Bangladesh Bank unveils H1 monetary policy today
The central bank unveils its first-half (H1) yearly monetary policy today (Tuesday) aiming to achieve maximum economic growth by boosting investments in productive sectors. The policy will help real sectors achieve sustainable economic growth while fighting inflation. Officials said the central bank has formulated the growth-supportive monetary policy giving top priority to investment through increasing credit flow, especially in the real economic sectors. They also said the BB will facilitate credit flow to the productive sectors for achieving 7.8 per cent GDP (gross domestic product) growth by the end of this fiscal. The central bank has prepared the policy blueprint considering the upward trend in prices of petroleum products in the global market, and possible rising inflationary pressure. Meanwhile, the inflation as measured by consumers’ price index (CPI) rose to 5.78 per cent in the FY’18 on annual average basis from 5.44 per cent a year ago, according to the Bangladesh Bureau of Statistics (BBS) data. The government had set the inflation target at 5.6 per cent for the FY’19. In the policy document, the BB will also give emphasis on boosting loans for small and medium enterprises (SME) and agriculture along with microcredit to create employment opportunities across the country.
Higher NPLs hit asset quality of banks
Higher classified loans in public banks in the recent years remain a concern for the banking sector from financial stability perspective, the central bank said. It also said asset quality for the country’s private commercial banks (PCBs) has slightly deteriorated mainly due to higher non-performing loan (NPL). The gross NPL ratio in the banking sector increased to 9.3 per cent in the calendar year (CY) 2017 from 9.2 per cent a year before, according to the Financial Stability Report (FSR) 2017, released on Monday. The gross NPL ratios of all groups of banks except foreign commercial banks (FCBs) and specialised development banks (SDBs), generally known as specialised banks (SBs) went up between end-December 2016 and end-December 2017. The FCBs experienced a moderate decline of 2.6 percentage points in their gross NPL ratio during the period under review, according to the FSR. Though SBs achieved some improvements but their NPL ratio still remained high. The gross NPL ratio of SoCBs increased to 26.5 per cent in CY 17 from 25.1 per cent a year ago. Asset quality deteriorated for private commercial banks (PCBs) as their gross NPL ratio increased to 4.9 per cent in CY 17 from 4.6 per cent in the previous calendar year. The gross NPLs increased by Tk 121.3 billion between CY 16 and CY 17.
Stocks extend losses for five straight sessions
Stocks extended losses for the five straight sessions on Monday as risk-averse investors continued their selling binge on sector-wise stocks. The market opened on positive note and key index of the premier bourse crossing 5,300-mark after one hour of trading. But, rest of the session went down steadily. At the end of the session, DSEX, the prime index of the Dhaka Stock Exchange (DSE), went down by 17 points or 0.32 per cent to settle at 5,262. It was the lowest level of DSEX since January 9, 2017. The two other indices also ended lower. The DS30 index, comprising blue chips, fell 7.02 points to finish at 1,871 and the DSE Shariah Index shed 7.78 points to close at 1,240. Turnover, another important indicator of the market, stood at Tk 6.14 billion, which was 6.41 per cent higher than the previous day’s Tk 5.77 billion. The market capitalisation of the country’s main bourse came down to Tk 3,813 billion on Monday which was Tk 3,820 billion in the previous session. The port city bourse—CSE—ended lower with its CSE All Share Price Index – CASPI – losing 51 points to settle at 16,214 and the Selective Categories Index – CSCX –shedding 34 points to finish at 9,807. The port city bourse traded 8.04 million shares and mutual fund units worth more than Tk 532 million in turnover.
BB bars mobile cos from holding stake in MFS cos
Bangladesh Bank on Monday issued a set of regulations on mobile financial services, barring mobile phone companies from holding any stake in an MFS providing company. The new Bangladesh Mobile Financial Services (MFS) Regulations, 2018 replaced the previously issued guidelines titled ‘Mobile Financial Services for the Banks’, adding that the new regulations would come into effect immediately.
