank recorded a 33 percent rise in operating profit to Tk 236 crore in 2008 from Tk 178 crore a year ago. The growth rate for UCB and NBL, two first-generation PCBs, was 24 percent and 28 percent respectively in 2008.
Operating profits by NBL and UCB reached Tk 374 crore and Tk 260 crore respectively in 2008.
Operating profits of BRAC Bank, a third-generation private bank, also increased by over 23 percent to Tk 200 crore from Tk 162 crore in 2007.
Prime Bank's operating profit soared to Tk 410 crore in 2008 from Tk 326 crore in 2008. Pubali Bank earned Tk 60 crore more than its 2007 income of Tk 306 crore.
Southeast Bank posted Tk 300 crore in operating profit, up from Tk 291 crore in 2007.
Of the other banks, EXIM earned Tk 260 crore, Dhaka Bank Tk 254 crore, Dutch-Bangla Tk 221 crore, Mercantile Tk 190 crore, IFIC Tk 177 crore, Basic Tk 175 crore, Standard Bank Tk 156 crore, Trust Bank Tk 138 crore, Jamuna Bank Tk 120 crore, One Bank Tk 110 crore and Social Investment Bank Tk 100 crore, according to data tallied by The Daily Star.
AB Bank's operating profit however dipped by Tk 15 crore to Tk 450 crore in 2008 from Tk 465 crore in 2007.
“Banks in Bangladesh saw a good year in 2008 despite the global financial turmoil. Credit should go for the central bank for its prudent and effective guideline,” said Nurul Amin, managing director of NCC Bank.
“We have also seen growth in the banking industry in 2008 in spite of a slowdown in the global economy,” said Syed Abu Naser Bukhtear Ahmed, chief executive officer of state-owned Agrani Bank.
Agrani's operating profit reached Tk 600 crore in 2008 from Tk 526 crore a year ago.
The operating profit of the PCBs had increased by nearly Tk 1,500 crore to Tk 5,200 crore in 2007, up from Tk 3,734 crore in 2006.
The country's imports grew by 31.66 percent in the first four months of the current fiscal year, compared to the same period of the previous fiscal year, according to Bangladesh Bank data.
The value of letters of credit against imports worth $7.898 billion was settled in the July-October period of fiscal 2008-2009, compared with $5.999 billion in the same period of the previous fiscal year.
Credit to the private sector rose by 24.72 percent to Tk 39,736 crore in October 2008, compared to the same period of the previous year.
Source: The Daily Star, January 02, 2009
The operating profit of a PCB was as high as 97 percent and the lowest margin was 23 percent for 2008.
Bankers put the growth down to higher import payments following a huge rise in the prices of commodities from the beginning of 2008.
“The commodity price hike that lasted through the third quarter of 2008 pushed the banks' profit up in 2008,” said Shahjahan Bhuiyan, managing director of United Commercial Bank (UCB).
“Banks' commission income increased significantly because of a price rise in 2008,” said AKM Shafiqur Rahman, executive vice president and secretary of National Bank Limited (NBL).
The operating profit of Al-Arafah Islami Bank rose by 97.5 percent to Tk 158 crore in 2008 from Tk 80 crore in 2007. Shahjalal Bank and Islami Bank saw operating profit increasing by 57 percent and 55 percent respectively in 2008, from a year earlier.
National Credit and Commerce Bank recorded a 33 percent rise in operating profit to Tk 236 crore in 2008 from Tk 178 crore a year ago. The growth rate for UCB and NBL, two first-generation PCBs, was 24 percent and 28 percent respectively in 2008.
Operating profits by NBL and UCB reached Tk 374 crore and Tk 260 crore respectively in 2008.
Operating profits of BRAC Bank, a third-generation private bank, also increased by over 23 percent to Tk 200 crore from Tk 162 crore in 2007.
Prime Bank's operating profit soared to Tk 410 crore in 2008 from Tk 326 crore in 2008. Pubali Bank earned Tk 60 crore more than its 2007 income of Tk 306 crore.
Southeast Bank posted Tk 300 crore in operating profit, up from Tk 291 crore in 2007.
Of the other banks, EXIM earned Tk 260 crore, Dhaka Bank Tk 254 crore, Dutch-Bangla Tk 221 crore, Mercantile Tk 190 crore, IFIC Tk 177 crore, Basic Tk 175 crore, Standard Bank Tk 156 crore, Trust Bank Tk 138 crore, Jamuna Bank Tk 120 crore, One Bank Tk 110 crore and Social Investment Bank Tk 100 crore, according to data tallied by The Daily Star.
