Bangladesh Bank

Buyback policy for govt securities on the cards

Posted by BankInfo on Mon, Jun 12 2017 09:09 am

It may help cut govt's interest expenses

The government has planned to introduce a buyback arrangement for its securities to bring dynamism in the secondary market, officials said.

They said the Ministry of Finance, Bangladesh Bank (BB) and Primary Dealer (PD) banks will work jointly to formulate a policy and implement the plan.

At present, the government buys back its securities from the market as and when it thinks necessary due to absence of any policy. If implemented, the buyback would take place under the policy.

The decision emerged at a meeting of senior officials of the ministry, the BB and treasury heads of all the PD banks at the central bank headquarters in the capital Sunday, with BB executive director Dr. Abul Kalam Azad in the chair

"We're now working to boost the secondary securities market through buyback and other initiatives," a senior BB official told the FE.

He said the yields on the buyback securities would be fixed in line with the market rates.

Earlier, the government bought back its securities worth Tk 11.16 billion in the fiscal year (FY) 2007-08 and FY 2009-10, according to the BB officials.

The latest move came against the backdrop of falling trend in trading at the secondary market mainly due to the lack of adequate securities.

Trading of both the Bangladesh Government Treasury Bonds (BGTB) and treasury bills (T-bills) dropped by more than 37 per cent in May than that of the previous month.

Total turnover that included both buy and sale came down to Tk 11.22 billion in May from Tk 17.87 billion a month ago, according to the central bank's latest statistics.

At the meeting, the PD banks proposed the government to formulate a buyback policy that will allow holding reverse auction of its securities as and when necessary.

"We also want the government to come forward with 'unconditional attitude' for encouraging the stockholders to participate the proposed reverse auction," a treasury head of a PD bank said, following the meeting.

He said the move would help cut the government's interest expenses against such securities while contributing to boost the secondary market.

The ministry officials informed the meeting that the government wanted to issue new securities and buy those back simultaneously in bringing dynamism in the market.

Currently, three T-bills (91-day, 182-day and 364-day) are being transacted through auctions to adjust the government borrowings with the banking system. Besides, five government bonds with tenures of 02, 05, 10, 15 and 20 years respectively are being traded on the money market.

The BB had earlier selected 20 PD banks to deal with the government securities on the secondary market.

news:financial express/12-jun-2017

BB should look into Islami Bank issue: analysts

Posted by BankInfo on Sun, May 28 2017 10:00 am
Star Business Report

Bangladesh Bank should intervene to restore stability in the trouble-hit Islami Bank Bangladesh Ltd and avoid spillover impact on the entire banking industry, analysts said yesterday.

IBBL has been going through massive changes – from the owners to the board, committees and top management – for the past one year.

Two independent directors of the bank—vice chairman Syed Ahsanul Alam and chairman of the risk management committee Abdul Mabud—resigned from the board on Thursday, two days after their removal from their executive posts.

A group of seven directors have threatened to quit their jobs en masse if any of them is forced to step down.

The recent rift in the board has got a lot of attention from the businesses, the bank's depositors and the banking community as a whole.

Yet, Bangladesh Bank, the country's banking regulator, has kept mum on the issue.

“The situation demands a statement from Bangladesh Bank,” the Centre for Policy Dialogue (CPD) said yesterday in its review on the economy.

“The central bank needs to play an important role on the matter. But we are not seeing any clear statement or role from the central bank,” CPD Executive Director Fahmida Khatun said at a media briefing at Brac Centre Inn in the capital.

The think-tank said a number of recent developments have created concerns about the smooth functioning of Islami Bank and its future. The CPD listed the concentration of shares into the hand of a single owner-borrower as one of the key concerns.

“An orderly transition in the bank is urgently required,” the CPD said, adding that the central bank has a role to protect the interest of depositors and borrowers of the bank and improve its governance.

Ahsan H Mansur, executive director of the Policy Research Institute (PRI), another think-tank, said the government itself is taking the bank towards collapse by appointing some unfit people to the board.

The fate of IBBL, the country's largest and best private commercial bank, will be similar to that of state banks because of political interference, he said. He said BB was opposed to the changes but overruled by the government. So, BB has nothing to do other than remaining silent.

Mansur suggested the central bank be more cautious about the loans being approved by the board.

“It should strengthen the monitoring so that loans don't go to the same people or the people close to the board members.”  “The big challenge for the central bank will be to stop loan irregularities of the bank,” he said.

