Important Business News Extracts – December 29 2016
Bangladesh Bank to be tough on borrowers
Borrowers who became defaulters despite taking a special rescheduling facility in 2013 will not be allowed to regularize their loans anymore, a central bank official said. As part of the move, Bangladesh Bank is now carrying out a special inspection to assess the status of those loans. Currently, a defaulted borrower can reschedule loans three times. In 2013, the BB allowed defaulters to reschedule loans by paying only 1-2.0% of their loans as down payment. The privilege was offered as businesses were affected by political unrest ahead of the January 2014 national election. Generally, a defaulter can reschedule loans for the first time by paying a 10.0% down payment of the outstanding amount. Defaulted borrowers, including the willful defaulters, took that special benefit to reschedule their loans. According to bankers, half the borrowers who rescheduled loans under the facility have become defaulters now.
The central bank again began buying the US dollar from banks as demand for the greenback dropped slightly on the Bangladesh money market. Officials said the Bangladesh Bank resumed the dollar buy after an interval of a month, as value of the main international trading currency maintained a downturn amid lower demand.
Of the total 56 banks in the country, 36 have reported to the Bangladesh Bank that they found no good borrowers in the year of 2015. Some 16 banks kept lump sum provisions against potential payable interest rebate last year but did not pay out to their good borrowers in current year. Only the four banks – Islami, MTBL, RAKUB and HSBC – provided interest rebate for good borrowers as of July 2016. Earlier on July 28 this year, the central bank asked all scheduled banks to provide information about good borrowers including the number of good borrowers, amount of interest rebate and provisions maintained against potential payable rebate. In response to the Bangladesh Bank’s instruction, 53 banks have reported their status but three of them – Sonali, Prime and Dhaka Bank did not respond.
NSCs sales exceed FY target in 5 months, soar to BDT 200.0 billion
The net investment in national savings certificates and bonds skyrocketed to BDT 203.2 billion in just five months of the financial year 2016-17, surpassing its annual target of BDT 196.1 billion, as clients invested heavily in the savings tools due to lack of investment opportunities. Economists say the huge net investment in the savings certificates and bonds has already created a risky situation for the country’s macroeconomic situation as the government will have to face a budget mismatch due to providing a large amount of rate of interest against its savings tools. According to the latest Directorate of National Savings data, the net investment in the savings instruments increased by 79.4% to BDT 203.2 billion in the July-November period of the FY17 compared with that of BDT 113.3 billion during the same period of the FY16. Despite the rate cut by the government for the savings tools on May 23 last year, clients’ rush for the tools continued as the interest rate for the bank products continued to maintain a declining trend in the recent months.
Disbursement of foreign loans and grants declined in the first five months of the current fiscal year to $903.18 million from that of $1,003.86 million in the same period of the last year, according to data of the Economic Relations Division of the finance ministry. Commitment made by the international lenders and development partners for giving loans and grants to Bangladesh, however, increased by around 14 times in July-November period of the current FY 2016-2017 mainly due to Russia’s loan commitment for Rooppur Nuclear Power Plant. Bangladesh got a commitment of getting $13.42 billion from the lenders and partners in the period against the commitment of $ 972 million in the same period of the last FY of 2015-2016. In July, Bangladesh and Russia signed a deal under which Russian government would lend $11.38 billion in supplier’s credit for the construction of Rooppur nuclear power plant.
Remittance declines 11pc, manpower export rises 35pc in 2016
The remittance inflow in 2016 has declined by 11 per cent although manpower export rose by 35 per cent than of last year, reveals a study by Refugee and Migratory Movements Research Unit (RMMRU). Dr Tasneem Siddiqui, founder-chairperson of RMMRU, a Dhaka University-based migration study organisation, revealed the information at a briefing at Jatiya Press Club in Dhaka on Wednesday, reports agencies citing a press release. Tasneem, also a Professor of Political Science Department of DU, said 749,249 Bangladeshis went abroad with jobs, mostly to middle-eastern countries, between January 1 and December 7, 2016.