AB Bank's operating profit however dipped by Tk 15 crore to Tk 450 crore in 2008 from Tk 465 crore in 2007.
“Banks in Bangladesh saw a good year in 2008 despite the global financial turmoil. Credit should go for the central bank for its prudent and effective guideline,” said Nurul Amin, managing director of NCC Bank.
“We have also seen growth in the banking industry in 2008 in spite of a slowdown in the global economy,” said Syed Abu Naser Bukhtear Ahmed, chief executive officer of state-owned Agrani Bank.
Agrani's operating profit reached Tk 600 crore in 2008 from Tk 526 crore a year ago.
The operating profit of the PCBs had increased by nearly Tk 1,500 crore to Tk 5,200 crore in 2007, up from Tk 3,734 crore in 2006.
The country's imports grew by 31.66 percent in the first four months of the current fiscal year, compared to the same period of the previous fiscal year, according to Bangladesh Bank data.
The value of letters of credit against imports worth $7.898 billion was settled in the July-October period of fiscal 2008-2009, compared with $5.999 billion in the same period of the previous fiscal year.
Credit to the private sector rose by 24.72 percent to Tk 39,736 crore in October 2008, compared to the same period of the previous year.
Source: The Daily Star, January 02, 2009
December 27, 2008
PCBs double industrial lending
Private commercial banks (PCBs) have almost doubled their stake in industrial term lending outpacing state-owned banks, a domination the latter enjoyed for years, central bank data show.
“With a very high level of past overdue, their (state-owned banks) actual role in industrial lending has become quite minor,” said a senior Bangladesh Bank (BB) official quoting its report of the 2007-08 financial year.
As per the report, the industrial term credit disbursed by all financial institutions in the country last fiscal stood at Tk 20,150 crore.
Of which, 30 PCBs alone disbursed Tk 13,650 crore, which was Tk 7,540 crore in FY 2006-07. Nine foreign commercial banks gave Tk 2,790 crore and non-bank financial institutions Tk 2,390 crore.
On the contrary, four state-owned commercial banks (SCBs) and five specialised banks disbursed only Tk 1,320 crore or 6.6 percent.
Of the amount, Sonali, Janata, Agrani and Rupali banks disbursed Tk 980 crore, while the specialised Bangladesh Krishi Bank, Rajshahi Krishi Unnyan Bank, Bangladesh Shilpa Bank, Bangladesh Shilpa Rin Sangstha and BASIC Bank disbursed Tk 340 crore.
Such loan disbursement by the banks and financial institutions marked a 62.6 percent rise and recovery 50.2 percent to Tk 13,620 crore.
According to bankers, the SCBs' contribution to industrial credit was above 80 percent until 1990, but the situation started getting reversed since the mid-90s with the more private banks' into business.
Shahjahan Bhuiyan, managing director of United Commercial Bank Limited (UCBL), a first generation private bank, said professionalism, services and above all customers' care have helped PCBs improve their stake significantly in lending.
SM Aminur Rahman, managing director of state-owned bank Janata identified some factors for the SCBs' low volume of credit disbursement, which include the credit ceiling set by the central bank, lack in business confidence and the fall in commodity prices in the international market.
“We could not disburse a significant amount of industrial credit in 2008,” said Syed Abu Naser Bukhtear Ahmed, managing director and chief executive officer of Agrani Bank.
He blamed political instability for this poor project financing by the bank.
Janata Bank MD has added another point: “Businessmen also did not come up with new ventures in 2008.”
SM Aminur Rahman, however, claimed that it is the SCBs that still create new entrepreneurs, not the PCBs.
Bhuiyan opposed Rahman's claim on developing entrepreneurship terming his idea 'an outdated one.'
“Now PCBs are creating entrepreneurs, not the SCBs,” he added.
Source: The Daily Star, December 26, 2008
“With a very high level of past overdue, their (state-owned banks) actual role in industrial lending has become quite minor,” said a senior Bangladesh Bank (BB) official quoting its report of the 2007-08 financial year.
As per the report, the industrial term credit disbursed by all financial institutions in the country last fiscal stood at Tk 20,150 crore.
