Depositors up in arms over 6pc Interest
Anxiety gripped Ahmed Kabir the instant he learnt from the morning paper yesterday that the government has decided to fix a uniform interest rate for all types of deposits from April 1. The Cox’s Bazar native got 9-9.5 percent interest against them, enough to live a comfortable life in his senior years. Inflation leapt 45 basis points in November to 6.2 percent, a 25-month high. The new decision, which was taken to facilitate single-digit interest rate for lending with a view to spurring private investment, will not just affect pensioners but also the fixed income group, who usually keep a portion of their income every month in deposit pension schemes [DPS]. Banks too will have to count losses because of the latest decision as they will have to continue their existing fixed deposit receipts [FDRs] and DPSs while giving out loans at 9 percent, said the managing director of a private bank, wishing not to be named. The government has deposited Tk 200,002 crore in the banking sector, but the majority of the sum is with state-run banks, he added. They might head back to savings instruments, which carry 11.04-11.76 percent interest. Because of their high interest-bearing nature, their sales hit a staggering Tk 49,939 crore last fiscal year.
Borrowers jump for joy at 9pc Interest
The double-digit interest rate is often cited by experts and businesses as the main reason for the declining trend of private sector credit growth in the last 21 months. Business leaders, however, welcomed the out-of-the-box move of the government cautiously as sponsors of banks had previously gone back on their word to bring down the interest rate to less than 10 percent by August last year despite bagging a number of facilities for this end. The benefits include a reduction of cash reserve ratio — which is the percentage of total deposits banks must maintain in the form of cash reserve with the central bank — and repo rate — which is the rate at which the central bank lends money to banks. BGMEA, the Bangladesh Knitwear Manufacturers and Exporters Association and the Bangladesh Textile Mills Association, the three trade bodies in the apparel sector, want them from January 1.
Banks bracing for big hit on Profits
Banks will have a hard time logging in profits in the coming days because of the latest government decision to fix interest rate for lending at 9 percent and for deposit at 6 percent. Although the government has announced splitting its funds equally between the state-run banks and private ones, the latest decision may create a haphazard situation for them nevertheless, said experts and a good number of managing directors of banks. The central bank will have to beef up its monitoring on the banking sector with a view to strengthening the financial health of lenders. And the government must give full autonomy to the central bank to do so. If the banks try to implement the single-digit interest rate without improving their health, profitability will decline alarmingly. The central bank earlier took the decision to not intervene in banks’ decision when they set the interest rate. But now it is dictating the rate, which will not be good for banks.
Rupali Bank to issue Tk 1,000cr Bond
Rupali Bank’s board of directors has decided to raise fund through issuing coupon bearing non-convertible perpetual bond worth Tk 1,000 crore through private placement. The fund will be raised to meet additional Tier-I revised regulatory capital framework for bank in line with Basel-III subject to the approval from authorities concerned.
Tk 767cr Project for Mongla Port facelift
A government project is set to boost the capacity of the country’s second busiest seaport of Mongla. This is to support an increase in trade arising from development initiatives scheduled to be completed around the country by 2020-21. The initiatives include the construction of the Padma Bridge, Khan Jahan Ali airport in Bagerhat, a rail line from Khulna to Mongla and a special economic zone under a Bangladesh-India joint initiative. The capacity enhancement will also raise possibilities for transit-based trade for exports of India, Nepal and Bhutan. The port’s container handling capacity is predicted to increase from 8.72 lakh twenty-foot equivalent units [TEUs] in 2025 to 45.32 lakh TEUs in 2049, says a research report. Some 30,000 vehicles will go through it in 2049 whereas over 1,200 ships a year in 2019-20, up from 912 in 2018-19 and 416 in 2014-15. The meeting approved seven projects worth Tk 4,460 crore, four of which were revised ones. One of the revised projects was for strengthening the power grid network, with the cost raised by Tk 622 crore to Tk 14,326 crore. Approved in 2016, the project was scheduled to be completed in June 2021. The deadline was revised to June 2024 for delays of the financier, China, according to a planning ministry proposal.
Berger Paints Bangladesh signs Cooperation Deal with Japanese Co
Berger Paints Bangladesh Limited [BPBL] and Chogoku Marine Paints, Ltd [CMP] of Japan have signed an agreement for cooperation and collaboration in the field of marine and related industrial paints in Bangladesh. The agreement envisages joint efforts in producing, marketing and purchasing marine and related industrial paints in the country, says a statement. Chogoku Marine Paints, since its establishment in 1917, has uniquely developed marine coatings as a core product and is one of the global leaders in the area and expanded its knowledge and technology to other industries. BPBL is a leading paint manufacturer in decorative, industrial and marine segment, and this alliance will take the quality and convenience of availability of world class marine paints into the next level.
Local and Global Stock Indices *
|Index Name||Close Value||Value Change||Percentage Change|
|↑ 76.30||↑ 0.27%|
|FTSE100||7,542.44||↓ 44.61||↓ 0.59%|
|Nikkei 225||23,656.62||↓181.10||↓ 0.76%|
World Commodities *
|Commodity||Close Value||Value Change||Percentage Change|
|Crude Oil (WTI)||$ 61.06 ||↓ 0.62||↓ 1.01 %|
|Crude Oil (Brent)||$ 66.00 ||↓ 0.67||↓ 1.00 %|
|Gold Spot||$ 1,518.20||↑ 0.93||↑ 0.06 %|
Major Currencies Exchange Rates Movement in Last Seven Days *
|USD 1||BDT 83.2176|
|GBP 1||BDT 109.719|
|EUR 1||BDT 93.3263|
|INR 1||BDT 1.16665|
*CURRENCIES AND COMMODITIES ARE TAKEN FROM BLOOMBERG.<