BB to announce H2 monetary policy on Jan 29
Bangladesh Bank is likely to announce on January 29 the monetary policy for the second half (January-June) of the current fiscal year 2017-2018 keeping ‘unchanged’ the private sector credit growth target set out for the period in the MPS for the first half of the year. BB officials said the central bank was still working on setting the credit growth targets and to ascertain whether to incorporate a provision to cut advance deposit ratio for banks, given the sensitivity surrounding the issues in an election year. They said the central bank would try to strike a balance between controlling money supply for reining in inflation and possible increase in election-centric expenses. Officials said that although in the MPS for the first half BB had set the private sector credit growth target at 16.2 for July-December, the actual credit growth in private sector shot up to around 20 per cent in December, gradually rising every month since July. They said the fast increase in private sector credit growth was a matter of concern as the rate of inflation was on an upward trend hovering around 5.83-6 per cent in last few months against the target of 5.8 per cent. Officials said that BB might keep the private sector credit target of 16.3 per cent unchanged for January-June which was set in the MPS for June-December.
Private credit growth finally hits the brakes
After being on an ascent for the best part of 2017, private sector credit growth slowed down in December thanks to an increase in interest rate for lending and high deposit collection. At the end of last month, private sector credit growth stood at 18.13 percent, down from 19.06 percent the previous month, which was the highest in 2017. The Bangladesh Bank had targeted to keep the private sector credit growth within 16.2 percent in the first half of fiscal 2017-18. Subsequently, in the monetary policy for the second half of the fiscal year that will be unveiled on January 29, the private sector credit ceiling will be increased slightly, said a senior BB official.
BB asked Eight banks to cut spread
The Bangladesh Bank has instructed eight private banks to bring down their interest rate spread to less than 5 percent — a directive the banks deem to be unfair on them. The interest rate spread is the gap between the interest rates on credit and deposit. The banks are: Standard Chartered, State Bank of India, Woori Bank, Citibank, HSBC, Dutch-Bangla, Brac and Uttara Bank. The BB does not take into cognisance the operating costs when calculating the interest spread and in so doing leaves out a big chunk of the banks’ expenses, said Abul Kashem Md Shirin, managing director of Dutch-Bangla Bank. “We do ATM, mobile and agent banking extensively in order to provide services to our more than 60 lakh customers and this costs money. But the central bank does not take this into account.” Dutch-Bangla’s spread is high because of higher operating costs. The spread should be calculated by deducting the cost of funds and the operating costs from the lending rate. “If the BB continues to pressurise us we will have to cut down our services in order to reduce the operating costs,” he added. In the letter to the eight banks on January 16, the central bank gave them a timeframe to bring down their spread. The BB gave the order after calculating the banks’ spread in September. The sector’s average spread that month was 4.45 percent.
Loan defaults rise to 65,602 crore
Finance Minister AMA Muhith acknowledged in parliament last night that there were many weaknesses in the banking sector, saying it would not be easy to fix the problem. In the last 10 years, bank and non-bank financial institution disbursed loans worth Tk 6,06,503 crore to only 8,791 individuals and organisations, each of them getting Tk 10 crore and more, he said while placing a list in parliament.
NBR for instant upload of import papers to stop data tampering
The customs wing of the revenue board has requested the central bank to upload relevant import documents on the web platform instantly to keep dishonest importers from evading tax through tampered documents. The wing made the request after its primary investigation found some evidences of manipulation of import documents for duty evasion. Md Lutfor Rahman, a customs policy member of the National Board of Revenue (NBR), recently sent a letter to Bangladesh Bank (BB) governor Fazle Kabir seeking his help in collecting proper revenue while expediting release of goods. In the letter, the customs wing requested the central bank to take steps for real-time uploads of detailed packing list, proforma invoice and commercial invoice. Detailed packing list, proforma invoice and commercial invoice are crucial import documents for quick customs valuation and collection of the government’s estimated revenue, the letter said. The BB needs to instruct the authorised dealer (AD) branches of all commercial banks to take necessary steps so that customs officials can check the documents online instantly, said the letter of the NBR.
