Southeast Bank to issue BDT5.0bn subordinate bonds
The Bangladesh Securities and Exchange Commission (BSEC) has taken a set of decisions, including approval of non-convertible subordinate bond of Southeast Bank worth BDT 5.0 billion. The approval came a meeting held at the office of the BSEC in capital Dhaka on Tuesday with BSEC chairman Professor M Khairul Hossain in the chair. The tenure of the BDT 5.0 billion non-convertible bond, which will be issued by the Southeast Bank, will be seven years. The characteristics of the bond will be non-convertible, unlisted, fully redeemable, floating rated and subordinated. The private commercial bank will fulfill the requirement of Basel-II by raising fund through issuing the bond. Only the local financial institutions, corporate bodies and any other eligible investors will be allowed to purchase the units of the bond worth BDT 1.0 million each.
Most of the banks’ cost-to-income ratio, which is used to measure efficiency and productivity, accelerated in 2015 from a year earlier. The higher ratio generally indicates lower efficiency, but a number of factors can affect the ratio, including a bank’s business model, its size and the overall investment climate of a country, according to bankers. The Daily Star compiled data of 15 major private banks to analyze the industry’s costs in relation to its operating income. Nine banks’ costs escalated in 2015; four saw their costs decline, while two remained unchanged, data showed. Of the banks, Dutch-Bangla’s operating cost was the highest, 59.0%, followed by Uttara Bank at 57.0% and AB Bank at 53%. On the other hand, Southeast Bank was the most efficient private sector bank with a cost-to-income ratio of 31.0%. Bankers attributed the rise in cost-to-income ratio to the high nonperforming loans (NPL) and the declining interest income amid a sluggish demand for credit.
Remittance plummeted about 29.0% year-on-year to USD 1 billion in July as low oil prices continue to bite the countries that host the majority of Bangladesh’s migrant workers. July’s receipt is also the lowest monthly remittance inflow in at least four fiscal years, according to the provisional figures from the central bank. Bangladesh received USD 1.4 billion in remittance in July last year. Remittance inflow from the Middle Eastern countries declined 5.2% year-on-year to USD 8.6 billion in fiscal 2015-16. About 68.0% of Bangladeshi migrant workers reside in the Gulf Cooperation Council countries — Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates — which have been hit by the slump in oil prices. Oil price crashed to a historic low in January this year from an all-time high in mid-2014. Remittance slipped 2.5% year-on-year to USD 14.9 billion last fiscal year, as weak oil prices forced many Middle Eastern countries to cancel development projects and weakened the demand for migrant workers.
Bangladesh Securities and Exchange Commission (BSEC) has decided to open new department to operate financial literacy-related program across the country. To bring pace in financial literacy program, a steering committee and technical committee have already been formed. The securities regulator has undertaken the initiative for launching financial literacy program as part of its master plan to make people literate on financial instruments. An official said the regulator will formulate new rules and make the program mandatory for every institution and use its resources to disseminate financial education. A committee member said the committee already recommended executing the financial literacy program into three phases — short-term, mid-term and long-term. According to the recommendation, the short-term plan might be implemented between 2016 and 2018. Investors and stakeholders will be trained so that they could make appropriate investment decisions under the plan. The mid-term plan might be implemented between 2018 and 2019. Investors other than existing stakeholders will be trained on financial issues to make them understand capital market investment well under the mid-term plan. Under the long-term plan to be implemented between 2020 and onwards. Officials in all government and non-governmental organizations will be trained under the long-term plan.
BSEC approves Vanguard AML Rupali Bank Balanced Fund
The securities regulator Tuesday approved the prospectus of Vanguard AML Rupali Bank Balanced Fund, a closed-end mutual fund (MF), and BDT 5.0 billion non-convertible subordinate bond to be issued by Southeast Bank, officials said. The approvals came a meeting held at the office of the Bangladesh Securities and Exchange Commission (BSEC). At Tuesday’s meeting, the securities regulator also approved the proposal of opening the Financial Literacy Department at the BSEC. As per the BSEC approval, the tenure of Vanguard AML Rupali Bank Balanced Fund will be 10 years. Of BDT 2.0 billion, BDT 650 million has already been collected through pre-IPO (initial public offering) placement. The sponsors will contribute BDT 400 million, whereas remaining BDT 950 million will come from public. The offer price of the units of Vanguard AML Rupali Bank Balanced Fund is of BDT 10 each.
