Bad loans, the worst types of defaulted loans, in the country’s banking sector increased by 24.57% to BDT 541.7 billion in the first nine months of this year because of the scheduled banks’ failure in recovering classified loans amid a rise in financial scams. According to the latest Bangladesh Bank data, the bad loans increased to BDT 541.7 billion as of September 30, 2016 from BDT 434. 9 billion as of December 31, 2015. As of September 30, 2016, the bad loans accounted for 82.4% of the total classified loans — BDT 657.3 billion — in the banking sector. The non-performing loans in the banking sector increased by BDT 143.6 billion in the first nine months of this year as the central bank had recently unearthed a number of scams in different banks that fuelled the overall defaulted loan figures of the banks. The BB data showed that the overall defaulted loans increased to BDT 657.3 billion as of September 30, 2016 from BDT 513.7 billion as of December 31, 2015. The huge amount of bad loans usually puts an adverse impact on the banks’ loan disbursement capacity as they (banks) have to keep 100% provision against the loans, the BB official said.
Private sector credit growth decreased to some extent in October over that of the previous month, according to the central bank’s latest statistics. The growth in credit flow to private sector came down to 15.2% in October 2016 on a year-on-year basis from 15.34% in September. The private sector credit growth was 16.21% in August 2016, the Bangladesh Bank (BB) data showed. The total outstanding loans with the private sector rose to BDT 6,850.81 billion in October 2016 from BDT 6,801.37 in this September. It was BDT 5,946.8 billion in October 2015. The central bank has projected that private sector credit would grow at 16.6% in December 2016 and at 16.5% in June 2017.
Bangladesh Bank signs deal with six banks for green financing
Bangladesh Bank (BB) yesterday signed separate agreements with six private banks to facilitate long-term financing under the Green Transformation Fund for export-oriented textile and textile products and leather manufacturing industries. Under the agreements, the six banks would provide long-term financing for transforming the export-oriented industries into green manufacturing units, reports BSS. The banks are Eastern Bank, Jamuna Bank, Mercantile Bank, Prime Bank, Shahjalal Islami Bank and South East Bank
A weak taka brings cheers to exporters and remitters
After nearly a year of stable exchange rate, the taka has started to weaken against the dollar — a development that is cheering up remitters and exporters. The average BC (bills for collection) selling rate has crept up 1.25% to BDT 79.6 against the dollar since November 1, according to data from Bangladesh Foreign Exchange Dealers’ Association. Banks use this rate to sell dollars to importers. Citi Bank’s BC selling rate was the highest at BDT 79.98 a dollar yesterday. The lowest price was quoted by some state banks: BDT 79.3. The inter-bank exchange rate, which was stable at BDT 78.4 for about one year, has also increased to BDT 78.75 a dollar yesterday. Buying dollars has become even costlier as some banks are charging BDT 84.0 for one dollar. The rate is higher by BDT 1-2 in the open market, driven by the demand from Bangladeshis visiting India. Market players also attributed the rise of dollar to the gap between demand and supply. Inward remittance, which helps Bangladesh maintain a positive balance of payments, has declined 15.4% to USD4.26 billion during the July-October period this year from a year earlier, according to data from the central bank.
The securities regulator asked the country’s both the bourses on Thursday not to allow direct listing of any private company. The Bangladesh Securities and Exchange Commission issued a directive in this connection in the backdrop of misuse of the direct listing scope which led to a bubble before the 2010-11 stock market debacle. The regulaAman Cement Mills recently applied to the Dhaka Stock Exchange seeking permission to be listed with the bourse directly as the listing regulations of the Dhaka and Chittagong stock exchanges allows such approval. Direct listing is a doorway to list with the exchange for the company which does not require to increase its existing paid-up capital but wants to list its securities for prestige, liquidity benefit or any other reason and its intent to offload the existing shares of the shareholders for privatization purpose. According to the provision 8 of the exchanges’ listing regulations, the provisions 8 to 13 shall be applicable to direct listing of unlisted or re-listing of de-listed securities as specified by the commission from time to time.
Stocks refinance scheme: Defaulted loans stand at BDT 235.1 million
Defaulted loans in the government’s BDT 9.0 billion refinance scheme for the affected small investors stood at BDT 235.1 million till November 27 this year as a number of entities failed to pay installments in due time. The Investment Corporation of Bangladesh, which was dealing with the loan disbursement in favor of the government, has already informed the supervision committee for the scheme headed by Bangladesh Securities and Exchange Commission executive director M Saifur Rahman after warning the defaulted entities of taking proper action, an ICB senior official told New Age. The ICB official said according to ICB data, seven organizations have failed to pay a number of installments in due time. Of the organizations, dues of Fareast Stock and Bonds was BDT 82.8 million, Reliance Brokerage Services BDT 55.0 million, Prime Finance Capital Management BDT 40.0 million and PFI Securities defaulted to pay BDT 19.8 million. The commission has the authority to cancel or suspend license of any brokerage house or merchant bank in case of their failure in repaying the refinance loan installments. Apart from BDT 235.1 million defaulted loan, ICB has recovered BDT 5.5 billion out of its disbursements of BDT 6.4 billion in last three-year. Of the recovered amount, BDT 5.0 billion was principle and BDT 5.2 million was interest.
