Country’s banking sector performance caused some concerns in areas including classified loans in the final quarter of the fiscal year (FY) 2015-16 compared to that of the previous quarter, according to the central bank’s latest quarterly report. “Several key indicators such as gross nonperforming loans (NPL), provision shortfall position, return on assets (ROA) and return on equity (ROE) exhibit deteriorations during the quarter compared to the previous one,” said the latest Bangladesh Bank Quarterly (BBQ) for April-June, 2016 which was released on Thursday. The ratio of gross NPL to the total outstanding loans of the banking sector increased to 10.06% at the end of fourth quarter (Q4) of the FY ’16 from 9.92% at the end of the Q3 of FY ’16. However, the ratio of net NPL decreased to 2.81% at the end of June ’16 from 2.88% at the end of March ’16. The provision shortfall position of the banking sector deteriorated during the April-June period of the FY and stood at BDT 44.5 billion from BDT 41.2 billion at the end of January-March ’16.
Farm loan disbursement posted a 14.0% growth in the first two months of the current fiscal year of 2016-17 compared with that in the same period of the FY 2015-16. Banks disbursed BDT 20.6 billion in farm loans in the July-August period of FY17 against BDT 18.1 billion distributed in the same period of FY16, according to the latest Bangladesh Bank data. BB officials said banks grappling with surplus liquidity amid dull business situation in the country showed an increased interest in disbursing agriculture credit in recent months. Six scheduled banks, however, disbursed no farm loan against their annual targets of loan disbursement to farmers in the first two month of this fiscal year. The banks are Bank Al-Falah, Commercial Bank of Ceylon, National Bank of Pakistan, Standard Chartered Bank, State Bank of India and Farmers Bank. The BB will take punitive action against the banks which will not take required steps to meet their annual farm-loan disbursement targets for FY17, said the officials. The central bank recently blocked undisbursed farm loan amount of BDT 1.4 billion of four banks which failed to achieve their farm loan targets in FY16. The BB deposited the fund in its custody and the four banks also will not get any interest on the amount, BB officials said. The BB will repay the deposited fund to the respective banks at the end of this fiscal year if they distribute the undisbursed amount with their fresh targets for FY17. A BB official told New Age on Thursday that the banks’ farm loan disbursement continued to increase in recent months as banks were now holding surplus liquidity after the country’s businesspeople had adopted a ‘wait and see’ approach while making fresh investment due to political uncertainty and delicate law and order situation.
Chinese Exim Bank to give USD 705.1 million in loan
The Exim Bank of China agreed Thursday to provide USD 705.1 million as loan for constructing the country’s first tunnel under the Karnaphuli River. A delegation of the bank sat with the Economic Relations Division (ERD) and Bangladesh Bridge Authority (BBA) on the day and completed negotiations over funding the tunnel project. Sources, however, said the bank remains rigid on 2.0% interest rate, although the government has been requesting them to lower it. They said of the total amount, USD 300.0 million would be concessional loan while the rest would be preferential loan.
The Asian Development Bank (ADB) has planned to provide aid worth USD 8.0 billion to Bangladesh’s public and private sectors in five years until 2020 to develop infrastructure and cut poverty. The Board of Directors of the Bank in Manila endorsed the five-year (2016-2020) Country Partnership Strategy (CPS) for Bangladesh on Wednesday where it has assured of the USD 8.0 billion credit in the coming years, said an ADB press release Thursday. In the previous CPS period between the year 2011 and 2015, ADB lent more than USD 5.0 billion to Bangladesh. Under the five-year CPS (2016-2020), the ADB will help develop economic corridors to position Bangladesh well in regional and global value chains, the lender said.
BSEC relaxes listing rules for banks, FIs, insurers till December 31
All listed banks, financial institutions (FIs), insurance companies and their subsidiaries have been exempted from some provisions of the stock exchanges’ listing regulations till December 31 in order to follow uniform income year (January-December) by all, officials said. Bangladesh Securities and Exchange Commission (BSEC) gave the exemption through issuing a directive. As per Finance Act 2015 (Act No-10 of 2015) and Finance Act 2016 (Act No-28 of 2016) all banks, FIs and insurance companies will have to adopt uniform income year from January to December. Subsequently, they have been exempted from some provisions of the exchanges’ listing regulations, as they are required to adopt uniform income year by taking approval from their boards and shareholders. As a result, the listed banks, FIs and insurers, whose income year is not January-December, are not required to hold annual general meeting (AGM) and submit quarterly reports by December 31, 2016.
