Silver lining for the banking sector as loan recovery soars in 2019
Pushed into a tight corner banks put up a spirited fight against the mounting default loans last year, as their loan recovery went up 15.46 per cent. Banks retrieved Tk 15,465 crore from defaulters in 2019, according to data from the Bangladesh Bank. The facility allows defaulters to reschedule classified loans by making a down payment of only 2 per cent of their outstanding amount instead of the existing 10-50 per cent. The defaulters also got a year’s grace period. But only Tk 536 crore were recovered as down payment, a tiny amount given the total rescheduling amount of Tk 19,119 crore. Despite the relaxed rescheduling facility and a strong recovery effort, default loans stood at Tk 94,313 crore at the end of 2019, up 0.42 per cent year-on-year. Dhaka Bank has recently got travel restriction on a good number of habitual defaulters from the courts, which helped in containing the default loans, said its MD Emranul Huq. The bank also filed cases against the defaulters under the Negotiable Instruments Act, 1881 as part of its effort to expedite the recovery of defaulted loans, he said. Default loans recovered by state-run banks rose 1.40 per cent year-on-year to Tk 4,110.56 crore in 2019. It rose 22.66 per cent to Tk 11,267 crore for private banks. Recovery at foreign banks, however, dropped 42 per cent to Tk 87.52 crore.
Postal savings schemes go digital
The government yesterday initiated the automation of ordinary and fixed deposit accounts under Post Office Savings Bank to ensure transparency and prevent affluent people from abusing the high interest-bearing tools designed for marginal and low-income groups. The automation, which will allow people to open accounts and deposit and withdraw funds very quickly, will get rid of the misuse of the benefit under the existing system. The automation will be completed by March 17, the minister said at the programme. Last month, the finance ministry slashed the interest rates on the three-year tenure fixed deposit in postal savings banks to 6 per cent from 11.28 per cent and ordinary deposit to 4.5 per cent, a move that sparked outcry from various quarters. There are more than 50 lakh deposit accounts under the postal bank and marginal and low income people from rural and suburban areas mostly park funds there. The submission of tax identification number and the national identification number will be required while depositing more than Tk 2 lakh. The instruments carry interest rates as high as 11.76 per cent, which is way higher than what banks offer. As a result, fixed deposits in postal saving bank soared 66 per cent year-on-year to Tk 11,730 crore in the first half of the fiscal year, according to data from the Bangladesh Post Office. At the same time, investment in savings certificates sold by post offices plummeted 88 per cent to Tk 1,870 crore. The ceiling for the highest investment in savings certificates doubled to Tk 50 lakh for individuals and Tk 1 crore under joint names. The investment ceiling for pensioner savings certificates will double to Tk 1 crore. The deposits at the Post Office Savings Bank were more than a fifth of Tk 83,630 crore of investment made by people in various types of savings certificates, bonds and government schemes in fiscal 2018-19, DNS data showed. The deposits accounted for 14 per cent of the government’s accumulated liabilities as of June 30 last year.
BD economy shows mixed trend: ICCB
The performance of Bangladesh economy in 2019 with reference to global, macro and micro levels presents a mixed picture. Globally, Bangladesh did not suffer any major setback during the year, but some headwind stemmed from slowed-down export and import due to shrinking global economic growth. The country archived 8.15 per cent GDP in FY ’19, considered by Asian Development Bank (ADB) to be the fastest-growing economy in the Asia-Pacific Region. Bangladesh’s exports earning during 2019 was $39.33 billion, which was $39.25 billion in 2018. Import payment during 2019 was $59.09 billion against $60.49 billion in 2018 (calendar year), according to the editorial. Remittance earnings stood at $20 billion at the end of 2019, as it grew by 9.8 per cent being boosted by depreciation of taka and cash incentives given at the rate of 2.0 per cent of remitted amount. According to World Economic Forum (WEF), Bangladesh has been classed by the United Nations as one of the world’s least developed countries (LDCs) since 1975, but its current trajectory means it is likely to shed that description by 2024. The success of the IT industry is central to the digital transformation and ongoing economic growth of Bangladesh. The country exports nearly $1.0 billion of technology products every year – which is expected to increase to $5.0 billion by 2021. The country also has 600,000 IT freelancers. The growth of flow of loans to the private sector slowed to 11.32 per cent in 2018-19 against a target of 16.5. Bangladesh’s economy will outshine the economy of Malaysia, Hong Kong and Singapore with its presence as the 30th largest economy in the world by 2024, WELT report added. Bangladesh’s economy will further climb from the 40th place in the World Economic League Table in 2020 to 26th and 25th position respectively by 2029 and 2034.
IPDC inks deal with bKash
From now on, customers of IPDC Finance Ltd will be able to pay installments of loan through bKash. Very soon, the installment payment of Monthly DPS Savings Scheme through bKash will also be launched. To provide these services, IPDC Finance, one of the leading loan distribution organisations has signed an agreement with bKash, the largest mobile financial service provider of the country.
Import orders drop by 12pc in January
Bangladesh’s import orders dropped by more than 12 per cent or nearly US$663 million in January last due to supply chain disruption caused by the coronavirus outbreak in China. Opening of letters of credit (LCs), generally known as import orders, came down to $4.63 billion in January from $5.29 billion a month ago, according to the central bank’s latest data. Also, the settlement of LCs, generally known as actual import, in terms of value, fell by nearly 9.0 per cent to $4.54 billion in January from $4.98 billion in the previous month. The country’s overall export earnings dropped by nearly 5.0 per cent to $26.24 billion during the July-February period of the current fiscal year (FY), 2019-20, from $27.56 billion in the same period of FY ’19. Bangladesh imported goods worth $13.64 billion, which include raw materials, machinery and consumer products, from China in FY ’19. It was about 25 per cent of total volume of imports in that fiscal. The total imports stood at $55.44 billion in the last fiscal, according to the data provided by the customs department of the National Board of Revenue (NBR). Meanwhile, the country’s overall imports decreased by 4.44 per cent to $34.58 billion in the first seven months of this fiscal year from $36.19 billion in the same period of FY ’19. Import of intermediate goods fell by 3.29 per cent to $19.81 billion during the July-January period of FY ’20 from $20.48 billion in the same period of previous fiscal while capital goods import dropped by 13.19 per cent to $7.70 billion from $8.87 billion.
Local and Global Stock Indices *
|Index Name||Close Value||Value Change||Percentage Change|
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|FTSE100||5,876.52||↓ 83.71||↓ 1.40 %|
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World Commodities *
|Commodity||Close Value||Value Change||Percentage Change|
|Crude Oil (WTI)||$ 31.24 ||↓ 1.74||↓ 5.28 %|
|Crude Oil (Brent)||$ 33.89 ||↓ 1.90 ||↓ 5.31 %|
|Gold Spot||$ 1,635.59 ||↑ 0.55||↑ 0.03 %|
Major Currencies Exchange Rates Movement in Last Seven Days *
|USD 1||BDT 83.2853|
|GBP 1||BDT 107.379|
|EUR 1||BDT 94.1736|
|INR 1||BDT 1.12458|
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