The government is going to grant Tk 10 billion to the scam-hit BASIC Bank to meet its capital shortfall, once more. Besides, officials said, five state-owned banks (SoBs), one private bank, a specialised financial entity and restructured Grameen Bank (GB) together will also get another dollop of Tk 10 billion under different heads. The ministry of finance has sent a proposal in this regard to the finance minister for approval, at a time when there has been a flurry of debate over repeated giving of taxpayers’ money for so-called recapitalisation to the banks. According to the proposal, the funds are set to be handed out to five state-run banks, private-bank IFIC, House Building Finance Corporation and GrameenBank, the sources said. The money will be made available from a fund of Tk 20 billion that has been earmarked in the budget for 2016-17 for recapitalisation.And from this spare money, the scam-ridden BASIC Bank is getting the highest amount as it stood hollowed for fraudulent lending that led to its management shakeup. Some Tk 10 billion, Tk 3.0 billion, Tk 1.0 billion, over Tk 1.64 billion and Tk 1.0 billion will go into the coffers of BASIC, Sonali Bank, Rupali Bank, Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank (RAKUB) respectively from the budgetary fund, according to the finance ministry data. Besides, Tk 1.85 billion will be provided to the IFIC as subscription fee for rights share. Also, Tk 1.50 billion and Tk 2.2 million will be provided to the house-building finance corporation and Grameen Bank respectively, according to government share ratio.The government is going to grant Tk 10 billion to the scam-hit BASIC Bank to meet its capital shortfall, once more. Besides, officials said, five state-owned banks (SoBs), one private bank, a specialised financial entity and restructured Grameen Bank (GB) together will also get another dollop of Tk 10 billion under different heads. The ministry of finance has sent a proposal in this regard to the finance minister for approval, at a time when there has been a flurry of debate over repeated giving of taxpayers’ money for so-called recapitalisation to the banks.
The overall excess liquidity with the commercial banks decreased by nearly 19 per cent or Tk 230 billion in April from a level it was four months ago due to accelerated credit growth particularly in the private sector, officials said. It stood at Tk 1.0 trillion in the last week of April, falling from Tk 1.23 trillion as on December 31 last year, according to latest statistics of Bangladesh Bank (BB). “The amount of excess liquidity has dropped recently mainly due to a higher private sector credit growth,” a senior official of the central bank told the FE Wednesday. Lower lending rates might have encouraged the businessmen and individuals to borrow more from the banks to meet their demand for funds, he explained. The weighted average interest rate on lending fell to 9.62 per cent in April from 9.70 per cent in the previous month while the weighted average interest rate on deposits came down to 4.97 per cent from 5.01 per cent.
Foreign banks may be advised to bring in remittance
The Bangladesh Bank (BB) had no proper system in place for monitoring foreign exchange inflow and its utilisation before the sudden hike in price of US dollar in April last, a senior central banker admitted. “Now we are monitoring everything. There was no effective monitoring then,” BB executive director for Foreign Exchange Policy Department Ahmed Jamal told the FE. People learn from mistakes, he said. In April last, price of US dollar went up to Tk 84 from usual Tk 79 all on a sudden prompting the central bank to intervene.The government also expressed concern over the unusual price hike of the greenback. Following this, the central bank met treasury heads of 20 banks and asked them to submit forex transaction details for the entire month of April.Mr Jamal told the FE Tuesday there was a mismatch in dollar inflow and utilisation which had triggered the hike in its value against Bangladesh Taka. “But we did not find any foul play behind the dollar price hike,” he said replying to a question. Asked what caused the dollar price hike, Mr Jamal said, there was a liquidity shortfall at that time. “Now it is gone.” He also said foreign banks do not bring in any remittance to the country but buy US dollars from the local market whenever they need. “We asked them to contribute to remittance inflow.”
Half a million people would have been brought out of poverty had the government allocated Tk 2,000 crore to the poor instead of doling out money to the state banks, analysts said yesterday.“There is no logic in subsidising the state’s fragile banks or industries in this way. It’s a reward for their inefficiency,” Abdul Bayes, director of Brac Research and Evaluation Division, said at a discussion.The discussion, styled “National budget 2017-18: expectations, gains, and challenges”, was organised by Brac and the Institute of Informatics and Development at the capital’s Brac Centre.At the discussion, analysts urged the government to increase the allocation for the education sector to at least 4 percent of the country’s gross domestic product.In the proposed budget for fiscal 2017-18, Tk 50,432 crore has been assigned to the sector, which is 2.2 percent of GDP. The amount is an increase of about 14 percent from the current year.Though the budgetary allocation has been increased for the education and health sectors in the proposed budget for the upcoming fiscal year, it is still proportionately lower than what they ought to be, they said.Some Tk 20,679 crore has been proposed for the health sector in fiscal 2017-18, up 18 percent year-on-year.“The main problem lies in implementation of the budget,” said AB Mirza Azizul Islam, former adviser to a caretaker government.On the one hand, the size of the budget increasing, while on the other hand, the level of implementation is decreasing.
Bangladesh Bank has asked all commercial banks to be cautious about fake notes as forgers may attempt to release counterfeit notes ahead of the Eid festivals cashing in on increased demand.Banks have been instructed to take necessary measures to prevent the spread of fake notes during the month of Ramadan, according to a central bank notice issued yesterday.The BB advised banks to check notes before putting those in ATMs. At the same time, all branches were asked to display the security features of bank notes in video during banking hours.The central bank fears that forgers will try to release fake notes ahead of Eid-ul-Fitr as cash transactions increase significantly during the festival, said a senior executive of BB.He said banks have been instructed to ensure the use of modern fake-note detecting machine at branch level.People transacted Tk 17,000 crore in the fortnight ahead of Eid-ul-Fitr in 2015, according to BB.
