Default loan rates highest in shipbreaking, SME
Shipbreaking and shipbuilding, small and medium enterprises, trading, agriculture and garment are the top five sectors that generated the highest level of bad loans in Bangladesh in 2020, official figures showed. Fund diversion by borrowers, lack of farsightedness among businesses when it came to investment, and banks’ failure to maintain due diligence were mainly responsible for the highest amount of default loans in the sectors.As of December last year, banks gave out funds amounting to Tk 16,980 crore in the shipbuilding and breaking sector. Of the volume, 18 per cent turned into non-performing loans (NPLs), the highest ratio among all of the sectors, according to data from the central bank.Emranul Huq, managing director of Dhaka Bank, said there were many wilful defaulters in the ship breaking sector.The CMSME sector had the second-highest level of NPLs, which accounted for 12 per cent of the total outstanding loans of Tk 44,790 crore as of December.The NPLs facing the commercial loans in the trading sector stood at Tk 24,700 crore, or 11 per cent of the outstanding loans.Default loans in the agriculture sector stood at Tk 4,465 crore, which is 10 per cent of the loans disbursed among the farmers.NPLs stood at Tk 88,734 crore last year, down 5.93 per cent year-on-year, BB data showed. However, bad loans went up heavily in June this year. It was Tk 99,205 crore, up 11.80 per cent from six months earlier and 3.21 per cent year-on-year.
Meghna Group now making ceramic tiles
The Meghna Group of Industries (MGI) has recently entered the domestic ceramic industry by establishing its own Fresh Ceramics brand. It invested nearly Tk 500 crore to set up a ceramic manufacturing facility in Ashariar Char in Narayanganj, creating an opportunity to directly employ around 1,000 people.The local ceramic industry has registered an annual average growth rate of about 15 per cent since fiscal 2015-16, according to data from the Bangladesh Ceramic Manufacturers and Exporters Association (BCMEA). In fiscal 2019-20, about Tk 4,597 crore worth of tiles were sold, according to the BCMEA data. Of the total consumption, local brands accounted for about 84 per cent, or Tk 3,856 crore, while imports the remaining Tk 741 crore.Now, there are 31 ceramic manufacturing facilities in the country with a combined annual production capacity of 2,064 lakh square metres.Total investment in the industry currently stands at about Tk 5,235 crore while it employed around 19,883 people directly, showed the BCMEA data.The MGI story traces back to 1976 when it operated as Kamal Trading Company before establishing itself as Meghna Vegetable Oil Industries in 1989 on a small patch of land in Meghnaghat. The secret to the MGI’s rapid expansion has been product diversification.
BB approves two more refinancing schemes
Two refinancing schemes worth Tk 35 billion are being launched to help out Covid-hit agriculture and tourism sectors under government stimulus packages, officials said. Two proposals to this effect were approved at a board-of-directors meeting of Bangladesh Bank Monday with BB Governor FazleKabir in the chair. Talking to the FE, a BB senior official said the board approved the refinancing schemes to help offset the adverse impact of the ongoing Covod-19 pandemic on the sectors.The BB had earlier formed a special refinancing scheme worth Tk 50 billion for the agricultural sector on the same grounds. Another refinancing scheme worth Tk 5.0 billion will be constituted to help the tourism industry to clear salary and allowances of their employees.The central bank had announced the guideline for utilising the government-announced new stimulus package worth Tk 10 billion for the tourism industry. It issued a circular on July 15 last detailing the rules on how the hotels, motels, theme parks and other tourism organisations could avail of the low-cost funds.
Banks put Tk4,100cr in stocks last year
The consolidated stock exposure of banks went up to 24% amid the pandemic in 2020 from 22.8% in the previous year, according to the financial stability report of the Bangladesh Bank for the year 2020. The consolidated stock exposure refers to all activities of a company and its subsidiaries. Though investment in stocks jumped, it is far below from the maximum permissible limit of 50% of the banks’ capital.Islami Bank, the largest investor in the stock market among banks made a profit of Tk200 crore last year, EXIM Bank Tk203 crore, Social Islami Bank Tk78 crore, ShahjalalIslami Bank Tk72 crore, Al-ArafahIslami Bank Tk68 crore and First Security Islami Bank Tk53 crore, according to their annual reports.Banks can build up the fund from their own source or take the money from the central bank through a repurchase agreement (repo) at 4.75% rate.The DSE increased by 21.3% in 2020 and the market capitalisation rose 32% The daily average turnover leaped to Tk650 crore last year from Tk 450 crore in 2019.