Almost one third of Bangladeshis now have access to mobile banking as the number of users has climbed 150% in the last three years, says a new survey. Some 22% of the relevant agents have faced fraud in the last one year as over-the-counter transactions not allowed by the regulatory authority are prevalent, says the survey conducted by Helix Institute of Digital Finance. Based on 2,088 interviews with mobile money agents carried out in March 2016, the survey noted that Bangladesh has seen a substantial increase in the number of digital financial service providers as well as agents. However, the country still needs innovative and sophisticated products to tap this market further, Helix said in its latest country report on Bangladesh. Mobile Financial Service Providers in Bangladesh have continued to offer ‘superior liquidity’ and agent network management services, speakers said. Until now, 25 banks in Bangladesh have received permission for offering mobile banking services in Bangladesh, out of which, 18 banks have started their such operations. According to the central bank statistics, there are around 36.22 million registered mobile banking customers in the country served by 0.6 million agents. On average, 4.2 million transactions take place through mobile banking channels every day in Bangladesh valued at around BDT 7.71 billion.
Bangladesh Bank on Monday asked scheduled banks to make their clients aware about fake foreign investment to avoid fraudulent acts. The BB issued a circular to authorised dealer branches saying that the central bank and different government agencies had recently received allegations that some non-reputed foreign and local groups instigated the local entrepreneurs that they (foreign and local groups) would help bring foreign investment. The groups usually want initial cost of the foreign investment from the entrepreneurs but ultimately cheat them. Most of the groups are fake and false and they try to embezzle money from the entrepreneurs by instigating them to bring the foreign investment, the BB circular said. The proposals of the foreign investment fund are usually phony and the fund may use in terrorist activities in some cases if any person brings the finance without submitting proper documents, it said. The clients have to bring the foreign fund through the banking channel so they (clients) have recently submitted such type of proposals before the banks.
The Bangladesh Securities and Exchange Commission will allow the market makers to go for short sales of shares, the proposed amendments to market maker rules showed. Market makers are entitled to keep prices of shares within a certain range through buyings and sellings based on fundamentals of companies depending on market situation. Short selling is the sale of any share that is not owned by the seller. The seller can borrow the share or buy the share after selling to adjust. Under the existing securities rules including the Securities and Exchange Commission (Market Maker) Rules, 2000 none is allowed to make any sort of short selling and it is prohibited in the country’s capital market. Under the proposed rules, market makers will be allowed to make short-selling highest 20 per cent of its total sales on particular securities in a day.
Unit holders favor conversion from close-end to open-end scheme
A special meeting of the unit holders of Seventh ICB Mutual Fund, managed by Investment Corporation of Bangladesh (ICB) regarding its conversion from close-end to an open-end scheme was held Monday at Fars Hotel & Resorts in the city. The meeting took place in accordance with respective rules of Bangladesh Securities and Exchange Commission (BSEC). The meeting was chaired by Mr. Md Iftikhar-Uz-Zaman, Managing Director of ICB, said a statement. Prof. Dr. Mojib Uddin Ahmed, Chairman of the Board of Directors of ICB was present at the meeting as Chief Guest. Besides, Deputy General Managers of ICB were present at the meeting. The members of the Trustee Committee and a good number of Unit holders were present on the occasion. The Chairman and the Managing Director addressed. A total of 99.32% of the unit holders cast their votes favoring conversion of the Seventh ICB Mutual Fund from a close-end fund to an open-end scheme.
The securities regulator has sought public opinion on the amendment brought to the Bangladesh Securities and Exchange Commission (Market Maker) Rules, 2016 to finalize the rules for ensuring the market’s supportive role. In this regard, the Bangladesh Securities and Exchange Commission (BSEC) posted the draft amendment on its official website seeking public opinion to be sent to the BSEC chairman. And the opinion will be received by August 21 this year. A company having license of stock broker or dealer can work as market maker after fulfilling the requirements included in draft amendment. As per the amendment, a company must have a minimum paid-up capital of BDT 500 million to work as market maker. The Nasdaq, an American stock exchange, is a prime example of an operation of market makers. There are more than 500 member firms that act as Nasdaq market makers.
Foreign investment dropped 32% year-on-year in the first quarter of the year due to uncertain business climate. Between January and March, foreign direct investment or FDI stood at only USD 410.68 million in contrast to USD606.92 million a year earlier, according to data from the central bank. Foreign investment is split into three categories: equity, reinvestment of earnings and intra-company loan. In the first quarter of the year, equity capital or new investment declined 54% from a year earlier to USD 90.29 million. Reinvestment of earnings also fell 9% to USD299.86 million. Intra-company loans also declined four-fold year-on-year to USD 20.53 million during the period. FDI also decreased over the previous quarter by 24%. Economists and businessmen blamed at different times the perennial infrastructural bottlenecks, administrative barriers and uncertainty for the fall in fresh FDI. The problems with roads and highways, ports and land have remained the same.