Bangladesh’s exports in the first 11 months of the current fiscal year stood at $31.79 billion, 4.68 percent lower than the target of $37 billion, Export Promotion Bureau (EPB) data show.However, compared to that of the same period in the last fiscal year, this year’s export posted 3.67 percent growth, second lowest in a decade.Prolonged political turmoil in 2013-15 and the collapse of the Rana Plaza building in 2013 pushed the country’s export growth down to 3.4 percent in 2014-15, exporters say. Apparels that account for Bangladesh’s over 80 percent exports maintained an average 13 percent growth over the last 10 years.As a result, export earnings this fiscal year were able to finance slightly over two-thirds of import payments and pushing the trade deficit up to $8.1 billion in the first 10 months of the fiscal year, Bangladesh Bank data show.Four major factors affected the country’s export growth this year, said Avijit Chowdhury, acting chief executive of the EPB.
New VAT measures to net in extra BDT 112.3 billion
The National Board of Revenue has made a projection of generating around BDT 11,228 crore in value-added tax through budgetary measures in the coming fiscal year 2017-18 including implementation of the new VAT law. The revenue board, however, estimated that its collection through VAT would be BDT 8,435 crore less due to some of the proposed budgetary steps under the new VAT and Supplementary Duty Act-2012 which will come into force from July 1 this year. The ‘loss’ will be incurred because of the hike in the annual turnover limit to BDT 15.0 million from BDT 8.0 million for imposing turnover tax and hike in VAT-free annual turnover for small businesses. The NBR has already placed the provisional estimation to the government high-ups. According to the provisional estimate of the revenue board, it may generate additional BDT 47.0 billion through implementing 15.0% single VAT rate for all goods and services, except essential products under the new budget through withdrawing existing tariff value and truncated VAT system. The revenue board may generate additional BDT 25.0 billion because of withdrawal of tariff value based VAT facility for some sectors like MS products, paper, river vessel, transformer, tissue and bricks which would pay VAT at reduced rates based on tariff value fixed by the NBR. Another BDT 12.0 billion will come from sectors like construction agency, supplier, land and building developers because of withdrawal of truncated multiple VAT rates system and implementation standard VAT rate for the sectors.
High taxes dent telecom sector’s growth: operators
Mobile operators yesterday blamed high taxes on handsets and duties on mobile services for less-than-expected growth of 3G and other telecom services in Bangladesh.“The country has missed opportunity every year by increasing tax on either services or handset imports,” said the Association of Mobile Telecom Operators of Bangladesh (AMTOB) at a post-budget briefing at Sonargaon hotel in Dhaka.“Had the government not imposed new tax or increased tax, Bangladesh would have got extra penetration and earned more revenue, which would have eventually taken the country towards digitisation,” said Matiul Islam Nowshad, chief corporate and people officer of Robi Axiata.The government has increased value added tax and customs duty on handsets and imposed supplementary duty and surcharge on mobile phone usage for the fourth consecutive fiscal year in 2017-18, adding more hurdles to the ongoing digitalisation efforts, according to the AMTOB.Taimur Rahman, senior director of Banglalink, said smartphone penetration could have been at least 40 percent since the launch of 3G in 2013. Smartphone penetration is 27 percent now.“The handset tax is a hurdle for the industry,” said Rahman.Mahmud Hossain, chief corporate affairs officer at Grameenphone, said the overall 3G coverage is more than 65 percent, and internet penetration stands at about 18 percent.
Telecom regulator working on internet price guideline
The telecom regulator is formulating a pricing guideline for internet services as data is not becoming cheaper at the user level despite significant cuts in bandwidth prices. The government reduced the internet bandwidth price to as low as BDT 625 a megabyte last year, which was BDT 72,000 eight years back. Two consultants of the International Telecommunication Union are in Dhaka and working with the telecom regulator and other stakeholders to set the cost modelling benchmark. The ITU is charging BDT 26 lakh for the service. The Bangladesh Telecommunication Regulatory Commission already has cost modelling benchmarks for voice and short message services. “The consultants are working to bring the best practices for cost modelling,” said Md Emdad ul Bari, director general for system and services at BTRC. In November last year, the BTRC organized a public hearing where mobile users complained about the higher price of internet. This prompted the telecom watchdog to run the data cost modelling for mobile operators. But it changed its mind yesterday and decided to engage the internet service providers, who have only 5% of the internet customers but use up 60% of the bandwidth in the country.
Prime Minister Sheikh Hasina on Wednesday said some 53 projects, including 46 investment and 7 technical schemes, involving BDT 976.2 billion are underway in the Bangladesh Railway (BR), reports BSS. “The government has allocated BDT 92.8 billion in the Revised Annual Development Program (RADP) in the fiscal 2016-2017 for 53 projects,” she said while replying to a starred question from treasury bench member M Monirul Islam of Jessore-5 in the Jatiya Sangsad. All the projects are being implemented fast, she said, adding, “Implementation of these projects would play a significant role in improving the railway communication along with socioeconomic condition of the country.” “Work for updating the Railway Master Plan is also underway and the master plan, which included 235 projects, would be implemented in four phases at a cost of BDT 2.3 trillion,” Sheikh Hasina informed the House. She said the government approved the Railway Master Plan on June 30, 2013 with the cooperation of Transport Sector Co-ordination (TSC) wing under the planning commission aimed at expanding railway network, improving double line of some important corridors, quality and other development along with modernization and time befitting as a public mode of transport.
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