The ministries and divisions put to use 3.86% of their total outlay in the first two months of the fiscal year, up from 3.0% they managed a year earlier. The slight increase would come as a setback to the government, which has taken a host of initiatives over the last two to three years to bump up development spending. Between July and August, BDT 47.6 billion was spent from the annual development program allocation, in contrast to BDT 33.5 billion a year earlier. ADP spending in the first two months has been declining since fiscal 2013-14. In fiscal 2012-13 the spending was BDT 45.4 billion, which came down to BDT 42.5 billion in fiscal 2013-14 and BDT 39.9 billion the year after.
The country’s middle class is projected to rise by 37 million to 59 million in the next decade, according to latest findings by an international organization. New York City-based Ogilvy & Mather said the emerging middle class will drive consumer trends and social change over the next 10 years. However, local experts, who deal with such issue, said Bangladesh’s present growth is not supportive of such a big jump in the number of the middle class people. According to the World Bank, the middle class must have per capita income of over USD 4,000 a year. Ogilvy & Mather, an advertising, marketing and public relations organization, however, said the expected level of investment and sustainability of macroeconomic fundamentals will lead to a significant rise of the middle class in the country. But economists say a planned urbanization should be in place immediately to cope with the needs of the growing middle class.
The government plans to construct 30 power plants with the generation capacity of 10,743 Megawatt (MW) to ensure smooth and uninterrupted power supply across the country, a top official said, reports BSS. “The current power generation capacity is 14,980 MW, covering 78.0% of the population in the country,” Director General of Power Cell under Power, Energy and Mineral Resources Ministry Engineer Mohammad Hossain told BSS on Saturday. The government’s target, the DG said, is to increase power generation capacity to 24,000 MW by the year 2021. Of the 30 power plants, 16 having the capacity of 6,703 MW would be set up under public initiatives, while 14 with 4,040 MW capacity under private initiatives, said Eng Hossain.
Dhaka Northern Power eyes BDT 3.13 billion in revenue
Dhaka Northern Power Generations plans to generate BDT 3.13 billion in revenue a year by selling electricity to Bangladesh Power Development Board (BPDB). BPDB recently approved the date of commercial operation of a 55MW power plant of Dhaka Northern, which is owned by Doreen Power Generations and Systems, in Manikganj. “As per a power purchase agreement, BPDB will buy electricity from the plant for 15 years from the date of commercial operation, effective from August 17,” the company said in a statement on the Dhaka Stock Exchange website yesterday. Doreen Power, which owns a 98.52% stake in Dhaka Northern, will benefit from the revenue earnings. Set up in 2007, Doreen Power has three electricity plants that generate and supply 66MW to BPDB and Rural Electrification Board under two agreements for a period of 15 years, according to the company’s website.
Ship-breakers to make 3.0 million tons of steel in 2016
The country’s ship-breaking industry is likely to manufacture some 3.0 million tons of scrap steel this year, as import of scarp ships has increased substantially in the recent days. According to industry sources, the country has already imported about 187 scrap ships having 2,431,645 LDT (light deadweight tonnage) during the last seven months of this year, as against 159 vessels having 1,592,811 LDT during the same period last year. Industry operators are expecting arrival of more vessels by rest of the year, exceeding the last year’s record. The country produced about 2.5 million tons of scrap steel worth about USD 1.0 billion in 2015 by dismantling some 231 ships. The quantity was 2.60 million tons from 227 scrapped ships in 2014, and 2.05 million tons from 171 ships in 2013. The country produced the highest amount of scrap steel (2.86 million tons) in 2012 from 217 ships. Sources in Bangladesh Ship Breakers Association (BSBA) said about 40 large scrap vessels having 470,068 LDT were imported in May 2016, the single largest import volume in a month over the last two years.
The Chittagong port is experiencing record container congestion owing to non-operation of long vehicles that carry loaded and empty containers to and from the harbour for the last four days. If the situation continues for two more days the port would face a deadlock, according to officials of the Chittagong Port Authority. Covered vans bring the export cargoes from factories all over the country to the 16 private inland container depots in Chittagong for loading into export containers. The containers are then sent through long vehicles like prime movers or trailers to the port for loading onto the ships waiting at the jetties. On Monday, Prime Mover, Trailer Malik Sramik Oikya Parishad, a platform of the owners and workers of the vehicles, went on an indefinite strike after the Road Transport and Highways Division launched a crackdown on overloaded vehicles on the Dhaka-Chittagong highway.
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