Banks asked to limit single borrower exposure
Bangladesh Bank has asked all scheduled banks to bring down their overexposure to a single borrower limit, which is 25% of the bank’s capital, by December 31 this year. The banks that have provided funded loans to their single clients, exceeding the ceiling, will have to bring down the overexposure by the end of the year, said a circular Bangladesh Bank issued recently. The instruction came in the wake of misinterpretation of the rule of single borrower exposure limit by banks providing loan facilities beyond the ceiling, said the circular. According to the Bank Company Act, the loan borrowed by any individual, organization or group will not exceed a certain limit of the capital set by the central bank, but a condition is applicable that the ceiling will not exceed 25% of the bank’s capital by any means. Bangladesh Bank set the single borrower exposure limit at 15% of the capital in line with the act. But the ceiling is exempted for some cases including public limited companies, government borrowing and power supplier companies. The central bank has awarded the exemption of 15% ceiling, but the ceiling of 25% set in bank company act will remain applicable.
NCC Bank to issue non-convertible bond worth BDT 4.0 billion
The board of directors of National Credit and Commerce Bank (NCC Bank) has decided to issue non-convertible, redeemable subordinated bond worth BDT 4.0 billion, said an official disclosure on Thursday. “The board of directors has decided to issue NCC Bank 7 years non-convertible, redeemable subordinated bond worth BDT 4.0 billion to meet capital requirement under Tier-2 category of Basel III”, said the disclosure. “The bond issue is subject to approval of the shareholders in general meeting. Approvals from BSEC and BB are also needed,” the disclosure said. NCC Bank was listed on the Dhaka bourse in 2000. The bank belongs to the “A” category. The sponsor-directors own 39.91% stake in the NCC Bank, while institutional investors own 14.39%, foreign investors 0.67% and the general public 47.03% as on April 30, 2016. The company’s paid-up capital is BDT 10,000 million and authorised capital is BDT 8,832.18 million, while total number of securities is 883,218,003, according to statistics from the DSE. Each share of the bank closed at BDT 8.30 on Thursday, losing 2.35% over the previous session.
Uncertainty grips new VAT law launch
Field officials are in doubt about the enforcement of the new VAT law from July 01, despite the finance minister’s vow to push it through, as the groundwork is seen inadequate. Moreover, trade chambers have sought modifications of its provisions, particularly the 15% uniform VAT rate for all sizes of businesses. Finance Minister AMA Muhith, on several occasions, expressed his resolve regarding enforcement of the Value Added Tax and Supplementary Duty (SD) Act 2012 from the first day of the coming fiscal year. Many of field-level officials, preferring anonymity, claimed they were yet to get prepared to enforce the new law from the FY 2016-17 as per government plan. They felt the need for adequate training on development of expertise, logistic support, and motivation of the stakeholders and running the new law on pilot basis for a specific time to help officials get accustomed to the new law for a smooth sail. Although under the Value Added Tax (VAT) online project a series of motivational programmes were arranged for the VAT payers and training programmes for VAT officials, the field officials found it inadequate compared to the volume of technical applications of the new law.
Next budget deficit likely at BDT 972.5 billion
The government may have to count a huge deficit of BDT 972.50 billion in funding the national budget for the next fiscal year, projected at BDT 3.4 trillion. As such, the deficit financing of the 2016-17 budget, which is likely to be placed in parliament on June 02, would hover around 5.0% of the country’s gross domestic product (GDP). Budget deficit has been on an upturn in recent years as the size of the budget far outstrips the growth in tax revenues. So happens as the budget size swells up more than 15% on average on the back of relatively lower rise in revenues. The rate of growth in total revenues in terms of the GDP remained around 10.0% for many years now. As a result, the overall budget deficit has widened in recent years. It was 4.2% of the GDP in the last financial year 2014-15. But it never crossed 5.0% by official count. “Big budget is meant for meeting both development and non-development expenditures, including the full implementation of the national pay scale,” said a finance official. Of the estimated overall deficit, BDT 663.80 billion will be met by borrowing from domestic sources while the BDT 308.70 billion from external sources.
NEC Okays BDT 1.1 trillion Annual Development Program for new fiscal
The government on Thursday approved a BDT 1.107 trillion Annual Development Program (ADP) for the next fiscal year (FY), 2016-17, which is 22% higher than the ADP outlay in the current fiscal. Considering the transport sector top priority, the government allocated single largest BDT 60.26 billion funds for the under-construction Padma Bridge project in the next FY. Presided over by Prime Minister Sheikh Hasina, a meeting of the National Economic Council (NEC) in Dhaka approved the BDT 1.107 trillion ADP for the next FY. NEC also allocated BDT 96.458 billion funds for the public sector autonomous and semi-autonomous agencies for next year. After the meeting, Planning Minister A H M Mustafa Kamal told journalists that the Planning Commission (PC) placed a BDT 1.09 trillion ADP before NEC. But the prime minister approved additional BDT 15 billion allocations for finalising the new ADP.