Biru Paksha Paul, former chief economist of the central bank, said it is the central bank's responsibility to look into the disorders in a bank.

Khatun of the CPD said there was allegation against the IBBL that it was involved in terror financing and funding political violence, and the government took steps against it.

She said the CPD welcomed the government move up to the point. She said investigations must take place if any of the bank's activities had harmed the country or the people and were against the spirit of independence. 

The bank has reached a stage in the last two years that it is now facing many problems, said the economist, adding that when the largest borrower becomes the largest owner then it becomes a problem for the bank's corporate governance.

Mirza Azizul Islam, a caretaker government adviser, however, said BB should not make public statement over the recent crisis of IBBL at the moment.

“The central bank should allow the ongoing internal change at IBBL and observe the situation,” he said.

He suggested BB strengthen the monitoring of IBBL's loan activities and take internal measure to restore peace within the organisation. 

news:daily star/28-may-2017

Bangladesh Bank postpones agriculture credit recovery in haor areas

Posted by BankInfo on Tue, Apr 25 2017 09:51 am


Bangladesh Bank (BB) on Monday postponed agriculture credit recovery from haor areas across the country due to huge damages in the area by flashfloods.

"The credit recovery remains postponed until the situation is improved," according to a circular issued by BB here Monday.

BB also asked the banks to provide facilities for re-scheduling the credit through relaxation of down payment or easy installment.

BB also instructed the scheduled banks to provide new credits in different crops including planted aman and fisheries considering the real situation of the area.

The central bank also asked the commercial banks to provide credit at concessional interest rate for robi crops and import alternative crops such as pulses, oilseeds, corns and spices.

BB ordered the banks to provide necessary credit to affected farmers for rearing poultry birds, cattle and purchasing fodder.

In another circular, BB also asked all schedule banks and financial institutions to provide financial assistance and reliefs (food, clothes, pure drinking water and medicines) among the flood affected people in haor areas under their Corporate Social Responsibility (CSR) activities.

The recent flash flood caused by incessant rain over the last few days has damaged crops in the country's haor areas under Sylhet, Sunamganj, Netrokona, Kishoreganj, Habiganj, Moulovibazar and Brahmanbaria districts.

news:daily sun/24-apr-2017

MFS transaction limits taking toll on SMEs, e-commerce

Posted by BankInfo on Sun, Apr 23 2017 10:49 am

Several mobile financial service account holders are now using different SIM cards to do transactions, leading to an increase in the number of MFS accounts
Rajib Dhar

An account holder can now make deposits and withdraw amounts twice in a day. Previously, the limit for cash-in was five and for

On January 11 this year, Bangladesh Bank issued an order to all mobile financial service providers to comply with the revised mobile banking transaction ceiling, citing abuse of the facility by a section of people.

This limitation of the mobile financial service (MFS) transactions has now started taking a toll on users, especially SMEs and small e-commerce entrepreneurs.

According to the directive, a maximum of Tk15,000 can be deposited into an MFS account and Tk10,000 can be taken out each day. The previous daily ceiling was Tk25,000 both for cash-in and cash-out.

An account holder can now make deposits and withdraw amounts twice in a day. Previously, the limit for cash-in was five and for cash-out it was five.

Each month, a mobile money customer can deposit a maximum of Tk1 lakh, down from Tk1.50 lakh earlier. The maximum monthly withdrawal limit is Tk50,000 through 10 transactions at most.

Previously, the cash-out limit was Tk25,000 per transaction and three transactions were allowed at most. The overall cash-out limit used to be Tk1.50 lakh in 10 transactions a month.

The customer also cannot withdraw more than Tk5,000 within 24 hours after a deposit.

To withdraw cash of Tk5,000 and over, the customer must first show proper verification – national identity card or its photocopy – to the mobile banking agent.

Several MFS account holders are now using different SIMs to conduct transactions, leading to an increase in the number of MFS accounts this month.

According to a central bank report, though the total number of registered MFS accounts has increased by 18.89% and the number of active MFS accounts has risen by 44.85% to 23.9m in February in comparison with the previous month, however, the total number of MFS transactions has actually dropped by 11.42%.

The Dhaka Tribune interviewed a cross section of people, including rickshaw pullers, housewives, students, garments workers, Facebook based e-commerce businessmen and small online business owners, who all said they had been severely affected by the implementation of the revised transaction limit on February 1.

Rudmila Hasan, who runs an online shop for womens’ clothing, said the revised limit has been causing many difficulties for her in receiving payment from her customers as well as in paying her suppliers.