Board, executive management need to work in unison
The top brass are to blame for the prevailing risk culture in Bangladesh’s banking entities, say experts and suggest a top-down restructuring. Boards and top managements are an integral part of the existing risk cultures in the banks, they opined, saying “sustained change in the risk culture needs to start at the top”. Their views came during a workshop on risk culture of the banks held at the Bangladesh Institute of Bank Management (BIBM) in the capital recently. Chief Risk Officers and relevant officials from different banks of the country participated in the event on academic exercises on banking. “Successful change in the risk culture of a bank ultimately requires awareness that the board itself, and the executive management, are an integral part of the existing risk culture,” said Sajib Azad, Senior Adviser of BIBM who delivered the keynote presentation at the workshop. “Sustained change in the risk culture needs to start at the top and may require a reappraisal of approaches consistent with bringing greater diversity of thinking into the boardroom,” he added. The BIBM focus on Risk Culture comes at a time when the banking sector of the country is growingly becoming embroiled with a number of sensitive issues. Rising amounts of non-performing loans (NPLs) and loan forgeries are on top of it all.
City Bank signs deal to implement VEEFIN for Supply Chain Finance
City Bank signed an agreement with Infini Systems to implement VEEFIN, a solution for Supply Chain Finance, recently, said a press release. VEEFIN will enable City Bank to facilitate easy and instant finance to the suppliers and distributors of large corporate, through seamless supply chain finance transactions. Under this agreement, City Bank will invite large corporate and commercial clients to join the VEEFIN Supply Chain Finance platform and connect their suppliers and distributors. The selected suppliers and distributors will be able to raise financing requests from their computer or mobile phone applications without having to visit the bank’s branches. They simply need to forward their supply and purchase requests to City Bank and will receive the money in their accounts. Mashrur Arefin, Additional Managing Director of City Bank, and Jigar Shah, Chief Operating Officer of Infini Systems, signed the agreement on behalf of their respective organisations.
VAT returns submission eased
The National Board of Revenue has simplified the VAT returns submission process, allowing VAT-payers to file their returns by guaranteed express post, courier service and e-mail. Previously, traders or their representatives had to submit their value-added tax returns only by visiting their respective VAT circle offices.
LNG price to be three times more than domestic gas
The government would require US$844.20 million to import around 1,000 million cubic feet per day (mmcfd) equivalent of LNG (liquefied natural gas) annually and its re-gasification in two FSRUs before supplying to users. The Energy and Mineral Resources Division (EMRD) under the Ministry of Power, Energy and Mineral Resources (MPEMR) has estimated the LNG import cost recently to fix domestic natural gas prices after import of expensive LNG, said a senior MPEMR official. He said the energy ministry has calculated the LNG import cost in line with the LNG price as set in the sales and purchase agreement (SPA) between Qatar’s RasGas and Petrobangla and costs as set in the terminal use agreements (TUAs) and implementation agreement (IAs) with US-based Excelerate Energy and local Summit Group.
Bidders selected to build 181km LNG pipeline
The government yesterday picked the lowest bidders for building a 181-kilometre gas transmission pipeline in order to facilitate imports of liquefied natural gas (LNG) from April this year. The cabinet committee on purchase approved the bidders for the Chittagong-Feni-Bakhrabad pipeline. The bidders are — a joint venture of Arc Construction Company & Cathweld Construction; GasMin Ltd; a joint venture of Pipeliners Ltd and Business King Ltd; Bangladesh Foundry & Engineering Works; a joint venture of Technic Construction Company Ltd and Royal Utilisation Services; Dipon Gas Company Ltd; and Libra Enterprise. They will set up the eight sections of the pipeline at a combined cost of Tk 346.54 crore. The government has taken initiatives to import a huge amount of LNG to tackle a growing energy shortage largely caused by depleting domestic reserves and rising demand of gas. It signed an agreement with Excelerate Energy, Singapore to set up a floating LNG terminal with a capacity of processing 500 million cubic feet of gas per day in Moheshkhali of Cox’s Bazar. The LNG will be added to the national network by April.
Long lead times, fabric imports reduce competitiveness of woven garment exports
Increased dependence on fabrics import and a lack of proper policy on energy supply are negatively impacting the competitiveness of Bangladesh’s woven garment exports in the global market. Industry insiders and trade analysts have blamed longer lead time, poor backward linkage, the absence of value addition and modern technology and lack of proper policy support on gas and electricity connection for the decline.