Of which, 30 PCBs alone disbursed Tk 13,650 crore, which was Tk 7,540 crore in FY 2006-07. Nine foreign commercial banks gave Tk 2,790 crore and non-bank financial institutions Tk 2,390 crore.
On the contrary, four state-owned commercial banks (SCBs) and five specialised banks disbursed only Tk 1,320 crore or 6.6 percent.
Of the amount, Sonali, Janata, Agrani and Rupali banks disbursed Tk 980 crore, while the specialised Bangladesh Krishi Bank, Rajshahi Krishi Unnyan Bank, Bangladesh Shilpa Bank, Bangladesh Shilpa Rin Sangstha and BASIC Bank disbursed Tk 340 crore.
Such loan disbursement by the banks and financial institutions marked a 62.6 percent rise and recovery 50.2 percent to Tk 13,620 crore.
According to bankers, the SCBs' contribution to industrial credit was above 80 percent until 1990, but the situation started getting reversed since the mid-90s with the more private banks' into business.
Shahjahan Bhuiyan, managing director of United Commercial Bank Limited (UCBL), a first generation private bank, said professionalism, services and above all customers' care have helped PCBs improve their stake significantly in lending.
SM Aminur Rahman, managing director of state-owned bank Janata identified some factors for the SCBs' low volume of credit disbursement, which include the credit ceiling set by the central bank, lack in business confidence and the fall in commodity prices in the international market.
“We could not disburse a significant amount of industrial credit in 2008,” said Syed Abu Naser Bukhtear Ahmed, managing director and chief executive officer of Agrani Bank.
He blamed political instability for this poor project financing by the bank.
Janata Bank MD has added another point: “Businessmen also did not come up with new ventures in 2008.”
SM Aminur Rahman, however, claimed that it is the SCBs that still create new entrepreneurs, not the PCBs.
Bhuiyan opposed Rahman's claim on developing entrepreneurship terming his idea 'an outdated one.'
“Now PCBs are creating entrepreneurs, not the SCBs,” he added.
Source: The Daily Star, December 26, 2008
December 24, 2008
Banks on branch expansion spree
Private banks have quickened their branch expansion programme to net the unbanked population across the country, officials said.
Some thirty private commercial banks (PCBs) have opened around 50 branches only during the time from November to December 20, 2008.
According to Bangladesh Bank (BB) data, the central bank has granted licences to 30 PCBs to open around 150 branches by this year.
BB officials meanwhile said the demand for new branches is increasing this year like never before.
“No one disputes the importance of online banking or its increasing coverage, but every bank believes that the way to get there is to first have a more visible presence on the street,” said Muhammad A Rumee Ali, chairman of BRAC Bank and a former deputy governor of BB.
Rumee Ali said: “I don't think it's possible to provide full banking services without physical presence.”
BRAC Bank has got BB approval to open the highest number (20) of new branches in 2008 followed by Dutch-Bangla Bank with 15 branches. No other banks got permission to open more than 10 branches, according to BB data.
As of October 31, 2008, 48 Bangladeshi banks that include four state-owned, 30 PCBs, nine foreign and five specialised banks have a total of 6,789 branches. The number was 6,562 at the end of 2006 and 6,402 in 2005.
“The number of total branches will be around 6,850 at the end of 2008,” a senior BB official said.
Different banks have different explanations for their branch expansion strategy. For some it is about plugging geographical gaps in their network, for some others it is a response to customer demand and the call for more business.
“Business is the prime objective of any branch expansion. A branch needs to generate income, otherwise it will be shut down,” Rumee Ali said.
Helal Ahmed Chowdhury, managing director of Pubali Bank, which would have 371 branches at the end of 2008, said a bank needs to assess business potentials before opening a new branch.
Pubali Bank got permission to open 10 new branches this year, of which seven rural and the remaining three are urban branches.
“Now we consider economic activities and remittances before opening a new branch,” Chowdhury said.
There will be more branches as new areas are becoming urbanised, he added.
Responding to a query, he said a branch requires only one year to make profit.
“An urban branch generates quicker profit than a rural one,” Rumee Ali said.
Source: The Daily Star, December 23, 2008
Some thirty private commercial banks (PCBs) have opened around 50 branches only during the time from November to December 20, 2008.
According to Bangladesh Bank (BB) data, the central bank has granted licences to 30 PCBs to open around 150 branches by this year.
