The central bank has introduced US dollar (USD) and Bangladesh Taka (BDT) swap arrangement through offshore banking units (OBUs) of the commercial banks, officials said.
Under the new arrangement, the banks are allowed to swap maximum $20 million from Bangladesh Bank (BB) against their BDT through their OBUs for maximum six months.
"We want to meet the growing demand for foreign currency for investment in Bangladesh through offering such facility to the banks," a BB senior official told the FE Monday.
He also said the central bank has already communicated with the banks about introduction of the USD-BDT swap facility.
"We may extend the tenure of the swap facility if necessary," the central banker explained.
The banks will receive interest on their invested BDT on the basis of reverse repo rate from Bangladesh Bank, while the banks will have to pay at the London Inter-bank Offered Rate (LIBOR) plus 1.0 per cent interest to the central bank for the US-dollar amount, according to the arrangement.
"Large foreign currency borrowers including Bangladesh Petroleum Corporation and Biman Bangladesh Airlines may take advantage of the new arrangement through borrowing from local banks," another BB official noted.
The central bank has taken the latest move against the backdrop of healthy position of the country's foreign exchange reserve in the recent times.
The country's forex reserve rose to $16.89 billion Monday from $16.85 billion on the previous working day due mainly to higher growth of export earnings and lower import payment pressure in the recent times, according to the BB officials.
"We're able to settle more than five months' import bills with the existing forex reserve," another BB official said, adding that the reserve would increase gradually in the coming days.
The deposit and lending operations of OBUs are carried out entirely in foreign currencies.
The overseas banking operations at normal bank branches are done over separate counters, by maintaining separate offshore banking accounts.
Currently, 31 local and foreign commercial banks conduct OBU operations in Bangladesh.
News:The Financial Express/20-Nov-2013
Bangladesh Bank (BB) on Tuesday published “Thoughts of Banking and Finance”, the first journal of the central bank.
Governor Dr Atiur Rahman launched the journal at a programme at the Bangladesh Bank Training Academy (BBTA) in the city.
Addressing the luncheon programme, he said there is no alternative to the research to expedite development process, and local research process should be strengthened to maintain the pace of development.
Referring to the different steps of the central bank including low rate lending to the agriculture sector, the governor said research should be done on the impact of such initiatives to make them more effective.
He said the banking sector already adopted many modern technologies those warrant proper review and research so the central bank can take steps to ensure their utmost benefit to the people.
The extent of default loans increased in the third quarter due to tightening the loan classification guideline, sluggish business activities during the political uncertainty and interruption in energy supplies.
The classified loans increased by Tk44bn or 8% to Tk567bn in the July-September quarter from Tk523bn of the April-June quarter of this year, according to Bangladesh Bank data. The classified loan is about 13% of the total outstanding loan of more than Tk4tn.
The total classified loan was Tk510bn in March this year, which was Tk290bn in June, 2012.
“The classified loans increased due to tightening the guideline,” said a senior executive of Bangladesh Bank. Besides, sluggish business during the political uncertainty and lack of gas and electricity pushed the classified loans up, he said.
Bangladesh Bank Deputy Governor SK Sur Chowdhury said the commercial banks have classified the loans from March quarter following the international standard guideline issued by Bangladesh Bank.
He, however, said the banks have faced some problems to follow the new guideline. “They will overcome the problems gradually.”
According to the new guideline, banks have to classify the loans in three categories, included sub-standard, doubtful and bad or loss.
Of the total classified loans, four state-owned banks have Tk241bn, private commercial banks Tk223bn, specialised banks Tk87bn and foreign banks Tk14bn.
Of the state-owned banks, Agrani Bank’s classified loan stood at Tk51bn, which is 27% of the total outstanding loan; Janata Bank Tk47bn, which is 18% of outstanding loan; Rupali Bank Tk16bn, which is 17% of their outstanding loan; and Sonali Bank Tk125bn, which is 42% of their total outstanding loan.
Under the revised loan classification guideline, the general provision against all unclassified loans of small and medium enterprises (SME) has been set at 0.25% from the existing 1%.
Besides, the base for provisioning has been re-fixed at minimum 15% of the outstanding balance of a loan from 20%.
Under the revised provisions, the down-payment for the first time rescheduling of a term loan has been reduced to minimum 15% from at least 25% previously of the overdue installments or 10% of the total outstanding amount of a loan, whichever is lower.
The application for second time loan rescheduling will be considered upon receipt of cash payment of minimum 30% of the overdue installments or 20% of the total outstanding amount of a loan, whichever is lower.
The application for third time loan rescheduling will be considered upon receiving cash payment of minimum 50% of the overdue installments or 30% of the total outstanding amount of the loan, whichever is lower.
The committee of secretaries on Tuesday submitted recommendations to the finance minister regarding a separate pay scale for the employees of the Bangladesh and the four other state-owned commercial banks.
Sources said after the finance minister has given his consent, the recommendations would to the prime minister.
The employees of these banks, however, have been strongly opposing the proposal for separate pay scale saying the general pay scale for the government employees is better for them.
An official of the banking division of the finance ministry said: “Most employees of the state-owned commercial banks Sonali, Janata, Agrani and Rupali and the Bangladesh Bank expressed fears that they would not be able to take enough money back home, resulting in a fall in their living standards. Because under the separate pay scale, they would have to pay income taxes and there would not be some of the key bonuses and allowances.”
Finance Minister AMA Muhith on Tuesday said the government would simultaneously implement the national pay scale for government employees and the separate one for the government banks.
Dr Aslam Alam, secretary of the finance ministry’s Bank and Financial Institutions Division, told Dhaka Tribune: “Implementing the separate pay scale will take time because of two reasons: firstly, most of the employees of Bangladesh Bank and the state owned commercial banks are opposing the move as they want to stay under the purview of the national pay scale.
“Secondly, the Bangladesh Bank is currently under the national pay scale. It will have to come out of that for enabling the implementation of the separate pay scale.
“I have talked to the employees of the state-owned commercial banks and the Bangladesh Bank. They have told me that they were wondering why the government was thinking about implementing a separate pay scale hastily.”
He added that the implementation would not be very easy because the proposed separate pay scale had some issues that needed to be solved.
The committee of secretaries, headed by Cabinet Secretary Musharraf Hossain Bhuiyan, last month decided that the employees of the government banks would have to pay income taxes and their salaries would rise by Tk2,000.
However, the finance minister had hinted before that the government bank stuffs would get a much bigger hike.
At present, the four government commercial banks have 90,000 employees, while the central bank employs about 6,000, sources said.
Bangladesh Bank (BB) is preparing a guideline to help banks check forgery in online banking.
The new guideline is likely to be issued next month, a central bank official told BSS on Sunday.
The central bank is issuing the guideline against the backdrop of some incidents of credit card forgery and fraudulent transactions at ATMs.
Under the guideline, banks will be advised to follow a set of measures to protect their clients from fraudulent activities in online transactions.
Among the measures, the banks would be asked to develop a system from which their clients would get instant message (SMS) and email immediately after each and every online transaction.
Currently, some banks are providing similar services at their own initiatives to protect the interest of their clients and to ensure secured online banking.
“But, all banks should provide their clients with similar services after issuing the guideline,” the BB official said.
He said SMS and email should be sent to the respective clients against their transactions by using debit or credit cards at the ATMs (automated teller machines) or PoS (Point of Sales).