Revenue of NBR (National Board of Revenue) rises 16.0% in July-March
Revenue collection rose 16% year-on-year to BDT 1054.3 billion in July-March of the current fiscal year, spurred by higher exports, imports and income tax, according to preliminary data of the National Board of Revenue. The amount is 70% of the revised target at BDT 1500.0 billion for this fiscal year, meaning the NBR will have to collect BDT 445.7 billion in the remaining three months. The tax authority is optimistic about reaching the revised target, which is 15% lower than the original target of BDT 1763.7 billion. “We will have an impressive collection figure after we finish realizing the dues,” NBR Chairman Md Nojibur Rahman said. The tax authority earlier said it was working to realize arrears of BDT 230.0 billion in taxes from various state organizations. However, growth of tax receipts slowed in March from the same month last year, particularly for a decline in VAT collection from domestic sources.
Private import of LNG: Government may go for dual-pricing
The government is planning to let the market determine the price of liquefied natural gas (LNG) when private sector imports the fuel to supply for industrial use, a draft policy revealed. However, the government will fix the price before it gives work order to private sector importers to supply LNG to the national gas grid after re-gasification, it noted. Presently, the government fixes the prices of all kinds of fuels, except for liquefied petroleum gas (LPG), imported into the country. Bangladesh Petroleum Corporation (BPC) is solely responsible for fuel import. Some independent power companies are also allowed to import furnace oil to run their plants. The LPG suppliers are allowed to fix prices taking the advantage of absence of any government rules. At present, the country’s gas production is about 2,700 mmcf per day leaving a daily shortage of 600 mmcf. To meet the gas shortage, the government has decided to import LNG in a bid to supply required gas to the industrial units as part of its efforts to boost production. The government has fixed a target to add LNG to the national gas grid by 2017 after setting up an LNG terminal at Moheshkhali in the Bay of Bengal. Finance Minister AMA Muhith at a meeting recently asked private sector companies to be ready for investing in LNG import.
Government finalizes master plan to conserve energy
The government has finalised energy efficiency and conservation master plan aiming to reduce per GDP energy intensity by 20% by 2030, thus saving considerable amount of foreign currency needed to set up power plants. The master plan on “Energy Efficiency and Conservation Master Plan (EECMP) 2030” has been finalised by Sustainable and Renewable Energy Development Authority (SREDA) under the power division of the ministry of power, energy and mineral resources. The plan has the target of saving consumption of power by 15% by 2021 and 20% by 2030. If things move toward the right direction, then it will help save 7,482 gygawatt-hour power, which is equivalent to an annual power generation of a 2,000 megawatt (MW) power plant, member of SREDA Siddique Zobair told the FE. The authority has taken up three broad-based programmes for ensuring efficiency and conservation of power and energy. The programmes include energy management and energy auditing for industry to ensure setting up of efficient machinery for saving energy, energy leveling programme for electrical gadgets and appliances to set up efficient air conditioner, micro woven, refrigerator etc at the household level and green building rating system for ensuring energy efficiency in the buildings.
‘Political tensions act as deterrent to FDI’
The first ever EU-Bangladesh Business Climate Dialogue in the city on Thursday listed impediments to foreign direct investment (FDI) in the country. Lack of coordination among the government agencies, political uncertainty, shortage of energy and limited infrastructure were among the bottlenecks hampering the FDI in Bangladesh, said Ambassador and head of the European Union (EU) delegation Pierre Mayaudon. “Bangladesh has many assets for attracting foreign investment…but foreign investments are not yet coming to Bangladesh in a big way,” he said at the business dialogue between Bangladesh and the European Union (EU) at the conference room of the ministry of commerce (MoC). Commerce Minister Tofail Ahmed inaugurated the dialogue. Mr Mayaudon said that the new genuine FDI flow fell short of expectations in Bangladesh.
124 garment factories hit by gas shortage
Some 124 garment factories are struggling to get their production back to full swing following relocation due to a dearth of gas supply, as the government is not approving transfer of gas lines or new connections. The factories have lodged complaints with Bangladesh Garment Manufacturers and Exporters Association. Of the total, 60 factories complained that the government is not allowing the transfer of their old gas lines to their new units, BGMEA President Siddiqur Rahman said at a press conference at the association’s office in Dhaka. Another 64 complained that they are not getting new gas connections for two to three years now. “Those factory owners are now running their units with diesel generators, which is very expensive,” Rahman said, adding that many others are in the same boat as these factories but are yet to file complaints.
