Private credit growth highest in four years

Banks’ lending to private borrowers grew a robust 16.56 percent last fiscal year, according to central bank data released yesterday. The growth rate was the highest in four years and well above the target of 14.8 percent set in the monetary policy, thanks to declining interest rates and rising demand for short-term and consumer loans, according to bankers. “Big corporate groups are taking short-term loans to expand their operations. Borrowers are cashing in on the lower interest rates,” said Anis A Khan, managing director of Mutual Trust Bank and chairman of the Association of Bankers Bangladesh. Loans are now being given to diversified sectors, such as small and medium enterprises, consumer, personal, garment and textile, said Khan, hoping that if the trend sustains, credit growth will improve in the coming months.

Source: http://www.thedailystar.net/business/private-credit-growth-highest-four-years-1268536

Bangladesh Bank to bar banks from issuing guarantees

The central bank is set to bar banks from giving guarantee for commercial papers (CPs) to avert possible risks involving such money-market hotcakes. Officials said the Bangladesh Bank (BB) is preparing to put such restrictions by issuing guidelines on the CP shortly as a safeguard against risks the banks may get in. However, the commercial banks may be allowed to invest in the CPs for enhancing credits to CP-issuers by acting as an issuing and paying agent (IPA). IPA means a bank that delivers CPs to the investors against the proof of payment and at maturity repays the investors after receiving funds from the issuer. The central bank has decided that the banks should not issue the CP in any form or provide any guarantee for the short-term securities, according to the BB official. Non-banking financial institutions (NBFIs) are now allowed to issue CP for meeting their liquidity requirements, he explained. The NBFIs are not currently allowed to receive demand deposit like the banks and are not permitted to receive term deposits of less than three months.

Source: http://print.thefinancialexpress-bd.com/2016/08/13/149033

Three non-banks weigh down entire sector

Three non-bank financial institutions’ reckless lending has pushed up the overall industry’s nonperforming loans. The NBFIs are: First Finance, BIFC and People’s Leasing and Financial Services. If Reliance Finance is included, the situation will get even worse, according to industry insiders. The Bangladesh Bank in its recently launched financial stability report also focused on the issue. The sector’s non-performing loans compared to total loans rose 3.6 percentage points year-on-year to 8.9 percent in 2015. The high non-performing asset ratio of the industry is attributed to the high level of non-performing assets of three NBFIs, according to the report. As part of intensive monitoring, the BB assigned observers to the institutions and instructed them to reconstruct their boards, it added. Also, the three NBFIs’ inability to maintain the required loan loss provision is making it seem that the entire industry has failed to meet the regulatory requirement. In 2015, loan loss provision amounting to Tk 1,420 crore was maintained by NBFIs against the requirement of Tk 1,980 crore.

Source: http://www.thedailystar.net/business/three-non-banks-weigh-down-entire-sector-1269451

Bank Asia inks deal on agent banking

Ms.Rowshan Ara Begum, Joint Secretary of Local Government Division, Ministry of Local Government, Rural Development & Co-operatives and Project Director of `Strengthening Women’s Ability for Productive New Opportunities (SWAPNO)’ and Mr. Adil Raihan, Head of Channel Banking Division of Bank Asia signed an agreement at Local Government Division, DPHE Bhaban at Kakrail in Dhaka recently with an aim to facilitate social payments to SWAPNO beneficiaries across the country through e-payment system of Agent Banking channels run by Bank Asia.Mr. Hamidul Haque Khan, National Project Manager, Mr. Belayet Hossain, M&E Specialist and Ms. Selina Choudhury of SWAPNO project financed by United Nations Development Programme and Mr. Md. Moniruzzaman Khan, AVP, Mr. Md. Saifur Rahman, AVP and Mr. Md. Zakir Hossain Bhuiyain, FAVP of Bank Asia were present, according to a statement.