The government plans to slash fuel prices next month by taking into account the base price of USD 60.0 per barrel, Finance Minister AMA Muhith said yesterday. Bangladesh had earlier lowered the fuel price in April by setting the base price at USD 80.0 per barrel. In April, Bangladesh cut the prices of octane and petrol by BDT 10.0 a litre and diesel and kerosene by BDT 3.0, with the intention of passing on the benefits of low prices on the international market to consumers. The prices of diesel and kerosene are now BDT 65.0 a litre, octane BDT 89.0 and petrol BDT 86.0. The fuel price cut was scheduled for December but the month is almost finished, Muhith said, adding that he is yet to meet with the prime minister over the issue.
National Board of Revenue (NBR) collection rises 19.2% in Q1
The revenue collection of the National Board of Revenue (NBR) grew 19.2% in the first three months or first quarter of the current fiscal year from the same period a year earlier. Despite the growth rate, the authorities still fell BDT 21.9 billion short of target during the period. NBR mobilised BDT 386.3 billion during the July-September period of the FY2016-17 against its revenue target of BDT 364.4 billion, according to NBR official data. The revenue authorities have taken up different initiatives to gradually increase the revenue collection that will help it in reaching its target at the end of the fiscal year, officials said. The NBR is developing its relationship with concerned stakeholders including taxpayers, tax lawyers, chambers, business, trade bodies and other government agencies to increase awareness to encourage people pay tax.
NBR starts creating online database of income taxpayers
The National Board of Revenue has started uploading of all income tax returns’ information in its online return filing system to create a digital profile of all taxpayers. Income tax wing of the board has asked its field-level offices to complete the activities by March 31. The NBR on November 1 launched e-filing system to ease taxpayers’ hassle through providing tax returns submission online from anywhere without visiting tax offices. The objectives of the system, including online assessment of returns, tax calculation, file selection for audit, process of tax information and data generation, will also not be achieved without uploading of all taxpayers’ information in the system as almost all taxpayers filed hard copies of their returns.
1,600 garment workers in Ashulia sacked over unrest
More than 1,600 workers from a number of garment factories in Ashulia have been sacked over the past week for their alleged involvement in demonstrations over pay, the police said yesterday. “The number is expected to rise,” said Md Mostafizur Rahman, director of the Industrial Police-1, which tallied the numbers of sacked workers. But the Bangladesh Garment and Industrial Workers Federation put the number of sacked workers at 3,500 and said dozens of protest organizers have been forced into hiding. Even if the protests seem to have calmed down, the sacking of workers continues at garment factories in the manufacturing hub.
The number of readymade garment factories in which global buyers cut business relations on charge of failure in fixing safety faults reached to 187 with suspension of nine factories by the North American retailers’ group in December 21-27. The nine factories with which the Alliance cut business relations in December 21- 27 are: OFMA Camp Limited, Warm Fashion Ltd, Quality Fashion Wear Limited, Ritzy Apparels, Sun Washing Plant, Apollo Sewing and Garments Ltd, Gous Fashion Ind Ltd and Fairy Fabric Printing in Chittagong and Deva Limited in Gazipur.
Emirates plans to introduce a new destination in Bangladesh to its network looking at the growth potential in the country’s aviation industry. “Bangladesh’s aviation industry has shown positive growth, and it’s a promising market,” said Khalid Ali J Hassan, area manager for Emirates, which takes off from Hazrat Shahjalal International Airport. Besides this airport, Bangladesh has two other international airports — Shah Amanat International Airport in Chittagong and MAG Osmani Airport in Sylhet — that can handle wide-body aircraft like Emirates.
Major Currencies Exchange Rates Movement in Last Seven Days
*CURRENCIES AND COMMODITIES ARE TAKEN FROM BLOOMBERG.
ABOUT DHAKA BANK
Dhaka Bank has truly cherished and brought into focus the heritage and history of Dhaka and Bangladesh from Mughal outpost to modern metropolis. Most of its presentation, publications, brand initiatives, delivery channels, calendars and financial manifestations bear Bank’s commitment to this attachment.