Banks happy as Loan-Deposit Ratio to stay unchanged
The Central Bank yesterday backtracked from its decision to lower the loan-deposit ratio as it looks to alleviate the sector’s ongoing liquidity crunch and facilitate lower interest rate on lending. In a notice yesterday, the Bangladesh Bank said that Conventional Banks would be allowed to keep the ratio at 85 percent and Shariah-based Banks at 90 percent, relieving them of the stress of bringing down the ratios by September 30.This is a very time-befitting decision as the private sector credit growth has been maintaining a declining trend for months according to Mr. Syed Mahbubur Rahman, Chairman of the Association of Bankers, Bangladesh, a platform of Private Banks’ CEOs. Private sector credit growth hit a six-year low of 11.26 percent in July, according to data from the Central Bank. Private sector credit growth in January last year was 18.36 percent. But the deadline was extended thrice, with the most recent cutoff date being September 30. The interest rate on both lending and deposit went up after the instruction. But seeing the Banking sector’s latest liquidity position, capital base and inter-Bank lending trend, the Central Bank has gone back from its earlier stance. Many Banks have adopted a go-slow policy in disbursing loans given the September 30 deadline, which had an adverse impact on credit growth and the Central Bank’s decision will help mitigate the ongoing liquidity stress in the Banking sector. It will also have a positive impact on deescalating the interest rate on both lending and deposit according to Mr. Rahman, the managing director of Dhaka Bank. As per latest Central Bank data, Private Banks’ loan-deposit ratio stood at 84.42 percent. The ratio of 10 Banks was well above the ceiling of 85 percent.
Onion Prices to come down in 24 hours: Govt
The government yesterday said that its measures alongside adequate market supplies would bring down onion prices locally within 24 hours. The Central Bank has already been asked to reduce interest rate on Bank loans for onion import. Bangladesh had gone for imports from Myanmar in 2014 and 2017 to cool down local market prices. The fixing of a minimum export price by India is a non-tariff barrier. Mr. Jafar Uddin, newly appointed commerce secretary, also assured that prices would go down soon due to government measures and monitoring by the Directorate of National Consumer Rights Protection and other government agencies. State-owned Trading Corporation of Bangladesh [TCB] is also selling onion from trucks under open market sales system. Market monitoring has been strengthened so that none can profit off an artificial crisis of this widely consumed item. The country’s annual demand was 24 lakh tonnes while local farmers grew 23.76 lakh tonnes, but this being a perishable item, some 30 percent of the demand had to be met through imports. Bangladesh’s annual imports average at nearly 11 lakh tonnes.
Forecast-based Financing reduces loss
Early financing and actions based on anticipation of disasters can reduce human sufferings and losses, according to the Speakers at a dialogue on Forecast-Based Financing [FbF]. The FbF is an innovative mechanism whereby early actions at community and government level are pre-planned based on credible forecasts, and are funded and implemented before a climate shock, according to World Food Programme [WFP]. These actions minimize losses and damages caused by climate hazards, and reduce the need for humanitarian assistance in their aftermath. The FbF is a very innovative approach to tackling disasters. The German Red Cross initiated the first FbF pilot projects in 2013. Today, 16 Red Cross and Red Crescent societies across the world are involved, working successfully in countries such as Bangladesh and Peru, according to a publication of the International Federation of Red Cross and Red Crescent Societies circulated at the dialogue.
Digital tech for Trade Finance in Asia-Pacific
Financial technologies, such as block chain and artificial intelligence, can enhance the efficiency and availability of trade finance, especially for Small and Medium-sized Enterprises [SMEs] in the Asia and Pacific region, according to a report of ADB and ESCAP. Asian Development Bank [ADB] and the United Nations Economic and Social Commission for Asia and the Pacific [ESCAP] launched ‘The Asia-Pacific Trade Facilitation Report 2019’ in New Delhi, India on Tuesday. The report highlighted the need to address the largely unmet demand for trade finance globally, estimated at US$ 1.5 trillion, of which 40 per cent is from the region. SMEs are the most affected as they tend to have higher rejection rates for trade finance applications, compared with larger firms, it said, adding that SMEs account for 45 per cent of rejected trade finance transactions as their applications tend to incur relatively high costs for Banks to comply with anti-money laundering and know-your-customer requirements. Technologies can help cut costs, eliminate manual documentation, and enable accumulated digital information on SME profiles for lenders to assess risks. E-commerce platforms and cloud-based invoicing can allow direct transactions between buyers and sellers, and block chain technology and artificial intelligence can facilitate due diligence and payments for SMEs.
MTB launches ‘Commercial Space Finance’ for SMEs
Mutual Trust Bank Limited [MTB], a leading private Commercial Bank on Tuesday launched a new term loan product styled ‘Commercial Space Finance’ for small and medium enterprises [SMEs]. The customers can apply for the credit to purchase, construct or renovate commercial spaces to start a business, expanding the venture or taking over an enterprise. The product was launched at a ceremony held at the Samson H Chowdhury auditorium housed in MTB Tower. Appreciating the introduction of the new product by MTB, Mr Liakat said financing in real estate sector is totally risk free; so, the Bank should keep the interest rate within the capability of businesses specially SMEs. The ceiling of the loan is set from Tk 5.0 million to Tk 100 million payable in one to ten years term. Citing Bangladesh Bank data, he noted that the total outstanding loans in real estate sector from Banks and financial institutions stood at Tk 815.2 billion as of June, 2018.
Tree Plantation mandatory at EZs
The Bangladesh Economic Zones Authority [BEZA] has undertaken an initiative to plant trees at over 10 per cent land of each Economic Zone [EZ] across the country aimed at ensuring eco-friendly industrialization, reports BSS. Developers of the EZs will plant trees at five per cent land of each EZ while the factory owners will make green rest of five per cent. Paban Chowdhury said many groups and Banks, including City Group, TK Group, MISA Group, Brac Bank, City Bank, One Bank and Eastern Bank, have come forward to implement the BEZA’s initiative for making green EZs across the country. At least one million [10 lakh] trees will be planted at the Bangabandhu Sheikh Mujib Industrial City comprising the Mirsharai, Sitakunda and Feni Economic Zones in Chattogram at its alongside roads, embankments and other selected areas of the economic zones.
Local and Global Stock Indices *
|Index Name||Close Value||Value Change||Percentage Change|
| ↑33.98||↑0.13% |
|FTSE100||7,320.40 ||↓ 1.01||↓0.01% |
|Nikkei 225|| 21,990.44 || ↓10.88||↓0.05%|
World Commodities *
|Commodity||Close Value||Value Change||Percentage Change|
|Crude Oil (WTI)||$ 59.01 ||↓ 0.33 ||↓ 0.56%|
|Crude Oil (Brent)||$ 64.44 ||↓ 0.11 ||↓ 0.17%|
|Gold Spot||$ 1,502.82||↑ 1.44|| ↑ 0.10% |
Major Currencies Exchange Rates Movement in Last Seven Days *
|USD 1||BDT 82.9887|
|GBP 1||BDT 103.302|
|EUR 1||BDT 91.5762|
|INR 1||BDT 1.15736|
*CURRENCIES AND COMMODITIES ARE TAKEN FROM BLOOMBERG.<