BPC moves to import diesel, jet fuel under open tendering
The government has scrapped term deals with 11 global petroleum product suppliers over import of diesel and jet fuel from June to December this year. State-run Bangladesh Petroleum Corporation (BPC) terminated the term deals unilaterally making way to start importing of diesel and jet fuel from the Emirates National Oil Company (ENOC) and the Unipec Singapore Pte Ltd under open tendering, a company insider said. “We already have informed the decision over ceasing of petroleum imports from the existing 11 term suppliers,” BPC director for operations and planning Mosleh Uddin told the FE. He said the BPC would not continue importing 0.05% sulfur gasoil (diesel) and A-1 jet fuel from the existing term suppliers after May as the overall import requirement of diesel and jet fuel could be met from the supplies of ENOC and Unipec, he said. The ENOC and the Unipec came out as successful bidders to supply diesel and jet fuel to the BPC following a competitive bidding where 12 bidders including US ExxonMobil, Dutch Trafigura, Thai state-run PTT Public Company Ltd, Malaysian state-run Petronas, South Korean SK Energy, Petro China, Swiss Singapore Overseas Enterprises Pte Ltd, and Glancore took part.
Government revises prices of day-old chicks
The government has revised the rates of day-old chicks applicable to state-owned hatcheries. The revision came as the prices of day-old chicks produced by government-owned hatcheries remain high for several years. The prevailing high price has pushed down sales by more than 40% from their estimate prepared for the current fiscal year 2015-16. The initial production target for chicks in the current fiscal year (till June 30) was set at 4.1 million, but now the figure has been revised downward at 2.44 million incubated at the government-owned hatcheries in 14 districts. People familiar with the developments at the Ministry of Fisheries and Livestock said the demand has fallen in recent years as the prices of day-old chicks called ‘sonali breed’ are lower in the privately-owned hatcheries. The ministry concerned had proposed two sets of prices for day-old chicks considering the current market situation.
PREVENTION OF INSIDER TRADING: BSEC to collect BO account data of sponsor-directors
The Bangladesh Securities and Exchange Commission has initiated a move to collect beneficiary owners’ account-related data of around 3,000 sponsor-directors of 287 companies listed with the capital market in a bid to prevent insider trading. The initiative came three and a half years after the launch of state-of-the-art surveillance software by the capital market regulator in December, 2012 with a view to checking manipulative share transactions including illegal insider trading. According to the section 4 (1) of the Securities and Exchange Commission (Beneficiary Business Prohibition) Rules, 1995, no one is allowed to conduct or suggest any sort of beneficiary business. Despite the regulatory binding, insider trading has been on the rise disrupting normalcy in the market, Dhaka Stock Exchange officials said. Insider trading includes tipping others when anybody has any sort of nonpublic information, they said. Sponsor-directors are not the only ones who have the potential to be convicted of insider trading, people such as brokers and even family members of sponsor-directors can also be guilty of the wrongdoing, the officials said. In recent times, sponsor-directors of a number of listed companies capitalised on price sensitive information as they purchased shares before disseminating those to public.
BO accounts on stock trade cross 3.2 million
The number of active BO (beneficiary owner) accounts has crossed 3.2-million mark in an apparent resurgence with many accounts opened over the last few months, despite a downturn in securities trade. According to information gleaned from Central Depository Bangladesh Limited (CDBL) on the stock market, the number of active BO accounts stood at 3,222,089 as of May 12 last. Some of the officials who handle BO accounts said many closed accounts were reactivated alongside the opening of new ones on payment of annual fees. The number of active BO accounts was 3,162,313 as of December 20, 2015. As a result, some 59,776 BO accounts were opened braving the downturn in the stock market observed since January till April this year. “Most of the accounts, which were opened in last four months, are run by the IPO (initial public offerings) hunters. Their participation in secondary market is insignificant,” said a senior official of a leading brokerage firm. Of the total active BO accounts, male investors own 2,339,787 accounts while female investors and companies own 871,532 and 10,770 accounts respectively.
World Stock and Commodities
|Index Name||Close Value||Value Change||Percentage Change|
|Crude Oil (WTI)*||$46.21||(0.49)||(1.05%)|
|Crude Oil (Brent)*||$47.83||(0.25)||(0.52%)|
|Dow Jones Industrial Average||17,535.32||(185.18)||(1.04%)|
|USD 1||BDT 78.38*|
|GBP 1||BDT 112.59*|
|EUR 1||BDT 88.63*|
|INR 1||BDT 1.17*|
*Currencies and Commodities are taken from Bloomberg.