Banks should have plan to bailout ailing business

Posted by BankInfo on Thu, Apr 27 2017 11:39 am

As much as it's important to recover bad loans, it's also equally important that our state-run and private banks actively engage in bailing out ailing businesses with strong potentials for becoming profitable ventures in the future. This is not good music to the ears of the taxpayers who claim that government owned banks ruthlessly continue to trim them off their money and don't receive services in return. However, though bailouts do not necessarily avoid an insolvency process but have been proved to be a decisive factor for many struggling businesses to sustain.
That said - currently there are many business organisations struggling to survive but, with the required working capital or financial assistance from banks - can become profitable ventures. By aiding them our banks would not only ensure to recover their loans but would also play a vital role in creating job opportunities while increasing its tax and revenue earnings.
This is a ruthless way to think that just by filing court cases and jailing the defaulters the banks would be able to realise the loans. The way is not only ruthless and thoughtless but also ungainful. The bankers must think like bankers. But they do not think of saving the industry or business only because it is not very easy.
 They have to save the economy and jobs of thousands of people. The present role of the bank with regard to defaulter is to wreck the industries and businesses. The imprisoned owners of industries and businesses should be available for discussion with the banks and not in prison or out of the country.   
A bailout scheme should be granted if, and only if, it can be proven that the company can be returned to profitability. In that case banks should move ahead with their financial rescuing schemes. Many such businesses have been rescued and turned into profitable ventures in the Western countries. The car industry is a shining example of successful government bailout in the USA where a number of state-owned banks played a crucial role. If major car companies had folded in 2008, the loss of jobs and general effect on the US economy at that time would have been staggering. By providing loans to prop up companies such as GM and Chrysler, many of the leading automobile companies were prevented from collapsing.
Moreover, most successful founders in the Western World have a long history of multiple failures. What needs be understood is that - it is not the success that breeds success rather it is our collective ability to endure failure and cooperate the business owners to stand-up on their feet. For instance, at least five promising start-up business ventures is reported to have collapsed in Bangladesh in recent times - mainly because of shortage of running capitals where the banks could have played a key role in rescuing them. These are reportedly - a social media management venture, a Tech school for coding and electronics education institute for kids, a Dhaka based on demand delivery service and an online buying-selling market place.
On a different account, owners of at least a couple of dozen medium and small scale garment sub-contracting factories have reportedly shutdown in the past years for failing to obtain bank loans. Not to say, at the end of the day - it's the country's economy, which suffers a set back if businesses collapse. True, that we have many defaulters who have ran away with acquired loans, but also true that many were forced to shut down their units due to financial inadequacies and flee.          
Understandably, it may sound risky but in this country of thousands of crores of unrecovered bad loans - granted to known and unknown dubious parties - it is often the honest entrepreneurs who suffer the most when they need the loan the most.
Taking the above reality into serious consideration our banks should not only become extra-ordinarily judicious in analysing loan applications, verifying the authenticity of collaterals but simultaneously, may function at par with failing business organisations - meaning aid them to recover from their shortcomings.         
Experts believe our banks should introduce a separate wing for analysing potentially future profitable ventures struggling to survive in spite of displaying professionalism, commitment and goodwill. Lastly, banks are not meant solely for realizing interests and profits while lending and recovering loans, they are also supposed to be integrated into the financial system for ensuring growth of the economy by standing beside business houses in the time of their dire need.

news:new nation/27-apr-2017

BB puts cap on dollar rate for importers

Posted by BankInfo on Thu, Apr 27 2017 09:34 am

Star Business Report

Bangladesh Bank yesterday put a cap on the US dollar at inter-bank exchange rate plus Tk 2, to control the recent volatile market, said bankers.

The central bank informed the treasury officials of the commercial banks about the ceiling at a meeting yesterday.

The average Bills for Collection (BC) selling rate crept up 3.49 percent to Tk 83.66 against the dollar in just two weeks since April 11, according to data from Bangladesh Foreign Exchange Dealers' Association (BAFEDA). Banks use this rate to sell dollars to importers.

Citibank NA and Standard Chartered Bank quoted the BC selling rate of a dollar at a highest of Tk 84.80 yesterday.

Some other banks quoted the rate at Tk 84 or more for a dollar yesterday and the rate went up to Tk 84.65 for remittance payments, said bankers.

