Banks now to get cheaper BB funds
Bangladesh Bank has made funds cheaper for all banks by reducing its repo rate by 75 basis points to 6 percent. The decision was made yesterday, a couple of days after the BB slashed the cash reserve requirement or CRR by one percentage point to 5.5 percent. But both the decisions will take effect on April 15, according to two circulars issued by the central bank yesterday. The BB, however, kept the reverse repo rate unchanged at 4.75 percent. Repo is a short-term fund that the central bank gives to commercial banks in case of cash shortfall, while reverse repo is excess money that banks keep with the central bank. The BB has already faced severe criticism from different quarters over its decision to cut the CRR. The decision came on Sunday after Finance Minister AMA Muhith held a meeting with BB Governor Fazle Kabir and directors of private banks.
Bangladesh Bank sells $27m to 10 banks
The central bank of Bangladesh has sold US$27 million more to 10 commercial banks to meet the growing demand for the greenback in the market. “We’ve sold the foreign currency to the banks on Tuesday at market rate to settle import payment bills particularly for fuel oils, food grains and fertilizers,” a senior official of the Bangladesh Bank (BB) told the BBN in Dhaka. He also said the central bank may continue providing such foreign currency support to the banks in line with the market requirement.
10 banks flouting central bank directive to keep interest rate spread under 5%
The Bangladesh Bank issued the directive in order to make the savings schemes more attractive as well as keep the interest rates on loans business-friendly. Although the Bangladesh Bank has strictly directed commercial banks to maintain their interest rate spread under 5%, at least 10 private banks are not following the directive, according to central bank sources. Five foreign banks – Standard Chartered Bank, State Bank of India, Woori Bank, Citibank N.A., and HSBC Bank – and five local banks – Brac Bank Ltd, Dutch-Bangla Bank Ltd, Uttara Bank Ltd, Premier Bank Ltd, and NRB Commercial Bank Ltd – were found to have an interest spread – the difference between interest rates on credit and savings – greater than 5% in March this year. Of them, the Standard Chartered Bank topped the list with 8.23% interest rate spread, followed by Brac Bank’s 7.35%. Sources said Bangladesh Bank issued the directive to maintain an interest rate spread under 5% in order to make the savings schemes more attractive as well as keep the interest rates on loans business-friendly.
BB fixes fees for loan, lease
Bangladesh Bank (BB) has fixed the same fees or charges or commissions against credit or lease for all Financial Institutions (FIs). “Loan application fees will be maximum Taka 200 and the document processing fees, CIB charge, stamp charge and legal and valuation fees will depend on the actual cost,” said a BB circular here today, BSS reports. The circular also said fees or penalty interest or profit for delaying loan installment will be maximum two percent with interest rate. In case of repayment of loan or lease before the expiry, the maximum amount of the payment fees or similar fees will be two percent of the outstanding loan or lease. In the case of adjustment before the schedule time of loans given in the cottage and micro sector, any fee will not be taken. No charge will be taken from the customer in case of giving balance confirmation certificate for half yearly basis credit or lease calculation. In case of giving more than twice the balance confirmation certificate as per demand of the customer, the maximum charge will be Taka 200 per time. BB asked the financial institutions to follow the circular.
Private sector credit growth continues to rise
Private sector credit grew 18.49 percent in February, up from 18.36 percent a month earlier and way past the central bank’s target of 16.3 percent, dispelling the notion of an ongoing liquidity crisis in the banking sector. For the best part of 2017 the private sector credit growth has been on the rise, prompting the Bangladesh Bank in January this year to lower the banks’ loan-deposit ratio ceiling to 83.5 percent from 85 percent. Bankers insisted that the move created a severe liquidity crisis but the latest data from the BB suggests otherwise. In the name of the liquidity crisis, private banks, by way of its directors, particularly those who are politically linked, managed to persuade the BB to lower the cash reserve ratio by one percentage point to 5.5 percent.
Inflation drops slightly in March
The point-to-point inflation rate in March dropped to 5.68 per cent compared to that of the previous month (February), official data showed. Bangladesh Bureau of Statistics (BBS) data, unveiled on Tuesday, showed that the point-to-point inflation decreased slightly by 0.04 percentage points in last month compared to 5.72 per cent in February. The national statistical body showed that the inflation in March of the current financial year (FY), 2017-18, however, increased by 0.34 percentage points compared to the same month in the previous FY. According to the BBS data, the point-to-point inflation rate in March of FY 17 was recorded at 5.39 per cent.