BB officials meanwhile said the demand for new branches is increasing this year like never before.
“No one disputes the importance of online banking or its increasing coverage, but every bank believes that the way to get there is to first have a more visible presence on the street,” said Muhammad A Rumee Ali, chairman of BRAC Bank and a former deputy governor of BB.
Rumee Ali said: “I don't think it's possible to provide full banking services without physical presence.”
BRAC Bank has got BB approval to open the highest number (20) of new branches in 2008 followed by Dutch-Bangla Bank with 15 branches. No other banks got permission to open more than 10 branches, according to BB data.
As of October 31, 2008, 48 Bangladeshi banks that include four state-owned, 30 PCBs, nine foreign and five specialised banks have a total of 6,789 branches. The number was 6,562 at the end of 2006 and 6,402 in 2005.
“The number of total branches will be around 6,850 at the end of 2008,” a senior BB official said.
Different banks have different explanations for their branch expansion strategy. For some it is about plugging geographical gaps in their network, for some others it is a response to customer demand and the call for more business.
“Business is the prime objective of any branch expansion. A branch needs to generate income, otherwise it will be shut down,” Rumee Ali said.
Helal Ahmed Chowdhury, managing director of Pubali Bank, which would have 371 branches at the end of 2008, said a bank needs to assess business potentials before opening a new branch.
Pubali Bank got permission to open 10 new branches this year, of which seven rural and the remaining three are urban branches.
“Now we consider economic activities and remittances before opening a new branch,” Chowdhury said.
There will be more branches as new areas are becoming urbanised, he added.
Responding to a query, he said a branch requires only one year to make profit.
“An urban branch generates quicker profit than a rural one,” Rumee Ali said.
Source: The Daily Star, December 23, 2008
December 07, 2008
Beautiful Bangladesh: Country Brands for Bangladesh
Chief Adviser Fakhruddin Ahmed yesterday launched the first country branding for Bangladesh.
The logo of the branding includes a rising sun above waves of seawater with the slogan "Beautiful Bangladesh" beneath.
Fakhruddin told the function that the country branding would be able to attract more tourists and foreign investments to the county.
Emphasising the need for country branding, the chief adviser said the thousand-year heritage of the country, its people, quality of its goods and services could be taken under a single brand.
The country branding represents not one segment but all the sectors and the population as a whole, Fakhruddin told the function at Sonargaon Hotel.
He also thanked the committee who had prepared and developed the logo and the slogan.
The country branding was launched amid a cultural programme, including a laser show, music and dance.
The image of the country considerably lies on tourism branding, and tourism itself could be developed by branding and promotion, said Mahbub Jamil, the chief adviser's special assistant for civil aviation and tourism.
"A nation's brand is not static. It evolves with the country," he said.
The Daily Star, December 7, 2008
November 13, 2008
Two organizations eye merger Bangladesh Development Bank planned
The Bangladesh Shilpa Bank (BSB) and the Bangladesh Shilpa Rin Sangstha (BSRS) are going to merge into one organization under a new name Bangladesh Development Bank.
The finance ministry sent last month a proposal on the matter to the secretary committee on administrative development.
A draft of Memorandum and Articles of Association on establishing a public limited company named Bangladesh Development Bank Limited was also sent to this body.
A senior official of the ministry said the proposal will be sent for the cabinet's nod after its scrutiny by this committee.
According to the proposal, Bangladesh Development Bank will be a public limited company under state ownership.
The official, however, said this bank might gradually be privatized.
The paid-up capital of the merged company will amount to Tk 400 crore. The present paid-up capital of the BSB is Tk 200 crore and BSRS' Tk 70 crore. Such capital will be raised to Tk 400 crore through an adjustment of the reserve funds of the two companies.
The proposed Bangladesh Development Bank will have at least seven directors.
In 1992, the government's several initiatives to privatize BSRS could not be accomplished due to some complexities.
BSB and BSRS, which have almost similar functions, were established to provide loans and facilities to industrial institutions besides helping in setting up new industries and expanding investment in the country. But, these two companies, according to the finance ministry official, failed to live up to their expectations.
In a recent meeting, representatives from the law ministry, Bangladesh Bank, BSB and BSRS emphasized making these two state-run lending agencies stronger and agreed on a merger.
An official sought that the government immediately take a decision with regard to the fate of the company because any uncertain situation will disappoint the employees of the companies.