As she cannot deposit more than Tk15,000 in her supplier’s account in a single day, this has made sourcing clothes from the Islampur wholesale market very hard.

“Most of my customers used to send their payments to my mobile wallet. Now I have to discourage them for mobile payment as I cannot cash- out more than Tk10,000 in one day and Tk50,000 in a month. This is affecting my business seriously as many of my customers live outside Dhaka,” she said.

Hundreds of Facebook based e-commerce businesses are also facing similar problems.

However, Zahedul Islam, spokesperson of bKash, the largest MFS provider in the country said to overcome the problem, the e-commerce sellers could open merchant wallets with the MFS providers, after fulfilling certain criteria, as there is no ceiling on merchant payment.

E-commerce Association of Bangladesh President Rajib Ahmed said the government directive came at a time when country’s e-commerce and Facebook e-commerce were experiencing a rapid growth, and that the decision has now halted that growth.

“Ultimately, it will become an obstacle to building a Digital Bangladesh,” he said, adding that opening a merchant wallet was not supported by most e-commerce entrepreneurs since many of the business did not have TIN numbers or trade licenses.

The incomes of MFS agents have also gone down because of the revised transaction limit.

Mossarraf Hossain, an MFS agent in the Moghbazar area, said his income had nosedived due to the central bank’s latest directive.

news:dhaka tribune/23-apr-2017

BB set Tk6,000cr credit limit for 4 state banks

Posted by BankInfo on Sat, May 03 2014 12:28 pm

The targets were calculated by subtracting government and agriculture loans from the total loan status of each of the banks

Bangladesh Bank has set a total credit limit of Tk6,186 crore for four state-owned banks for this year.

Based on adjusted loan status of the previous year, the central bank has set separate credit targets for the banks - Sonali, Agrani, Janata and Rupali – with signing separate memorandum of understandings (MoU) recently.

The targets were calculated by subtracting government and agriculture loans from the total loan status of each of the banks.

As the banks are to disburse certain amount of loans to the government and agriculture sector every year, the ceiling of bank credit is determined on the basis of the adjusted loans so the banks could disburse loans in other sectors, said a senior executive of Bangladesh Bank. 

He said the central bank has tightened regular monitoring on aggressive loan disbursements, although most of the banks have failed to achieve the growth target last year due to overall slower credit growth in the country amid sluggish investment climate and political unrest.

“As a result, the central bank did not extend the credit ceiling of most of the banks so they could fully comply with their respective targets and other conditions set by the central bank.”

All the four banks failed to achieve the credit growth target set by the central bank in 2013, excepting Rupali Bank. Considering the credit disbursement performance of the banks,

Bangladesh Bank did not expedite the new ceiling for Agrani and Janata, rather it has cut the credit limit for Sonali Bank.

The credit target has been increased only for Rupali Bank as it had surpassed the loan ceiling fixed for last year. The credit ceiling of Sonali Bank has been set at Tk1,328 crore for the year 2014, which is 6% of the adjusted loan status of Tk22,133 crore in 2013.

The adjusted loan growth rate of Sonali Bank was negative 7.07% in the last year against the target limit of 8% set by Bangladesh Bank. The total loan growth of the banks decreased by 11.67% or Tk3,963 crore in the last year.

The loan disbursement limit of the Agrani Bank has been set at Tk1,676 crore for the year 2014, whichi is 10% of the adjusted loan status of Tk16,764 crore of 2013.

Adjusted loan growth rate of Agrani Bank was negative 0.63% during the last year against the target limit of 10%. Total loan disbursement of the bank reduced by 7.76% or Tk1529.44 crore in the year 2013.

The credit limit of the Janata Bank has been set at Tk2,206 crore for the year 2014, which is 10% of the adjusted loan status of Tk22,067 crore of 2013.

The growth target of the Janata Bank was same in the last year but the bank was able to achieve only 1.15% of its target. The total loan disbursement of the bank was reduced by 8.59% or Tk2,405 crore in the year 2013. The central bank set the credit limit of the Rupali Bank at Tk976 crore for the year 2014, which is 12% of the total adjusted loan status of Tk8,139 crore of 2013.

The adjusted loan growth of the bank increased by 13.98% in the year 2013 against its 10% target limit of the adjusted loan status set in the MoU. The total loan growth of the bank increased by 18.59% or Tk1,613 crore in the last year.

The central bank punished the Rupali Bank asking it to block the excess loans that it had disbursed beyond its target limit.

News:Dhaka Tribune/30-Apr-2014

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