Bangladesh received record USD 3.5 billion foreign aid in FY’16
The country received a record-high USD 3.5 billion worth of foreign aid in the last financial year following a significant rise in disbursement by some key multilateral donors, including the World Bank. Officials said Tuesday the aid flow into the country in 2015-16 was USD 407.0 million higher than USD 3.0 billion received in the previous FY2015. The foreign assistance also crossed the annual target of the FY2016 as the country bagged USD 35.0 million higher aid than the USD 3.4 billion target, the Economic Relations Division (ERD) data, released Tuesday, showed. ERD statistics also showed that the commitment of the concessional foreign assistance also broke all previous records as the development partners working in Bangladesh confirmed USD 7.0 billion worth of grants and loans in the last fiscal. The multilateral and bilateral development partners made commitment worth USD 7.0 billion worth of medium- and long-term loans (MLTL) and grants in the last fiscal — some 33% higher over the previous FY — for constructing Bangladesh’s infrastructure and fighting hunger.
The government’s revenue authority has extended the tax exemption facility for the private power generation companies by another three and half years, up to December 31, 2019. The private power generation companies, except the coal-fired ones, that will go for commercial production by the said period will enjoy 15-year tax exemption facility. Internal Resources Division (IRD) has extended the deadline that expired on June 30 through issuing a Statutory Regulatory Order (SRO) recently. Officials said the deadline for availing the tax exemption facility was extended on a couple of occasions in the past through issuing SROs. The previous two deadlines ended on December 31, 2014 and June 30, 2013. As per Income Tax Ordinance 1984, private power plants that will comply with the conditions of the private sector power generation policy of Bangladesh, will be entitled to enjoy the tax exemption on the income generated from the power production business. Officials said a number of entrepreneurs have shown their interest to invest in power generation, being encouraged by the 15-year tax holiday facility.
The government has moved to set up a costly 200-300MW power plant in public sector in Khulna with electricity tariff at Tk 23.20 per unit. A Chinese consortium is likely to get the contract to install the plant. The Power Division on Sunday placed a proposal to the cabinet committee on public purchase for setting the proposed power plant at a cost of around Tk 2370.14 crore with funds from an export credit agency. The proposal also noted that Tk 644.53 crore would be required as additional expenditure to implement the combined cycle power project (CCPP) similar to the 225MW Sirajganj plant. The additional cost will take the power tariff from the proposed plant to Tk 23.20 a unit, the proposal said. However, the costly rental and quick rental HFO-based electricity generation costs only Tk 6.38 per unit on an average. The government has been facing subsidy burden for purchasing costly electricity from rental and quick rental plants and importing electricity from India.
Sinopec starts producing gas from Titas field of Bangladesh Gas Fields Company Ltd this month China’s Sinopec International Petroleum Service Corp. has successfully completed drilling two onshore gas wells in Bangladesh’s Titas field and will start producing around 45,000 Mcf/day of gas from this month, managing director of state-owned Bangladesh Gas Fields Company Ltd (BGFCL) Mohammad Kamruzzaman said Tuesday. The two wells — Titas-25 and Titas -26 — are owned by BGFCL and located in the Brahmanbaria district, 100 km off the capital Dhaka, he said, reports platts.com. “Test fires of natural gas from these two wells have already been completed. We expect to get supplies of around 15,000 Mcf/day from Titas-25 and 30,000 Mcf/day from Titas-26,” said Kamruzzaman. Sinopec will first supply the gas to BGFCL, which will then supply to the national gas grid, owned by state-run Gas Transmission Company Ltd., or GTCL, from where it will reach end-users via state-run gas marketing and distribution companies.
Software export gets only USD 152.8 million in FY16
Country’s software export earnings in the just concluded financial year of 2015-16 stood at USD 151.8 million, which is 14.6% higher than that of USD 132.5 million in the financial year of 2014-15, according to the Export Promotion Bureau revised data released on Tuesday. ICT sector people said despite having potential for much higher growth the country’s earnings from the export of information and communication technology-related products remained low due to an absence of proper planning on the part of the government. Though the export earnings from software in FY16 are 4.7% higher than the target of USD 145.0 million for the financial year, the sector people said that the export growth should be 50.0% every year. Shameem Ahsan, former president of the Bangladesh Association of Software & Information Services, told New Age on Tuesday that the government high ups targeted USD 5-billion export earnings from the ICT sector by 2021 but the government was not making any investment for product marketing. He said to tap the potential at the international ICT market Bangladesh needs investment worth BDT 5.0 billion every year but the ICT Division of the commerce ministry and the Export Promotion Bureau are not making any investment for this purpose.
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