“The central bank has asked us to cap the dollar price at the inter-bank rate plus Tk 2. We hope the exchange rate will come down today,” said a senior treasury official of a private bank who attended the meeting.

The inter-bank exchange rate was Tk 80.1 for a dollar yesterday. So, banks would have quoted the exchange rate for import payments at Tk 82.1.

The central bank will inject dollars into the market today to stabilise it, said another treasury official of a private bank.

The average BC selling rate was Tk 80.84 a dollar on April 11, which rose to Tk 83.66 yesterday, shows data from BAFEDA.

Though a weak taka against the dollar cheers remitters and exporters, it makes imports costlier, which might raise prices of commodities ahead of Ramadan next month. Letters of credit worth over $4.3 billion were opened for imports in March, which is a growth of 21 percent year-on-year, shows BB data.

According to bankers, imports continued to grow in April as well for the upcoming month of Ramadan. The pressure for payments also played a role in appreciation of the dollar rate, said treasury officials.

“We asked the treasury officials to be rational. If the import cost rises, consumers will be affected during Ramadan,” said a senior BB official, who was present at the meeting.

He also hinted at BB's intervention in the market to stabilise the exchange rate.

“We are scrutinising whether any bank is trying to benefit from the present market,” he said, requesting anonymity.

news:daily star/27-apr-2017

China's central bank injects cash into money market

Posted by BankInfo on Thu, Apr 27 2017 09:23 am

BEIJING: China's central bank continued cash injections into the money market through open market operations on Tuesday to ease liquidity.

The People's Bank of China (PBOC) conducted 80 billion yuan (11.6 billion U.S. dollars) of reverse repos, resulting in a net 40 billion yuan added to the market, as 40 billion yuan of previous reverse repos became due on Tuesday, reports Xinhua.

The operations included 40 billion yuan of 7-day reverse repo prices to yield 2.45 percent, 20 billion yuan of 14-day contracts with a yield of 2.6 percent, and 20 billion yuan of 28-day agreements with a yield of 2.75 percent.

It was the PBOC's sixth straight cash injection via reverse repos as lending costs remained on the up.

news:daily sun/26-apr-2017

RAKUB holds zonal managers’ confce

Posted by BankInfo on Thu, Apr 27 2017 08:36 am

Rajshahi Krishi Unnayan Bank Chairman Muhammad Nazrul Islam speaks at the performance evaluation meeting of zonal managers of the bank at its boardroom in Rajshahi on Tuesday.

RAJSHAHI” Utmost importance should be given to attaining all business targets of Rajshahi Krishi Unnayan Bank (RAKUB) of the current fiscal so that it can uphold the pace of earning profit.

Aim of the present government is to build a skilled, strengthened and inclusive financial management in the country. Besides, the government is committed to reaching the banking services at the peoples' doorsteps, reports BSS.

The RAKUB management came up with the observations while addressing the performance evaluation meeting of zonal managers at its headquarters here on Tuesday.  In addition to all departmental heads of head office, nine zonal managers, divisional audit officers, zonal audit officers, principal of RAKUB Training Institute and project director of SECP were present on the occasion.  RAKUB has been operating its banking activities as the largest development partner in all 16 northwest districts of Rajshahi and Rangpur divisions targeting its agricultural sector and all its sub-sectors.

Chief guest Nazrul Islam urged the zonal managers to perform duties with utmost sincerity and honesty to speed up the ongoing farmers-level lending activities.

news:daily sun/26-apr-2017

Golam Hafiz Ahmed, Managing Director of NCC Bank Ltd. and Muhammed Asadullah, Managing Director of AlphaRating exchanging signing documents in the city recently. Mosleh Uddin Ahmed, AMD, Md Habibur Rahman, DMD of the bank and Pranabesh Roy, Chief Strategy

Posted by BankInfo on Wed, Apr 26 2017 11:52 am

Golam Hafiz Ahmed, Managing Director of NCC Bank Ltd. and Muhammed Asadullah, Managing Director of AlphaRating exchanging signing documents in the city recently. Mosleh Uddin Ahmed, AMD, Md Habibur Rahman, DMD of the bank and Pranabesh Roy, Chief Strategy

news:new notion/ 26-apr-2017
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