Export earnings decline by 1.38pc in March
The country’s export earnings in March dropped by 1.38 per cent to $3.05 billion, compared to the corresponding month of last calendar year, according to officials data released on Tuesday. In March 2017, the export earnings were $3.09 billion. The earnings in March this year also fell short of target by 3.19 per cent, it showed. The overall export earnings in the first nine months of the current fiscal year 2017-18, however, stood at $27.45 billion, marking a 6.33 per cent growth. The country fetched $25.81billion in the corresponding period of last fiscal. Earnings from readymade garments (RMG) export during the nine-month period stood at $22.83 billion, marking a 9.11 per cent growth over the corresponding period of the FY 2016-17. Export earnings from woven items grew by 6.75 per cent to $11.51 billion from $10.78 billion in the same period of the last fiscal. The knitwear export stood at $11.32 billion during the period, marking an 11.61 per cent growth, as against $10.14 billion in the same period of the FY17. Woven and knitwear items’ export earnings exceeded the target by 4.03 per cent and 2.03 per cent respectively.
Economy encountering money market, BoP imbalances
The ongoing chaos in the country’s financial market is the manifestation of inefficiency in managing the macro-economy, economists said. They warned that measures taken lately to shore up liquidity in banks could stoke inflationary pressure. Their observations came following the government’s decision to deposit 50 per cent of state enterprises’ funds with private commercial banks (PCBs) from the previous level of 25 per cent and cut in Cash Reserve Requirement (CRR) by 1.0 percentage point. The central bank on Tuesday decided to slash the CRR by one percentage point to 5.5 per cent until December 31 this year. The decision to this effect was taken earlier in a meeting with the directors of the banks, where the finance minister was present. The holding of the meeting has drawn widespread criticism. The central bank also extended the deadline for meeting the revised limit of Advance-Deposit Ratio (ADR) by banks for three months through March 31, 2019, instead of December 31, 2018.
Pvt banks to give Tk 160cr to PM’s fund
The Bangladesh Association of Banks (BAB), a forum of private banks’ directors, has taken up an initiative to raise Tk 160 crore for the Prime Minister’s Relief and Welfare Fund. The BAB circulated a letter to all private banks last week saying the 30 old banks will donate Tk 5 crore each while the remaining 10 new banks Tk 1 crore each. The amount will be given from the banks’ corporate social responsibility (CSR) funds, chief executives of a number of banks said. Prime Minister Sheikh Hasina yesterday invited over the banks’ directors and chief executive officers along with their spouses for tea at her Gono Bhaban residence in the capital.
Prime Bank gets new AMD
Prime Bank’s deputy managing director Habibur Rahman has been promoted to the post of additional managing director. Rahman started his banking career with AB Bank in 1985 and joined Bangladesh Bank as an assistant director the following year, Prime Bank said in a statement yesterday.
Midland Bank gets new AMD
Mohammad Masoom joined Midland Bank Limited (MDB) as Additional Managing Director (AMD). Prior to taking over the new assignment, he served in Bangladesh Finance and Investment Company Limited (BD Finance) as its Managing Director and CEO. Mr. Masoom, a seasoned banker, has three decades of hands on extensive and versatile banking experience.
EBL gets new DMD
Chowdhury MAQ Sarwar has recently joined Eastern Bank Ltd (EBL) as deputy managing director (DMD). Prior to joining EBL, he was the Consultant of Islami Bank Bangladesh Ltd. A distinguished banker with 34 years of experience in banking, Mr Sarwar played a significant role in thought leadership in developing Internal Control and Compliance functions for the banking industry. He started his career with IFIC Bank as probationary officer.
Economic growth set to hit 7.65pc this fiscal: BBS
Bangladesh’s economic growth rate is expected to hit 7.65 per cent in the current financial year, supported by the industrial and agriculture sectors, the government said Tuesday. But economists were critical of the provisional growth rate, saying that the real economic activities are not compatible with the BBS’s figures. The gross income per head of the country is also expected to pick up by 8.82 per cent to US$1,752 in the financial year (FY) 2017-18 from $1,610 in the last fiscal year of 2017, the state-run Bangladesh Bureau of Statistics (BBS) said while unveiling its provisional data. Officials said that the gross domestic product (GDP) growth of the country at constant price has broken all the previous record in Bangladesh’s history. The country joined the rank of the “7.0 per cent growth club” two years ago in financial year 2015-16.
