Important Business News Extracts – October 10, 2017
BB instructs banks not to reject foreign cheques or drafts
Bangladesh Bank has asked banks not to send back clients who present foreign cheques and bankers’ draft with the view to arranging smooth repatriation of returning migrant workers’ additional job benefits. Typically, migrant workers get their added job benefits like retirement, insurance and other schemes by way of a wire transfer or cheque and bankers’ draft upon leaving their jobs abroad. The central bank found that banks are refusing to arrange collection of payment against the cheques or drafts without providing any valid reason. “This result in destruction of the safety net accumulated during the tenure of service abroad by the wage earners and creates loss of foreign exchange to the national economy,” the BB said. Subsequently, the central bank on Sunday issued a directive to all banks asking them to take necessary steps to arrange funds against the payment instruments deposited at branches by the beneficiaries.
The trade deficit widened more than three times to $1.81 billion in the first two months of the fiscal year on the back of a surge in imports and a decline in exports. “The import growth has been too high so far this fiscal year,” said Ahsan H Mansur, executive director of Policy Research Institute, a private think-tank. During the July-August period of the fiscal year, imports soared about 34 percent to $8.35 billion, according to data from the Bangladesh Bank.
State-run banks to disclose list of top loan defaulters through newspapers
The eight state-owned banks are considering revealing the names of top loan defaulters by publishing advertisements in daily newspapers, in order to check the upward trend of default loans. This is just one of the recommendations which are to be finalised by the Financial Institutions Division in a meeting on Tuesday. A total 63 recommendations to revive the state-run banks were proposed in a workshop held at Dhaka’s CIRDAP auditorium last month, titled “How to Meet the Challenges of State-Owned Banks.” Finance Minister AMA Muhith attended the workshop, which was organised by the Banking Division of the finance ministry. Banking division Secretary Md Eunusur Rahman told the Dhaka Tribune: “We will finalise the recommendations in Tuesday’s meeting, in a bid to resolve several problems that have been plaguing the state-owned banks.” “Several members of parliament engaged in a heated debate during a recent parliamentary session, over the publishing of the names of defaulters. As such, there has been some uncertainty regarding this issue,” he added. The secretary also said that they have been trying their best to incorporate all of the major recommendations.
Country’s economy faces some downside risks in the near term predominantly for an upturn in inflation, says a quarterly review by the central bank. The latest Bangladesh Bank Quarterly (BBQ) outlook on the country’s economic situation for April-June 2017 carries the caution because of higher risk stemming from inflation. However, a Bangladesh Bank senior official also mentioned export and remittance downturn and a slower-than-expected pace of overall economic growth that contributed to the headwind. “…there are some downside risks to the near-term economic outlook. Inflation risks are higher, stemming from food prices,” the central bank said in its April-June 2017 BBQ. On possible remedies, the Bangladesh Bank said well-coordinated monetary and fiscal measures could help mitigate inflationary risk in the near future.
Bangladesh Bank on Monday extended the loan facility from its $200-million green transformation fund to export-oriented jute goods manufacturers. The BB introduced the GTF refinance scheme on January 15, 2016 for the export-oriented industries of the textile and leather sectors to set up environment-friendly infrastructures. A central bank circular issued by BB deputy general manager Jagannath Chandra Ghosh on Monday said that to widen the scope of the GTF, the jute product manufacturing sector was also included in the refinancing scheme. The GTF is initially intended to facilitate access to financing in foreign exchange by all manufacturer-exporters in export-oriented textiles and textile products, and leather manufacturing sectors to import capital machinery and accessories for implementing environment-friendly initiatives. The refinance fund is being provided for water use efficiency in wet processing, water conservation and management, waste management, resource efficiency and recycling, renewable energy, energy efficiency, heat and temperature management, air ventilation and circulation efficiency and work environment improvement initiatives in the export-oriented textiles and leather industries.
Dhaka stocks plummeted on Monday after a six-day rise amid media reports that Bangladesh Bank fined seven banks and would penalise a number of other banks for crossing their capital market exposure limit. DSEX, the key index of Dhaka Stock Exchange, plunged by 1.23 per cent, or 76.60 points, to finish at 6,128.89 points after gaining 126 points in the previous six sessions. The market declined steeply on the day as investors, both institutional and general, went for selling shares heavily as they became jittery over the central bank’s move to punish the errant banks. According to the media reports, the central bank fined seven banks on October 5 for their investment in stocks beyond the allowable limit while a number of other banks would also be punished by the BB for the same offence. According to the Banking Company Act 2013, banks are allowed to invest 25 per cent of their capital in stocks. As a result of the BB move, some of the banks which have overexposure might have gone for selling stocks on Monday, making general investors panicky, said stockbrokers. Bank shares led the nosedive on Monday, declining significantly by 3.2 per cent with holding 48 per cent of the day’s turnover.
Faruq Mainuddin Ahmed has joined Trust Bank Limited as additional managing director recently, a press statement said. Prior to joining the bank, he was additional managing director, chief risk officer and chief anti money laundering compliance officer of City Bank Limited.
Arif Quadri, has been promoted to the post of additional managing director of United Commercial Bank Limited, the bank said in a statement yesterday. Prior to the new position, he was serving in the same bank as deputy managing director.