Source: http://www.thefinancialexpress-bd.com/2016/08/13/41966

Exports crash in July

Export earnings in July crashed to the lowest in nine months, hurt by a slowdown in garment shipments, after registering a record high in the previous month. Overseas shipments raked in $2.53 billion last month, down 3.8 percent year-on-year, according to data from the Export Promotion Bureau. July’s receipts also missed the monthly target by 25.18 percent. “Garment exports witnessed a slowdown due to long-term holidays for Ramadan and Eid,” said Siddiqur Rahman, president of the Bangladesh Garment Manufacturers and Exporters Association. Garment shipments brought home $2.11 billion in July, down 4.41 percent year-on-year.

Source:
http://www.thedailystar.net/business/exports-crash-july-1268533
http://print.thefinancialexpress-bd.com/2016/08/12/148929

Imports rise 5pc, driven by capital machinery

Bangladesh’s overall imports grew 5.45 percent year-on-year in fiscal 2015-16 owing to an uptick in capital machinery and industrial raw material deliveries. The country’s imports — on a cost and freight basis — stood at $42.92 billion, according to data from Bangladesh Bank. Import costs include the value of merchandise, freight, insurance, transport, travel, royalties and licence fees. Overall, imports recorded a positive growth rate last fiscal year despite falling commodity and petroleum products prices in the international markets. The import of petroleum products based on the settlement of letters of credit dropped 29.48 percent to $2.44 billion in fiscal 2015-16.

Source: http://www.thedailystar.net/business/imports-rise-5pc-driven-capital-machinery-1269304

Trade deficit falls to USD 6.3 billion in FY16 amid dull imports

The country’s trade deficit decreased to USD 6.3 billion in the recently concluded fiscal year 2015-16 compared with that of USD 7.0 billion in the FY15 amid a fall in import payments against higher export earnings. The export earnings registered an 8.9% growth in the FY16 compared with a 3.1% growth in the FY15, according to provisional data of Bangladesh Bank. The export earnings stood at USD 33.4 billion in the FY16 while it was USD 30.7 billion in the FY15.The imports registered a 5.5% growth in the FY16 compared with 3.0% growth in the FY15. The import payments stood at USD 39.7 billion in the FY16 while they were USD 37.7 billion in the FY15. The BB data earlier showed that the provisional trade deficit stood at USD9.91 billion in the FY15, but the central bank later revised significantly the data as it (trade deficit) stood at USD 7.0 billion. The central bank has mainly changed the import figure for the FY15 as the revised data decreased to USD 37.7 billion from the provisional data of USD 40.7 billion.

Source: http://newagebd.net/245703/trade-deficit-falls-6-27b-fy16-amid-dull-imports/

Deposits fall in school banking accounts in Q1

The amount of deposits in the bank accounts owned by school students in the country decreased to Tk 827.76 crore as of March 31, 2016 from that of Tk 844.19 crore as of December 31, 2015. BB official told New Age on Thursday that the deposit amount in the school banking accounts declined in the first quarter (January-March) of this year as banks had recently not given much attention to the financial inclusion programme targeting school children. Under the programme, students below the age of 18 are allowed to open bank accounts by keeping a minimum balance ranging between Tk 100 and Tk 500. he amount of deposits in the bank accounts opened by school students was Tk 764.99 crore as of September 30, Tk 687.99 crore as of June 30, Tk 823.04 crore as of March 31 in 2015 and Tk 714.49 crore as of December 31, 2014. The BB data, however, showed that the number of schoolchildren bank accounts increased to 10.66 lakh as of March 31, 2016 from that of 10.34 lakh as of December 31, 2015.

Source: http://newagebd.net/245943/deposits-fall-school-banking-accounts-q1/

Mutual funds likely to get respite from new VAT burden

All the mutual funds are likely to get respite from an additional 15 per cent value-added tax burden on different fees that the entities submit under securities rules, said Bangladesh Securities and Exchange Commission officials. The issue of submitting 15 per cent VAT by MFs came to light in April 2016, when the National Board of Revenue issued a letter in this regard. The NBR letter also asked to deposit VAT at 15 per cent rate since the year 2010 which was applicable on annual fees. The NBR letter was issued under the guideline of Section 19 E of Value-Added Tax Rule-1991.
The commission, however, observed that a number of institutions including stock exchanges and equities are exempted from such taxation under a provision of Value Added Tax Act, 1991. Following the NBR letter and based on the findings of the commission, BSEC in May this year issued a letter to the NBR so that the VAT on the MFs’ different fees is not deducted. The revenue board, however, is yet to give any reply in this regard, BSEC officials said. As the NBR is yet to clarify, majority of the mutual funds have kept a substantial amount as liability in their financial statement for the year ended on June 30, 2016, for the 15 per cent VAT which will ultimately affect the MFs’ dividend payment capacity and subsequently cause distortion in investors’ confidence as well, they said.