Another extension planned
The power and energy ministry has decided to seek further extension of the Speedy Supply of Power and Energy (Special Provisions) Act 2010 indemnifying officials concerned against prosecution for awarding contracts without tender for three more years until 2021. The ministry made the decision at a meeting with state minister for power, energy and mineral resources Nasrul Hamid in chair on March 29, said ministry officials. Enacted in October 2010 for two years, the law was first extended by two years until October 11, 2014 and by four years until October 11, 2018, they said. Ministry’s power cell director general Mohammad Hossain on Tuesday told New Age that the ministry would seek the three-year extension to facilitate emergency procurement of goods and services for power and energy sector. It is a legal support for facilitating purchases in situations as worse as power cuts, he said. Officials said that the proposal would require Prime Minister Sheikh Hasina’s approval, as she holds the portfolio of power and energy ministry, to be placed before the cabinet before being tabled in parliament.
No plan to raise tax-free income limit: NBR
The revenue authority plans to cut the tax rate for individuals in the lower tax brackets instead of raising the tax-free income limit. “It may not be possible to raise the tax-free income ceiling,” Md Mosharraf Hossain Bhuiyan, chairman of the National Board of Revenue, said at a pre-budget discussion at his office in the capital yesterday. He spoke in a meeting with the leaders of Dhaka Chamber of Commerce and Industry, which proposed raising tax-free income ceiling to Tk 3 lakh from 2018-19. Yesterday, the Bangladesh Chamber of Industries (BCI) and the Dhaka Stock Exchange demanded the limit be set at Tk 3.5 lakh for the next fiscal year due to rising cost of living. Bhuiyan said anyone living outside Dhaka and Chittagong city corporations with annual incomes of more than Tk 2.50 lakh has the ability to pay a minimum tax of Tk 3,000.
BD, India launch container train services
India and Bangladesh have started a container train service. A trial run of the container train was flagged off Tuesday from Majerhat station of Kolkata, said a press release issued by Indian High Commission in Dhaka. The train is scheduled to terminate at Bangabandhusetu West Station today (Wednesday), where it will be received by senior officials of the Bangladesh Railway, it said. “This (trial run) is pursuant to the signing of an MoU between the Container Corporation of India Limited (CONCOR) and Container Company of Bangladesh Limited (CCBL) for starting container services between the two countries during the visit of the Prime Minister of Bangladesh to India in April 2017,” said the press release. Transportation of goods through container trains is expected to be a faster and cheaper option for both India and Bangladesh, it added.
Beximco Pharma completes acquisition of Nuvista Pharma
Beximco Pharmaceuticals has completed acquisition of 85.22 per cent stake in Nuvista Pharma worth over Tk 100 million to strengthen its position in hormones and steroids segments. “The board of directors of Beximco Pharma has considered and approved the acquisition of 10,013,474 ordinary shares of Tk 10 each being 85.22 per cent shareholdings of total capital in Nuvista Pharma,” according to a disclosure posted on the Dhaka Stock Exchange (DSE) website Tuesday. Earlier, the shareholders of the company approved the acquisition proposal in its annual general meeting. Currently, the government of Bangladesh holds 12.92 per cent stake in Nuvista Pharma Limited, according to the disclosure.
Local and Global Stock Indices *
|Index Name||Close Value||Value Change||Percentage Change|
|DSEX||5,790.29||↓ 37.23||↓ 0.64%|
|DJIA||24,033.36||↓ 389.17||↓ 1.65%|
|FTSE100||7,030.46||↓ 26.15||↓ 0.37%|
|Nikkei 225||21,330.22||↓40.16||↓ 0.19%|
World Commodities *
|Commodity||Close Value||Value Change||Percentage Change|
|Crude Oil (WTI)||$ 63.37||↓ 0.14||↓ 0.22%|
|Crude Oil (Brent)||$ 67.94||↓ 0.18||↓ 0.26%|
|Gold Spot||$ 1335.37||↑ 2.63||↑ 0.20%|
Major Currencies Exchange Rates Movement in Last Seven Days *
|USD 1||BDT 83.36|
|GBP 1||BDT 117.41|
|EUR 1||BDT 102.35|
|INR 1||BDT 1.28|
*CURRENCIES AND COMMODITIES ARE TAKEN FROM BLOOMBERG.