Interbank lending rate goes past 9% cap for liquidity crunch
Cash-strapped banks are borrowing from cash-rich lenders paying more than 9 per cent in interest rate, which is above a cap set by the central bank, as an unprecedented liquidity crunch has hit the banking sector of Bangladesh. Some lenders have recently faced a cash reserve ratio (CRR) shortage, forcing them to secure funds at a higher interest rate from others.
For example, a bank yesterday took a loan amounting to Tk 15 crore, the maturity of which is 14 days, at a 10 per cent interest rate. A similar loan would cost 4 per cent a year earlier. Another lender obtained a loan of Tk 120 crore at 9.25 per cent interest on Monday, with a repayment period of 90 days. The lending rate was 4.25 per cent the year before. Banks turn to the interbank money market for short-term funds in order to meet their day-to-day financial needs. “The existing liquidity crunch in the banking sector is unprecedented,” said Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh. The interest rate in the interbank money market in Bangladesh usually shoots up in the run-up to Eid-ul-Fitr and Eid-ul-Azha, the two largest religious festivals for Muslims in Bangladesh, as people withdraw funds from the banking system to meet a rise in expenses.
Economic zones create 50,000 jobs so far
The economic zones (EZs) across the country have already created 50,000 jobs and will create more in near future as new industrial units are set to go into operations there, said Bangladesh Economic Zones Authority (BEZA) on Tuesday. “Around 50,000 people have so far been employed in the economic zones,” said BEZA Executive Chairman Shaikh Yusuf Harun. Six more companies are likely to begin commercial operations at Bangabandhu Sheikh Mujib Shilpa Nagar within the next six months, he added. He came up with the disclosures at an agreement signing ceremony between privately-run Bay Economic Zone and Taiwan-based apparel maker Makalot (BD) Ltd at the BEZA headquarters in the city’s Agargaon. Managing Director of the Bay Group Ziaur Rahman and Chairman of the Makalot (BD) Ltd Chou Hsin-Peng inked the agreement on behalf of their respective sides. Under the business agreement, the Makalot is preparing to invest $17 million to establish an industrial unit at the Bay EZ, creating job opportunities for nearly 1,500 people.
DSE aims at listing of at least 20 securities to boost trades on ATB
The Dhaka Stock Exchange is looking to increase the number of securities listed on the newly-launched Alternative Trading Board to make it vibrant. In doing so, the main board of the stock market insists that the listed securities should meet some sort of standards so investors gain confidence and come to the platform for trading. As of now, one equity security and a debt security have been listed. One of them, Lanka Bangla Securities have seen transactions of 2,500 shares since the first trading on January 4, but the other Pran Agro Limited Unsecured Guaranteed Bond-I has recorded no trades yet. “At least 20 securities are required for the platform to gain momentum. Our target is to ensure listing of quality securities,” said M. Shaifur Rahman Mazumdar, managing director (current charge) at the DSE. Defining the standards set, he said the companies that had convincing track records and bore good reputation would be welcomed into the platform. That was the ground on which the DSE had rejected a proposal.