The World Bank (WB) is going to raise the interest rate on its International Development Association (IDA) loan for Bangladesh from the next fiscal year, thanks to a rise in the country’s per capita income to USD 1,465 in the last fiscal. The WB informed Bangladesh about this decision and asked it to make preparations. According to the letter of the Bank, Bangladesh will have to pay 2 per cent interest, instead of the existing 0.75 per cent, and the repayment period will come down to 30 years from 38, and the grace period to 5 years from six. Bangladesh is ready to graduate from its current “IDA-only” status to the “gap” status since its gross national income (GNI) per capita crossed the USD 1,165-mark last fiscal year and is on course to repeating it this year too. To continue to get loans at concessionary terms from the IDA, the arm of the World Bank Group, which hands out loans and grants to the world’s poorest developing countries, Bangladesh’s GNI per capita has to be less than USD 1,165.
National Board of Revenue has dropped its plan of providing electronic cash register to shopkeepers citing complexities in maintenance and after-sales service. Initially, the revenue board had decided to procure 10,000 ECR machines and distribute those among traders at subsidised rate as the part of implementation of the automated VAT system under the new VAT law. Now, the tax authorities have decided to introduce a more sophisticated electronic fiscal management system under which customised electronic fiscal device or EFD will be installed at shops. The device will print VAT invoice containing a unique authorisation code to be automatically generated by the central server of the NBR as proof of VAT payment. Officials of VAT Online Project of NBR said that the finance minister had already approved a summary of NBR on introducing the system discarding the previous plan. VOP is now preparing the specifications for the device, they informed. Soon, VOP would float tender for development of the software and invitation for enlistment of interested traders to import the device, they added.
The National Board of Revenue has asked its field offices to help taxpayers get user identities and passwords in the shortest possible time to facilitate online filing of tax returns this year. The taxpayers will have to collect user IDs and passwords from respective circle offices to file returns online, said Kalipada Halder, an NBR member for information management and services. People can also use last year’s IDs and passwords for online filing this year, he said. The tax administrator sent a letter to all taxes zones last month saying that changes brought in income tax for 2017-18 have been incorporated in the software. Now the taxpayers can file returns online for the current year, the letter reads.
A number of rice-laden vessels have started arriving at the Chittagong port but unloading of the staple is being delayed due to logistical shortcomings at the port. A dearth of the required number of lighter vessels and a lack of jetties in the port mainly delayed the discharge. Foul weather with incessant rain also played a part. A total of 15 vessels carrying 3.23 lakh tonnes of rice imported from Vietnam, Thailand and Myanmar have arrived in the last three months. The vessels took on average a month to discharge the commodity, with one taking as long as 45 days to complete the process. Another vessel arrived on September 19 but it is still being offloaded, according to data from the Chittagong Port Authority and the food department.
Bangladesh has formally joined the China-led One Belt One Road (OBOR) initiative a day after the Trump administration joined India in its opposition to OBOR. Foreign Secretary Shahidul Haque explained at the World Economic Forum (WEF) meeting in Delhi on October 5 that this has everything to do with regional economic integration. Needless to say, much thought must have gone into getting on to OBOR especially in light of the fact that India boycotted the OBOR forum in May this year but which was attended by our representatives.
BTRC fines 3 ISPs for giving internet to illegal entities
The Bangladesh Telecommunication Regulatory Commission has fined three internet service providers total Tk 2.50 lakh for providing broadband to a number of unlicensed ISPs. BTRC’s enforcement and inspection department assistant director Md Towfiqul Alam issued a notice recently to the ISPs, a senior official of the commission told New Age on Monday. He said that the commission fined Dhaka Fiber Net Limited Tk 1 lakh, Maya Cyber World Tk 50,000 and Stargate Communication Limited Tk 1 lakh. The BTRC notice said that the commission imposed administrative penalty on Dhaka Fiber Net, Maya Cyber World and Stargeat Communication as they provided broadband services to some small-scale unlicensed ISPs.
Internet users are likely to face disruption in services in mid-October due to maintenance work of a primary submarine cable across the Bay of Bengal. Maintenance work will begin on October 16 and continue for three days when the cable will remain shut, said Monwar Hossain, managing director of Bangladesh Submarine Cable Company Ltd (BSCCL). According to him, “some internet disruption” may occur as a second cable launched last month of 1,500 Gbps bandwidth capacity will be used alternatively. Bangladesh currently uses only 200 Gbps of bandwidth from the second cable. “If the second cable fails to provide adequate bandwidth, it may lead to internet disruption,” Hossain told The Daily Star. “We are trying to shift all our connectivity to the second cable,” he said. Currently, the state-run company is supplying about 250 Gbps of bandwidth and there will be a shortage of about 50 Gbps during the maintenance period.
After much debate and deliberation over the last two and a half years, the government is finally opening the door for PayPal, the most popular online money transfer service in the world, to launch its operations in Bangladesh. Prime Minister’s Information and Communication Technology (ICT) Adviser Sajeeb Wazed Joy will inaugurate the service on October 19, the second day of the ICT Expo 2017, said Zunaid Ahmed Palak, state minister for the ICT Division. “It is a great news for us, especially the freelancers who will now be able to get their foreign currency earnings transferred anywhere in the country within 40 minutes,” he told the Dhaka Tribune yesterday afternoon. PayPal users will be able to avail the service in approximately 12,000 branches of nine banks, including Sonali Bank and Rupali Bank, Palak further said. The process to bring PayPal into the country began in March this year. The launch was initially scheduled in April, but it was postponed as meeting all the necessary conditions – cross-checking documents, ensuring legal compliance, finalising terms and conditions, etc – took longer than expected, sources said.
Major Currency Exchange Rate Movement in Last Seven Days
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