Low-cost funds for women entrepreneurs
The cost of funds for women entrepreneurs has declined as the Bangladesh Bank yesterday said they would be able to borrow at a 5 per cent interest rate under one of its refinance schemes. Both male and female entrepreneurs earlier could avail loans from the refinance scheme in the enterprise sector. Now, only women-headed businesses will get financing from the facility, according to a notice of the central bank.The volume of the fund is Tk 1,500 crore. The central bank has already set a target to give out at least 15 per cent of the SME loans to women entrepreneurs by 2024.As part of the move, the central bank has taken the latest initiative to allow them to borrow from the banking sector easily. Women-owned enterprises now account for a maximum of 4 per cent of the total SME loans disbursed annually.Under the scheme, banks and non-bank financial institutions will receive funds from the BB at 0.50 per cent interest rate. The lenders can charge a 5 per cent lending rate. The central bank doubled the volume of the refinance scheme in May last year to offset the impacts of the business slowdown stemming from the coronavirus pandemic.It also lowered the lending rate to 7 per cent from 9 per cent at that time.
Savers, small borrowers pay price as banks run after high profit
With the financial sector being weighed down by huge excess liquidity, banks have cut the interest rates on deposits at a faster pace than on loans, penalising savers and, to some extent, small borrowers. But the average spread, the difference between the lending rates and the deposit rates, widened over the last several months, meaning banks are punishing clients to ensure handsome profits and dividends for shareholders.The weighted average rate on deposits stood at 4.13 per cent in June, down from 5.06 per cent a year ago, according to data from Bangladesh Bank. As a result, depositors are facing a negative return on savings given the inflation rate of 5.64 per cent in June. The lending rate declined to 7.33 per cent in the month from 7.95 per cent a year ago. Against the backdrop, the spread stood at 3.20 percentage points in June in contrast to 2.89 percentage points in the same month a year ago. Most banks now offer an interest rate of 2 to 4 per cent on the fixed deposit receipts (FDRs), which result in a negative real interest rate of 2-3 per cent for savers.As per the new rules, investors are allowed to purchase these savings tools of up to Tk 50 lakh under a single name and Tk 1 crore under a joint account, in contrast to Tk 1.05 crore and Tk 1.20 crore, respectively, in the past.The credit growth stood at 8.40 per cent in the last fiscal year against the central bank target of 14.80 per cent. The existing situation might not improve this year even if the central bank mopped up a portion of the excess liquidity
Bangladesh on cusp of industrial revolution
Bangladesh is on the cusp of an industrial revolution as incomes rise and technology plays an ever-increasing role in the economy, according to HSBC. “Urbanisation, smaller households and more women at work are powerful consumption drivers that support high levels of growth,” said Devendra Joshi, equity strategist for ASEAN and Frontier Markets at HSBC.A lot of investors do not know that Bangladesh’s economy is not only larger than that of Vietnam but also growing faster, he told a virtual discussion on “Bangladesh Market Insights 2021: Consumption Propelling Growth” yesterday.Bangladesh’s economic growth exceeded 7 per cent for four years in a row in the pre-pandemic period while its population grew at a fast pace to stand at around 165 million.The GDP per capita in Bangladesh is now $2,228 and this happened within 50 years.
Leading NBFIs see higher EPS in H1
The country’s leading listed non-banking financial institutions (NBFIs) bagged higher profits in the first half (H1) of 2021 thanks to lower cost of funds, suspension of loan classification and capital gains through investment in share market. The earnings per share (EPS) of all seven NBFIs, which published unaudited financial reports as of Wednesday, increased during the January-June period of 2021, according to available data with the Dhaka Stock Exchange (DSE). The companies are Bangladesh Finance, United Finance, National Housing Finance & Investment, IDLC Finance, Delta Brac Housing Finance Corporation, IPDC Finance and Islamic Finance & Investment. The EPS is the portion of a company’s profit allocated to each outstanding share of common stock. In short, it serves as an indicator of a company’s profitability. Bangladesh Finance has informed that its EPS increased in the H1’21 due to reduction in cost of deposit and borrowings, substantial capital gains from investment in shares and increase in fees and commission compared tothe same period of previous year.DSEX, the prime index of the DSE, rose 532 points or 9.46 per cent in the first six months during the January-June period of 2021.