Source: The Daily Star, November 13, 2008
The finance ministry sent last month a proposal on the matter to the secretary committee on administrative development.
A draft of Memorandum and Articles of Association on establishing a public limited company named Bangladesh Development Bank Limited was also sent to this body.
A senior official of the ministry said the proposal will be sent for the cabinet's nod after its scrutiny by this committee.
According to the proposal, Bangladesh Development Bank will be a public limited company under state ownership.
The official, however, said this bank might gradually be privatized.
The paid-up capital of the merged company will amount to Tk 400 crore. The present paid-up capital of the BSB is Tk 200 crore and BSRS' Tk 70 crore. Such capital will be raised to Tk 400 crore through an adjustment of the reserve funds of the two companies.
The proposed Bangladesh Development Bank will have at least seven directors.
In 1992, the government's several initiatives to privatize BSRS could not be accomplished due to some complexities.
BSB and BSRS, which have almost similar functions, were established to provide loans and facilities to industrial institutions besides helping in setting up new industries and expanding investment in the country. But, these two companies, according to the finance ministry official, failed to live up to their expectations.
In a recent meeting, representatives from the law ministry, Bangladesh Bank, BSB and BSRS emphasized making these two state-run lending agencies stronger and agreed on a merger.
An official sought that the government immediately take a decision with regard to the fate of the company because any uncertain situation will disappoint the employees of the companies.
Source: The Daily Star, November 13, 2008
October 29, 2008
Bangladesh Bank may pick S&P, Moody for Sovereign Rating
The central bank is at the final stage to hire two international credit rating agencies - Standard & Poor's and Moody's Investors Service to conduct a credit rating for Bangladesh.
A five-member technical committee, comprised of officials from Bangladesh Bank (BB), Ministry of Commerce and the Institute of Chartered Accountants of Bangladesh, sits today to recommend these two firms to the BB governor for their appointment. The central bank chief will finalise the appointment of the two among the three invited to do the credit rating.
Another firm, Japan Credit Rating Agency did not respond.
“The technical evaluation committee has decided to recommend Standard & Poor's and Moody after scrutinizing their proposals,” a senior BB official said yesterday.
The move for Bangladesh's first-ever credit rating, initiated by the central bank in May to ensure a better credit rating for the country, will help attract foreign investment and mobilize resources from the capital market as well, experts believe.
Such rating was earlier arbitrarily practiced by donors and individual enterprises.
“We need a credit rating for the country so that any organizations or countries cannot do such rating solely on Bangladesh based on their own perceptions,” a BB senior official remarked.
In this context, the BB governor's observation is: “Some ratings unnecessarily branded Bangladesh as a high risk country.”
On appointment of the recommended firms,
the central bank will issue work orders to them after completing negotiations with them on prices and time duration in a month.
There foreign banks -- Citibank NA, Hongkong and Shanghai Banking Corporation (HSBC) and Standard Chartered Bank will offer advisory services to the BB in the total process of completing the task.
Standard & Poor's and Moody's Investors Service will be allowed to do the credit rating job independently, if appointed. However, the reports to be submitted by these firms will be assessed by the central bank for a better rating of the country.
Although credit rating for business organizations is common globally, country-wise credit rating is a bit new. Besides developed countries, some Middle East and many African countries have their own country credit ratings.
Credit rating generally reflects a country's overall economic situation, but socio-political issues also get high focus.
>> Source: The Daily Star, October 29, 2008
A five-member technical committee, comprised of officials from Bangladesh Bank (BB), Ministry of Commerce and the Institute of Chartered Accountants of Bangladesh, sits today to recommend these two firms to the BB governor for their appointment. The central bank chief will finalise the appointment of the two among the three invited to do the credit rating.
Another firm, Japan Credit Rating Agency did not respond.
“The technical evaluation committee has decided to recommend Standard & Poor's and Moody after scrutinizing their proposals,” a senior BB official said yesterday.
The move for Bangladesh's first-ever credit rating, initiated by the central bank in May to ensure a better credit rating for the country, will help attract foreign investment and mobilize resources from the capital market as well, experts believe.
Such rating was earlier arbitrarily practiced by donors and individual enterprises.
“We need a credit rating for the country so that any organizations or countries cannot do such rating solely on Bangladesh based on their own perceptions,” a BB senior official remarked.
