Private sector credit growth in September falls slightly

Private sector credit growth fell slightly again in September mainly due to lower payment obligations particularly back-to-back imports for ready-made garment (RMG) sector, officials said. The growth in credit flow to private sector came down to 15.3% in September 2016 on a year-on-year basis from 16.2% a month ago, according to the central bank’s latest statistics. The private sector credit growth was 15.97% in July 2016. The total outstanding loans with the private sector rose to BDT 6801.4 billion in September 2016 from BDT 5896.9 billion during the same of the last calendar year. It was BDT 6719.4 billion in August 2016. The official further said such credit growth also dropped due to long Eid vacation in September. “We expect that the credit growth may pick up in the month of October following upward trend in imports,” the central banker noted. The actual import in terms of settlement of letters of credit (LCs) stood at USD 1.4 billion in the first two weeks of October. The value of opening of LCs, generally known as import orders, was USD 1.5 billion, the BB data showed. The settlement of LCs fell by more than 13.0% to USD 2.99 billion in September 2016 from USD 3.4 billion in August. On the other hand, the opening of LCs also decreased by 7.4% to USD 3.53 billion in September from USD 3.8 billion in the previous month.

Source: http://print.thefinancialexpress-bd.com/2016/11/04/155814

Banks cut rates further in September

Country’s scheduled banks cut their rates of interest on lending further in September, for the 21th month in a row, against the backdrop of the businesses’ persistent reluctance to borrow from banks due to a sluggish business situation, said Bangladesh Bank officials. BB data showed that the weighted average interest rate on lending in the banking sector declined to 10.15% in September from 10.24% in August. A BB official told New Age on Thursday that the banking sector was forced to lower the lending rates due to a sluggish credit demand from the businesspeople. The BB data showed that the weighted average interest rate on deposit of the banks also decreased to 5.39% in September from 5.44% in August. The weighted average interest rate on lending was 10.32% in July, 10.39% in June, 10.57% in May, 10.64% in April, 10.78% in March, 10.91% in February and 11.05% in January of this year. The rate had declined throughout last year. From 12.32% in January 2015, it had dropped to 11.18% in December 2015. The BB official said that the majority of the banks had recently cut their rates of interest both on deposits and lending in the face of dull business.

Source: http://www.newagebd.net/article/2126/banks-cut-rates-further-in-sept

Jute millers now get three more years to repay loans in block account

The central bank has extended the loan repayment period of block account for both public and private jute millers by three years more, officials said. Under the relaxation, the millers are now allowed to repay their loans which have already been transferred to the block account by eight years instead of five years earlier, according to a circular, issued by the Bangladesh Bank (BB) on Wednesday. The BB also instructed the commercial banks to keep the rate of interest on block account based on their cost of funds. The central bank has taken the latest measure in line with the request of the Ministry of Textiles and Jute. According to the Bangladesh Jute mills Association (BJMA), private jute millers are now paying 10.0% interest on block account loans.

Source: http://print.thefinancialexpress-bd.com/2016/11/06/155918

Two-thirds of banks faced financial crimes in last two years: Bangladesh Institute of Bank Management study

Almost two-thirds of commercial banks in the country faced some forms of financial crimes over the last two years, a research study has revealed. Among these crimes, cheque-related frauds are most common, said the study conducted by Bangladesh Institute of Bank Management (BIBM). The findings were revealed during a research workshop on ‘Addressing Financial Crime in the Banking Sector of Bangladesh’ in the capital on Thursday. “About 65.0% of the banks sampled in our study said they faced deposit account-related financial crime incidents in their banks during the period from 2014 to 2016”, said Dr. Shah Md. Ahsan Habib, Professor and Director of BIBM. The study observed that although 35.0% of the banks surveyed as part of the research said they did not face any such crimes during the aforementioned period, it is not unlikely that the banks were shy to disclose such information. According to the BIBM study, 60.0% of the banks surveyed said they faced cheque-related financial crimes during the last two years out of which around 46.0% of this type of frauds was committed in the form of fake cheques. The study also noted that about 65.0% of the banks surveyed said they faced loan-related financial crimes in their banks during the aforesaid period out of which 38% was committed by taking loan in the name of non-existent or fake borrowers.