Source:
http://newagebd.net/245940
http://print.thefinancialexpress-bd.com/2016/08/12/148907

PMO’s note to frame law, policies on NPL recovery

The Prime Minister’s Office (PMO) has asked the finance ministry to take necessary steps for framing a law and policies on recovery of default loans in the country’s banking sector, officials said. As part of the move, an unofficial note signed by Dr Mashiur Rahman, Economic Affairs Adviser to the Prime Minister (PM), was sent to the finance ministry, they added. The finance ministry will inform the PM about it after working on its, they also said. In September last year a meeting organized by the Bank and Financial Institutions Division (BFID) under the finance ministry took a decision to appoint private agents to recover bad loans. But the authority did not proceed further with the decision for reasons unknown, sources concerned said. The People’s Development Services Corporation Ltd (PDSCL) has sought cooperation from the PM to frame a law, namely private agent company act-2015, on recovery of non-performing loans (NPLs).

Source: http://print.thefinancialexpress-bd.com/2016/08/13/149029

Bank rate, bureaucratic tangles obstruct local private investment in power generation projects

Experts and business leaders on Saturday said high rate of interest on bank loans and bureaucratic tangles in the project approval process were the major obstacles to private investment in mega power-generation projects. They said that the need for USD18.0-USD20.0 billion bank loans in the next 13 years to increase the country’s power generation capacity to 39,000MW was solely dependent on foreign sources as the local financial institutions were not ready to finance billion-dollar projects. Double digit interest rate on bank loans, inadequate grace period in repayment scheme and lengthy process in providing land and legal vetting are not suitable for local entrepreneurs to invest in mega power-generation projects — 300MW power projects or above, the experts said.

Source: http://newagebd.net/246088/seminar-big-power-project-financing/

NBR sets lower corporate tax target as PCBs’ profits shrink

The tax authority has set a lower corporate tax collection target for the current fiscal year, compared to that of the last year, in view of the last year’s slim growth of operating profit of the private commercial banks (PCBs). The revenue board for the first time set a target, lower by BDT 19.9 billion over that of the previous fiscal, for the Large Taxpayers Unit (LTU) under the income tax wing. The National Board of Revenue (NBR) fixed BDT 178.0 billion income tax collection target for the unit for fiscal year 2016-17. The income tax collection target was BDT 197.8 for 2015-16. Commercial banks contribute around 60% of the corporate tax collection of the LTU. According to statistics available with the NBR, the LTU experienced a significant shortfall in revenue collection target for the last fiscal year. The unit collected BDT 146 billion income tax last year, missing its target by BDT 51 billion.

Source: http://print.thefinancialexpress-bd.com/2016/08/14/149112

Petroleum import bill shrinks

Country’s petroleum import bill fell drastically by nearly USD 1.2 billion to over USD 2.0 billion in eleven months to last May as prices tumbled on the international market on supply glut, according to central bank statistics. The statistics prepared based on the opening of letters of credit (LCs) revealed that such fall was nearly by USD 1.0 billion in terms of LC settlements. The LCs opened for import of crude oil stood at USD 362.9 million in July-May period against USD 618.7 million in the same equivalent period previously. The LC opening for refined oil import accounted for USD 1.7 billion in the period under review. It was USD 2.6 billion in July-May 2015. Oil prices that had averaged more than USD 100 a barrel since 2010 went on a dive in June 2014 and it now stood on average at USD 43 a barrel. However, people at the Bangladesh Petroleum Corporation (BPC) said the reduction in import bill has been mainly due to the decline in fuel prices on the international market.

Source: http://print.thefinancialexpress-bd.com/2016/08/13/149037