The central bank, however, in its draft on MFS regulations had allowed mobile operators to hold maximum 49 per cent stake in an MFS providing entity. The provision of allowing mobile phone operators in the MFS business was scrapped in an anticipation of conflict of interest between the BB and telecom regulator Bangladesh Telecommunication Regulatory Commission. The central bank in the finalised guidelines allowed bank-led MFS, a model where a scheduled bank may run the MFS as a product of the bank or a bank may form an MFS providing subsidiary with at least 51 per cent of the share held by the bank with control of the board. To form an MFS entity as a subsidiary of a bank, a minimum paid-up equity capital would be Tk 45 crore, while equal amount of paid-up capital will have to be built up as capital reserve from retained earnings as cushion. The amount has to be from annual profit after tax at a rate not less than 10 per cent, to mitigate risks.
Foreign investment allowed in alternative investment fund
Bangladesh Bank on Monday allowed non-resident or foreign investors to make investments in alternative investment funds with a view to widening the scope for foreign investment in the country. To this end, the central bank on the day issued a circular stating that the AIFs must be registered with the Bangladesh Securities and Exchange Commission to attain foreign investments. Under the existing rules, non-residents are also allowed to make direct investments or portfolio investments in Bangladesh. Monday’s BB circular, however, said that eligible investors in terms of the BSEC (Alternative Investment) Rules, 2015 might invest in units of the AIFs registered with the BSEC. The transactions related to such investments may be made through non-resident investor’s taka account with Bangladeshi banks. The payment against purchase of AIF units by eligible non-resident investors must be made by inward remittance through the normal banking channels including by debit to NITAs, permissible FC accounts, non-resident taka accounts (Vostro) of overseas branches and corresponding NRTA, the BB circular said. BB’s foreign exchange investment department must be informed within 14 days of issuance, transfer or redemption of units of AIFs in favour of non-residents or by non-resident investors with necessary documents. Foreign investors holding units of AIFs would be allowed to sell or transfer or redeem the units as per rules or directions issued by the BSEC. Fair value of sale proceeds of units will be remittable abroad and/or may be credited to NITA subject to prior approval of the BB.
Export to Spain jumps by 21.40pc in past fiscal
Merchandise export to Spain from Bangladesh jumped by 21.40 per cent in the past fiscal year. Export Promotion Bureau (EPB) data showed that the export to that country reached at 2.45 billion in FY18 which was $2.02 billion in FY17. As Spain is a member of European Union (EU), its market access benefit for Least Developed Countries (LDCs), including Bangladesh, is equivalent to that in the EU. The EBA provides for granting duty-free quota-free access to the LDCs for the latter’s all products, except for arms and ammunitions, covering 99 per cent of all tariff lines. The Ready-made garment (RMG) is a major item of exports to Spain. In the past fiscal year, Bangladesh exported woven garments worth $0.83 billion and knit garments worth $1.05 billion.
Handicraft sector booms with govt support
In the financial year 2017–18 (July–June), export earnings from handicrafts fetched USD 16.69 million, registering a growth of 15.26 per cent, from USD 14.48 million during the same period of the previous fiscal year (2016–17), according to data from the Export Promotion Bureau (EPB). Bangladesh has been producing and exporting traditional handicraft products like ‘nakshi kantha’, pottery and terracotta, tant, muslin, jamdani, ‘shital pati’, bamboo craft and jute items to different countries around the world for decades. At this moment, the size of the global handicrafts market is worth a billion dollars. The size of the local market is also increasing by an approximate amount of Tk 10,000–12,000 crore, he disclosed. Investment in this sector is nearly zero because all the products are partially hand-made and locally produced. Around 50 lakh people are employed in the handicrafts industry across the country.
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)||$70.15||↑1.26||↑1.83%|
|Crude Oil (Brent)||$74.91||↑0.60||↑0.81%|
Major Currencies Exchange Rates Movement in Last Seven Days *
|USD 1||BDT 84.2250|
|GBP 1||BDT 110.5369|
|EUR 1||BDT 98.6191|
|INR 1||BDT 1.2273|
*CURRENCIES AND COMMODITIES ARE TAKEN FROM BLOOMBERG.