Source: http://print.thefinancialexpress-bd.com/2016/11/04/155780

Sales of savings tools soaring

Net sales of savings instruments continue to post robust growth this fiscal year riding on the higher returns than its alternatives. Bangladesh Bank data shows net sales of savings tools stood at upwards of BDT 116.5 billion during the July-September quarter, up 74.4% year-on-year. Over BDT 38.5 billion worth of savings certificates were sold in September this year, up by a whooping 88.0% from a year earlier. BB officials and commercial bankers attributed the growth to the returns the government offers for investments in savings tools. Investors were lured in by the interest rates, which are 5-6% percentage points higher than those offered by commercial banks on term deposits. But BB officials and bankers said the higher rate of returns is not only distorting the market but also creating interest payment burden on the government, which can lead to a mismatch in treasury management. The net sales of savings certificates were more than double the target set by the government for fiscal 2015-16: it stood at BDT 336.9 billion — the highest in the country’s history — against the target of BDT 150.0 billion. The government sold savings instruments of BDT 287.3 billion in fiscal 2014-15, while the amount was BDT 117.1 billion the year before. In fiscal 2012-13, the total sales of the instruments were a meagre BDT 7.7 billion. The interest rate on the five-year family savings certificates has been brought down to 11.52% from 13.45%, according to a notice of the Internal Resources Division. The five-year pensioner savings schemes saw its interest rate slashed to 11.76% from 13.19%.

Source: http://www.thedailystar.net/business/sales-savings-tools-soaring-1310143

Insurance sub-sector’s growth erratic

Growth of insurance sub-sector in terms of country’s gross domestic product (GDP) was marginal in the fiscal year (FY) 2015-16. Official data showed the sub-sector’s growth fell to only 0.54% in the last financial year (FY), 2015-16, from a level of 3.95% in the previous fiscal. Bangladesh Bureau of Statistics (BBS) in its final data on the GDP showed volatility in the insurance sub-sector’s growth in recent years. According to the BBS reckonings, the growth rate of the insurance sector was 3.69% in the FY2011, and increased to 4.41% just the following fiscal year (FY2012). In the subsequent FY2013, the growth hurtled down to only 0.61% –and once again moved up to 1.55% in FY2014 on its bumpy ride. Founder of Bangladesh’s leading insurance firm, Green Delta Insurance Company, Nasir A Choudhury said the insurance industry was passing through bad times as its operational costs were much higher compared to premium it was getting from clients. Officials said the country’s 43 insurance companies had spent an additional BDT 14.5 billion as operational cost over their limits in the last seven years. Experts said although the government six years ago established a dedicated regulatory authority — the Insurance Development and Regulatory Authority (IDRA) — it could so far do little to bring the country’s insurance companies onto track.

Source: http://print.thefinancialexpress-bd.com/2016/11/05/155881

Bangladesh Securities and Exchange Commission (BSEC) to set up capital market education academy

The Bangladesh Securities and Exchange Commission will form a separate academy, Bangladesh Academy for Securities Market (BASM), to conduct country-wide education on capital market. A BSEC official said BSEC has recently finalized rules on investment education promotion and training, which are waiting to be published as gazette notification. The capital market regulator on October 30 finalized the rules titled Bangladesh Securities and Exchange Commission (Investment Education Promotion and training) Rules, 2016 after receiving public opinion till October 2. Speaking about the necessity of forming separate academy despite having Bangladesh Institute of Capital Market, the BSEC senior officials told New Age that the institute was Dhaka-centric and only dealt with training professionals. As government has imitated to run nationwide financial literacy programme, forming a separate entity that will be dedicated to educate common people had become important, they said. The finance ministry has agreed with the BSEC about the necessity of having a separate academy to run nationwide financial literacy pregame. Under the finalized rules, the academy apart from giving different training to the investors will also be allowed to run different certified courses including diploma and post-graduate causes.

Source: http://www.newagebd.net/article/2129/bsec-to-set-up-capital-market-edn-academy