In this context, the BB governor's observation is: “Some ratings unnecessarily branded Bangladesh as a high risk country.”
On appointment of the recommended firms,
the central bank will issue work orders to them after completing negotiations with them on prices and time duration in a month.
There foreign banks -- Citibank NA, Hongkong and Shanghai Banking Corporation (HSBC) and Standard Chartered Bank will offer advisory services to the BB in the total process of completing the task.
Standard & Poor's and Moody's Investors Service will be allowed to do the credit rating job independently, if appointed. However, the reports to be submitted by these firms will be assessed by the central bank for a better rating of the country.
Although credit rating for business organizations is common globally, country-wise credit rating is a bit new. Besides developed countries, some Middle East and many African countries have their own country credit ratings.
Credit rating generally reflects a country's overall economic situation, but socio-political issues also get high focus.
>> Source: The Daily Star, October 29, 2008
October 18, 2008
Banks plan to switch to DIBOR by year-end
Commercial banks have planned to implement the proposed Dhaka inter-bank offered rate (DIBOR) by the year-end to discipline lending and borrowing of funds among them.
The move will help banks control the unusual nature of inter-bank call money rates and know the banks' overall liquidity position, treasurers in different banks said.
Currently, banks have no mechanism to quote rates for inter-bank lending and borrowing, which ultimately forces a bank to borrow at higher rates than that of even the corporate lending.
“We like to implement DIBOR by the year-end. Bangladesh Bank also wants DIBOR to be implemented,” said Syed Abu Naser Bukhtear Ahmed, chairman of Bangladesh Foreign Exchange Dealers Association, the initiator of the move.
The forex trade body has recently formed a technical committee to prepare a report on DIBOR, which will probably be submitted by the month-end.
DIBOR, if implemented, will be the barometer for interest rates that the banks in the country charge each other for term loans ranging from twenty-four hours to five years, according to technical committee members.
This inter-bank market provides a means for financial institutions with excess capital to earn higher rates of return by its lending liquid assets to those in need of funds.
The forex trade body chief, Syed Abu Naser Bukhtear Ahmed, also the chief executive officer of state-owned Agrani Bank Limited, said: “The technical committee is supposed to submit the report this month for a discussion on October 26.”
The meeting will also discuss how DIBOR-based lending and the limit of lending volume would work.
DIBOR is also important because it will be used as the base for variable rates for government and corporate loans and derivative-based products such as credit swaps, according to bank treasurers.
An increase or decrease in DIBOR will result in a corresponding rise or fall in a bank's cost of borrowing.
A treasury official of a private commercial bank who strongly supports DIBOR said the treasury bill rates are no longer reflective of the market-based interest rates.
Source: The Daily Star, October 17, 2008
The move will help banks control the unusual nature of inter-bank call money rates and know the banks' overall liquidity position, treasurers in different banks said.
Currently, banks have no mechanism to quote rates for inter-bank lending and borrowing, which ultimately forces a bank to borrow at higher rates than that of even the corporate lending.
“We like to implement DIBOR by the year-end. Bangladesh Bank also wants DIBOR to be implemented,” said Syed Abu Naser Bukhtear Ahmed, chairman of Bangladesh Foreign Exchange Dealers Association, the initiator of the move.
The forex trade body has recently formed a technical committee to prepare a report on DIBOR, which will probably be submitted by the month-end.
DIBOR, if implemented, will be the barometer for interest rates that the banks in the country charge each other for term loans ranging from twenty-four hours to five years, according to technical committee members.
This inter-bank market provides a means for financial institutions with excess capital to earn higher rates of return by its lending liquid assets to those in need of funds.
The forex trade body chief, Syed Abu Naser Bukhtear Ahmed, also the chief executive officer of state-owned Agrani Bank Limited, said: “The technical committee is supposed to submit the report this month for a discussion on October 26.”
The meeting will also discuss how DIBOR-based lending and the limit of lending volume would work.
DIBOR is also important because it will be used as the base for variable rates for government and corporate loans and derivative-based products such as credit swaps, according to bank treasurers.
An increase or decrease in DIBOR will result in a corresponding rise or fall in a bank's cost of borrowing.
A treasury official of a private commercial bank who strongly supports DIBOR said the treasury bill rates are no longer reflective of the market-based interest rates.
Source: The Daily Star, October 17, 2008
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