Govt. okays import of another1 lakh tonnes of rice
The cabinet committee on national purchases at a meeting on Wednesday approved procurement of one lakh tonnes of rice, 1,20,000 tonnes of fertiliser and premium for 14 lakh tonnes of fuel oil. Presided over by finance minister AMA Muhith at the secretariat in the capital, the committee approved a proposal from the food ministry to purchase the rice through tender won by Messrs Rashid Automatic Rice Mill quoting Tk 422.59 crore.
DCCI proposes to escalate infrastructural development from 2019 to 2021
Leaders of the Dhaka Chamber of Commerce and Industry (DCCI) have urged the government to declare the period from 2019 to 2021 as the “Infrastructure Years”. They made the proposal when a team of the DCCI board of directors, led by DCCI President Abul Kasem Khan, called on Bangladesh Investment Development Authority (BIDA) Executive Chairman Kazi M Aminul Islam at the BIDA Headquarters in Dhaka on Wednesday. Regarding the proposal, the DCCI president said: “In order to improve the ranking of Bangladesh with the aim of attracting private investment and facilitating industrialization, we need to improve our infrastructure, industrial energy situation, efficiency in the institutional framework, and develop a skilled workforce.” “We need to come out from the stagnant situation of both local and foreign investment. The private investment sector needs to be scaled up to 29% from the current level of 22.5%.” He also said that BIDA needed to effectively introduce an integrated one stop service, equipped with skilled human resources, to assure prospective investors of the simply and ease of business in Bangladesh. “A national strategy prioritizing the manufacturing sector and industrial projects needs to be developed for Foreign Direct Investment (FDI) promotion. In this connection, an FDI promotion task force may be formed under BIDA, in collaboration with private sector representatives including the Chambers of Commerce,” added Abul Kasem Khan.
Transport-sector craves for internal resources
Transport sector that undertakes many mega-projects has a greater liking for easy-available internal resources and seeks an additional nearly Tk 10.64 billion in such funds in revised development budget. Officials said Wednesday the Ministry of Road Transport and Bridges (MoRT&B), however, sought a lower amount from external resources (project aid) by Tk 7.70 billion for completing its foreign-aided development projects in the current financial year (FY). A Planning Commission (PC) official said although the ministry has proposed the slashing of the ongoing allocations for the mega-projects like Padma Bridge, MRT line-6 and Dhaka Elevated Expressway, it demanded higher funds for some small and less-priority projects in the upcoming RADP or revised annual development programme.
Teletalk to launch 4G service in May
Posts, Telecommunications and Information Technology Minister Mostafa Jabbar has said Teletalk is likely to launch fourth generation (4G) mobile service in May. “The state run mobile company – Teletalk has a plan to launch 4G service at all divisional cities across the country with its own finance of nearly Tk 200 crore (two billion Taka) in May 2018,” said the minister while responding to a query placed by treasury bench lawmaker Didarul Alam of Chittagong-4 at the Jatiya Sangsad (parliament) on Wednesday, reports BSS.
To increase the number of subscribers of the Teletalk, he said the government is implementing two projects for increasing network coverage of the state run mobile phone company. The project, titled “Modernisation and Expansion (MEP) of Teletalk’s 2G/3G Network up to Rural Areas”, is expected to be completed by June in 2018, he said.
Local and Global Stock Indices *
|Index Name||Close Value||Value Change||Percentage Change|
World Commodities *
|Commodity||Close Value||Value Change||Percentage Change|
|Crude Oil (WTI)||$ 66.24||↑0.63||↑0.96%|
|Crude Oil (Brent)||$ 70.97||↑0.44||↑0.62%|
|Gold Spot||$ 1,361.83||↑3.37||↑0.25%|
Major Currencies Exchange Rates Movement in Last Seven Days *
|USD 1||BDT 83.13|
|GBP 1||BDT 118.66|
|EUR 1||BDT 103.29|
|INR 1||BDT 1.31|
*CURRENCIES AND COMMODITIES ARE TAKEN FROM BLOOMBERG.