Banks’ deposit growth contracts in anticipation of interest rate cap

Deposit growth in banks saw a steep decline in January, in a development that can be viewed as the direct impact of the capping of interest rate on savings to 6 per cent. Earlier on December 30 last year, the government announced capping of interest rates on deposits at 6 per cent and on loans at 9 per cent. Many banks started to implement the 6 per cent interest rate on their fixed deposit schemes from the third week of January as part of their preparation to provide loans at 9 per cent interest from April 1. In January, banks’ deposits stood at Tk 1,138,632 crore, up 0.06 per cent from the previous month, according to data from the central bank. January’s deposit growth is the lowest since February last year. However, in January last year the deposit growth was 0.07 per cent in the negative. Between February and December last year, deposit growth hovered between 0.46 per cent and 2.38 per cent. The Daily Star spoke with least 10 officials of both the central bank and banks to unearth the reasons behind the downward trend of the deposit growth. Dhaka Bank Managing Director Emranul Huq said that the 6 per cent cap had an adverse impact on his bank’s deposit volume. Between January and February this year, customers withdrew about Tk 600 crore from the bank because of the lower interest rate. In January, the year-on-year credit growth stood at 9.20 per cent, down from 9.83 per cent from recorded for the previous month.

Source: https://www.thedailystar.net/business/news/banks-deposit-growth-contracts-anticipation-interest-rate-cap-1876570

Capital flight through trade mis-invoicing staggeringly high

Bangladesh lost a staggering $7.53 billion on an average between 2008 and 2017 to trade mis-invoicing during its foreign commerce with its 135 trading partners, said the Global Financial Integrity Report (GFI). The loss accounted for 17.95 per cent of Bangladesh’s international trade with all trading partners during the period, according to the GFI’s its annual update, “Trade-Related Illicit Financial Flows in 135 Developing Countries: 2008-2017”, which was released on Tuesday. The country lost $11.51 billion in 2015, the latest year for which data was available for Bangladesh. The report stated no such data for Bangladesh for 2014, 2016 and 2017. Bangladesh’s loss to trade mis-invoicing with the 36 advanced economies averaged $3.29 billion during the decade, which is 14.62 per cent of the country’s global trade. The report finds gap of $8.7 trillion in reported trade between developing and advanced economies over 10 years. It states trade mis-invoicing is a significant obstacle to sustainable development. In 2017, the most recent year for which data are available, the total value gap in trade between advanced economies and developing countries was $817.6 billion. The developing countries with the largest annual average value gaps in their bilateral trade with 36 advanced economies over the ten-year period were China ($323.8 billion), Mexico ($62.9 billion), Russia ($56.8 billion), Poland ($40.9) billion and Malaysia ($36.7 billion). Developing countries with the largest value gaps as a per cent of their total bilateral trade with the 36 advanced economies over the ten-year period were the Gambia (37.3 per cent); Togo (30.2 per cent); The Maldives (27.4 per cent); Malawi (26.8 per cent); and the Bahamas (26.6 per cent).

Source: https://www.thedailystar.net/business/news/capital-flight-through-trade-mis-invoicing-staggeringly-high-1876546

ISPs await fresh guidelines

The government will soon revise guidelines for internet service providers and bring down licensing categories in a bid to streamline broadband internet business in the country. Licence fees and annual charges will be hiked, while users will be able to set parental controls to reduce the risk of children encountering inappropriate contents online. Currently ISP licences are awarded in six categories, but under the new guidelines, there will be four types of licences. The ISPs with the nationwide licences now pay Tk 1 lakh per year which will be raised to Tk 2.50 lakh once the proposed guidelines come into effect. The central zone and zonal licence fees were Tk 50,000 which will rise to Tk 1.50 lakh under the divisional category. ISPs are now paying Tk 5,000 in annual fees for category A licences for providing internet connections in metropolitan areas. The fee will be Tk 1 lakh in the district level, according to the new guidelines. The categories B and C that offer connectivity in rural areas will be renamed as local ISPs and their fees will go up to Tk 25,000 from Tk 2,500. As of January this year, there were 57.43 lakh active fixed internet connections in the country, up from 57.30 lakh at the end of January last year, according to Bangladesh Telecommunication Regulatory Commission. As of February, the number of total ISP licences was 1,985, a jump from 1,218 in June 2018. Currently the BTRC has about 30 types of telecom licences and at the end of February the number of its total licences ran into 3,468.

Source: https://www.thedailystar.net/business/news/isps-await-fresh-guidelines-1876558