Country’s export earnings in July, the first month of the current financial year 2016-17, fell by 3.49% to USD 2.53 billion compared with that of USD 2.62 billion in the same month of the FY 2015-16. The export earnings in July of FY17 were 24.93% lower than the government-set target of USD 3.37 billion for the month, according to the Export Promotion Bureau provisional data to be published today. According to the EBP data, the earnings from the readymade garment export in July of FY17 posted a 4.41-per cent negative growth and amounted to USD 2.11 billion. The earnings from RMG export in July of FY16 were USD2.21 billion. The data showed that the export earnings from RMG products in the first month of FY17 were 23.60% lower than the government-set target of USD2.77 billion.
Hearing on Titas gas distribution margin hike turns into chaos
Public hearing on a fresh round of gas price hike turned into chaos as shareholders and brokerage house officials on Monday locked in altercations with the Bangladesh Energy Regulatory Commission officials over squeezing profit margin of Titas Gas Transmission and Distribution Company last year. The energy commission was hearing the arguments on a proposal of TGTDCL to raise the prices of natural gas for different consumers between 62% and 140% and its margin of commission from gas sales. In September 2015, the energy commission reduced the margin of TGTDCL by more than 75% leading the company’s profit to fall by more than 70% and share price to fall to BDT 40 from BDT 80. Later, the market rebounded early this year with the company’s share price rising to BDT 50 as TGTDCL submitted a fresh proposal to raise its margin to BDT 1.08 per cubic metre from BDT 0.2315. The chaos began at the Monday’s hearing after the representatives from Consumers Association of Bangladesh and the manufacturing business bodies claimed that they did not want to allow a public sector company to make any profit which had been distributed among the shareholders in terms of dividend and the company staff in terms of profit sharing. Titas offloaded 25% shares in 2008 with general investors currently holding around 10.08% shares, institutional investors 13.25, foreign investors 1.67% and government 75% shares.
Bangladesh Railway (BR) signed Monday the biggest contract in its history with a Chinese company to construct a 215-kilometre rail route from Dhaka to Jessore through the Padma Bridge. China clinches biggest Bangladesh rail deal Of the total project cost of BDT 349.88 billion, the Chinese government will provide BDT 247.49 billion in loan at an interest rate of 2.0 per cent for 20 years and the CREC will receive the amount as contractor. The government of Bangladesh will pay the tax and VAT worth BDT 29.03 billion on behalf of the contractor. According to the contract, CREC will construct total 215.22-kilometre tracks including 43.22km loops and sidings, 66 major bridges, 244 minor bridges, culverts and road underpasses, 30 level crossings, 14 new stations and renovate six existing stations and yards.
A Bangladesh-Singapore joint venture yesterday signed a number of agreements with different parties to set up a 414-megawatt power plant in Sirajganj at a cost of USD412 million. Sembcorp North-West Power Company Ltd, the joint venture of Sembcorp Utilities of Singapore and Bangladesh’s state-run North-West Power Generation Company Ltd, will build the duel fuel power plant. This will be the first public-private partnership project with a foreign investor in the power sector in Bangladesh. The joint venture signed four agreements at a program at Sonargaon Hotel in Dhaka. The agreements were on power purchase, land lease, gas supply, fuel supply and implementation. The simple cycle power plant is expected to start commercial production in June 2018 and the combined cycle in December the same year. It will supply power for 22.5 years. The tariff would be BDT 3.19 per kilowatt-hour if the plant is run by gas and BDT 13.56 if it is run by diesel. Sembcorp will own a 71% stake in the project while North-West Power Generation will hold the rest. The International Finance Corporation, Commonwealth Development Corporation of UK and Clifford Capital, a finance company based in Singapore, will lend 75% of the project cost, with a 25% share each.
India has urged Bangladesh to simplify repatriation of capital and staff salaries as a step toward bringing in more investment. Indian High Commissioner in Bangladesh Harsh Vardhan Shringla yesterday urged the Bangladesh government to make the processes of getting visas and no-objection certification from police simpler for Indian nationals. “When you come to the fact of Indian investment in Bangladesh, you will see that Indian companies have invested over USD3 billion. The figure is only going up,” he said. India’s foreign direct investment in Bangladesh increased 45% to USD82.79 million in fiscal 2014-15 from a year earlier, according to data from Bangladesh Bank. Some notable Indian companies such as Airtel, CEAT Tyre, Marico and Aditya Birla Group have made investments in Bangladesh, Shringla said. Recently, Hero Motors has entered into a joint venture with Nitol-Niloy Group to set up a manufacturing plant in Jessore for USD35 million, he said. Two major Indian companies — Adani and Reliance — showed interest in investing USD11 billion in energy and power in the first Bangladesh Investment Summit held in India in January.
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