World’s largest investment bankers keen to invest in Bangladesh
The ‘Big 4’ in investment banking – JP Morgan, PricewaterhouseCoopers (PwC), Deutsche Bank and Suisse Bank – as well a few other banks, including an Italian bank, are keenly looking into the investment opportunities in Bangladesh Buoyed by the economic success of Bangladesh, the world’s largest investment bankers are looking for investing in Bangladesh as a potentially lucrative investment destination, said international investment banking sources. Of the “Big 4”, PwC’s audit wing has been operating in Bangladesh for a long time and JP Morgan’s security wing has entered the capital market. The investment wings of both the organizations are planning to start operating soon. PwC has already upgraded its establishment by setting up a liaison office, while the others are operating through agents. On average, there is at least one investment proposal from Bangladesh going to the investment banks every month. Upon finding the conditions satisfying, the banks will respond positively, perhaps by opening a liaison office or going ahead with their investment projects. According to G4 sources, most of the proposals relate to infrastructure and banking where there are huge possibilities.
Roadmap for low, middle income groups’ home loan market in focus
A round-table discussion has underlined the need for a roadmap to develop home loan market for low and middle income groups in the country through bringing reforms in the related policies. The roundtable discussion was organized by IFC-World Bank Group as part of publication of a study at Le Meridian Hotel in the city on Thursday. The stakeholders in the financial and housing sector strongly advocated for making public lands available to private sector developers for low and middle income housing through a PPP mechanism. They also recommended developing a refinancing scheme to channel low-cost, long-term funds to the financial sector, according to an IFC-WBG press release. Other reforms included reform of prudential regulations restricting banks and financial institutions in terms of housing exposure caps, loan to value ratios and provisioning and improvement of foreclosure process for mortgage defaults, digitization of land records, reduction of registration costs and simplification of approval process for housing development. The IFC-World Bank Group’s report was developed in partnership with the Dutch government and based on analysis of secondary data. It highlighted that the demand for low and middle income housing finance in the country could grow to BDT 818.16 billion (USD 10.4 billion at current exchange rates) by 2020. The focus of the event was to present the findings and open up the floor to identify what reforms would be advocated by the participants to seize the market.
The listed cement companies were top gainers among major sectors on the Dhaka Stock Exchange (DSE) last week. The premier bourse featured five trading sessions and the cement sector witnessed a positive return of 5.4%. Over the week, out of seven cement companies, six witnessed rise in market price compared a week ago. Last week, the DSE featured an average daily turnover of BDT 7.2 billion, which was 9.5% lower than the previous week’s average daily value. Among the major sectors, cement sector’s daily turnover averaged 345.5 million in five sessions. The sector’s average daily turnover rose 117.0% compared to that of previous week. At the end of the week, the cement sector’s market capitalization stood at BDT 152.8 billion. Last week, Aramit Cement’s average daily turnover amounted to BDT 11.2 million, Confidence Cement’s BDT 118.9 million, Heidelberg Cement’s BDT 11.8 million, Lafarge Surma Cement’s BDT 175.1 million, Meghna Cement’ BDT 12.5 million, MI Cement’ BDT 7.0 million and Premier Cement’s BDT 9.0 million. In five trading sessions, the market price of Aramit Cement rose 10.7% to close at BDT 35.3, Confidence Cement 8.3% to close at BDT 119.1, Lafarge Surma Cement 8.1% to close at BDT 79.9, Meghna Cement 2.2% to close at BDT 100.8, MI Cement 3.5% to close at BDT 76.8 and Premier Cement 1.2% to close at BDT 85.0. The market price of Heidelberg Cement witnessed a correction and the trading was closed at BDT 544.9.
Firms get initial nod to set up 1,200 LPG auto refueling stations
Around a dozen companies got a primary nod from the government to set up 1,200 LPG auto refueling stations across the country, said a top official of the Department of Explosives. Beximco, Intraco, Navana, Petromax and Besto are some of the companies that received the approval for the liquefied petroleum gas plants. Policies on auto gas and bottling plants have already been formulated. Once the franchisee policy is prepared, the department will start issuing the final licenses. LPG is an alternate fuel for motor vehicles and is used in more than 100 countries. But the LPG market is still small in Bangladesh. Also, a liberal energy policy by the government encourages many national and multinational companies to establish LPG storage and bottling plants in Mongla and Chittagong. Bangladesh consumed only 160,000 tons of LPG in 2015 to meet the growing demand for cooking gas, according to industry sources. Of the amount, 142,000 tons were imported and 18,000 tons were generated from different government factories as a byproduct. Presently, there are around 600 CNG stations that refuel motor vehicles across the country. But many parts of the country, especially the southern districts, do not have CNG stations as gas is not available in those areas. Beximco Group has applied to set up 500 LPG auto refueling stations across the country in the next two years. It will franchise the operations of the filling stations.
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