Ten best rated banks awarded

Posted by Faisal Morshed on Mon, Feb 28 2011 04:57 am

Ten best rated commercial banks have been awarded by Exclusive Economic Weekly. 
The Industry in respective of performance in efficient asset management, keeping sufficient capital adequacy, controlling non- performing loan and generating satisfactory income. The function was held on Sunday at National  Press Club, Dhaka, says a press release.
Former Governor of Bangladesh Bank Dr. Mohammed Farashuddin was attended the function as chief guest, while eminent banker and Chairman of Bangladesh Commerce Bank A. Q. Siddiqui, immediate past Senior Vice President of Dhaka Chamber of Commerce and lndustry M. Sbahjahan Khan attended as special guests.
Enayet Karim, editor of the weekly presided over the function. The best rated award winning banks are: Prime Bank, Commerrcial Bank of Ceylon, Pubali Bank, Shahjalal lslami Bank, Islami Bank Bangladesh Limited, AI-Arafah Islami Bank, Standard Bank, Bank Alfalah, Exim Bank and United Commercial Bank.

News: The Independent/ Bangladesh/ Feb-28-2011

BB issues fresh licence for financial institution

Posted by BankInfo on Mon, Feb 07 2011 07:19 am

Bangladesh Bank has issued licence to Agrani SME Financing Company Ltd, a subsidiary financial institution of Agrani Bank Ltd, to keep the ‘Small Enterprises Development Project’ functioning.

The new financial institution was awarded license on January 31 this year under the section 4 (1) of the Financial Institution Act, 1993.

With the emergence of the new company, the total number of country’s financial institutions rose to 30.

About the rationale behind BB’s move of awarding a fresh license amid a volatile financial sector, a BB official said it was only to facilitate SME activities of Small Enterprises Development Project.

In recent times, the existing financial institutes have been passing through turmoil situation as they mostly depend on call money market which recently witnessed a surge in interest rate by around 190 percent.

BB’s new move, however, might not be proved to be very effective in near future as the institution will have to compete with the existing companies having strong infrastructure and network, Akhter H Sannamat, a financial market analyst observed.

“I don’t find it necessary to open any new financial company now, though it might have some true special functions,” he said.

“There are many banks and financial institutions that already have penetrated into the SME sector. For the last six to seven months, BB also directed them to enter into the sector,” Sannamat said, adding that it would be very “challenging” for it to survive.

“The existing companies will find them in better positions as they have the necessary infrastructure and network but the new company has to struggle as it will take much time for it,” he also observed.

The cabinet on December 31 in 2009 approved a proposal on the formation of Agrani SME Financing Company Ltd by turning small enterprises development project into a subsidiary of Agrani Bank Ltd.

News: Daily Sun/ feb-07-2011

WB tags progress of reforms to $1.0b budgetary support

Posted by BankInfo on Wed, Feb 02 2011 05:32 am

FHM Humayan Kabir

The World Bank would lend Bangladesh one billion dollar as budgetary support in the next three years provided it is satisfied with the progress of reforms pledged in the country's last two budgets, officials said Tuesday.

They said the development lender has asked the government to submit the status of the reforms by March this year and has assured Dhaka of disbursing the first tranche by June this year.

"We are preparing the progress report. It will be shared with the World Bank in March. We are confident it will satisfy the Bank," Arastoo Khan, additional secretary of Economic Relations Division (ERD), told the FE.

The government sought the budgetary support from the World Bank in October last year. The country needs the fund to finance its budget deficit, which is set to balloon this year due to spike in food and fuel import bills.

Unlike project aid, budgetary support can be used for any expenditure in the budget and normally a very few conditions are attached to such support.

"Usually, the World Bank attaches some terms and conditions on government reforms for availing its budgetary support," said ERD secretary M Musharraf Hossain Bhuiyan.

"But this time it has told us to show the progress of the reform programmes the finance minister pledged in his last two budget speeches," he told the FE.

In the last budget speech, the finance minister said that the budget deficit of the current fiscal year would be kept at five per cent of the country's Gross Domestic Product (GDP), up from 3.4 per cent in the last fiscal year.

But officials said the deficit could cross the projected limit as the government fuel bill is likely to rise by more than a billion dollars in order to fund costly electricity purchase from rental power plants.

In addition, the government was buying around 1.6 million tonnes of foodgrain at a very high price from the international market in an effort to build a buffer stock at home in view of a volatile domestic market.

In his last budget speech, the finance minister promised to raise the country's tax-GDP ratio to 11.9 per cent, boost development spending, frame a perspective plan for the next ten years, establish a budget and planning wing in all ministries.

He also pledged wide-ranging reforms in the financial sector, digitising land record system, strengthening local government and legal system and improving law and order situation.

The government has set a target to secure Tk35.00 billion ($500 million) million as budgetary support credit from foreign lenders this year to keep the budget deficit at Tk393.23 billion, which is five percent of the GDP.

Power Development Board (PDB) officials said the government would have to spend an extra Tk80 billion as subsidy to purchase power from the diesel and furnace oil fired rental power plants.

The government is setting up more than 1400mw capacity rental power plants under a first-track power generation programme to cut supply shortfall, which is hampering the country's GDP growth.

ERD officials said over the last few years the World Bank and the ADB provided Dhaka more than two billion dollars as budgetary support credit to bankroll national budget.

In the last fiscal year, the Asian Development Bank (ADB) lent a record $745 million as budgetary aid mainly to cushion the country from the impact of the global financial meltdown.

The country received $300 million as budgetary support from the multilateral donors-- the World Bank and the ADB, in FY2009.

News: The Financialexpress/ Bangladesh/ Feb-02-2011

Share loans: SEC puts onus on lenders

Posted by BankInfo on Wed, Feb 02 2011 05:03 am

In a major step, the Securities and Exchange Commission (SEC) yesterday decided to let lenders take decisions on share credit and perform other tasks related to margin loan disbursement and maintenance.

The merchant banks and stockbrokers, who provide margin loans for share purchase, will however have to report to the SEC on credit disbursement and maintenance on a monthly basis so that the regulator can monitor.

Previously, the SEC had fixed the loan ratio and the lenders provided credit in line with the limit, but the regulator was facing strong criticism from experts and market intermediaries for its role in share credit.

In another move, the SEC allowed stock exchanges to take decisions on some other issues such as transfer of securities from one trading market to another, and suspension of stock trading. Earlier, the bourses acted only on instructions from the SEC.

The decisions came from SEC's meeting with merchant banks and the twin bourses. The commission's Chairman Ziaul Haque Khondker presided over the meeting, attended by presidents and chief executive officers of Dhaka and Chittagong stock exchanges, president of Bangladesh Merchant Banker's Association (BMBA), and three executive directors of the SEC.

However, the SEC handed over a task to the BMBA to make a 'guideline' on margin loan and asked the association to submit it by February 10 to the commission for regulatory approval, said Saifur Rahman, an executive director of the SEC.

"While preparing the guideline, some issues will have to be considered such as valuation method of securities in a client's portfolio, highest limit or ratio of margin loan, certain procedures on margin call or forced sell and considering the existing securities rules and regulations," he said in a press briefing.

Once the margin loan ratio is fixed, the limit can be reset after six months. "The revised loan ratio will come into effect from the first trading day of every January or July," Rahman said.

He said after the new decisions takes effect, every merchant bank will have to submit reports on previous month's loan disbursement and maintenance, while the stockbrokers will have to submit similar reports through their exchanges.

On the bourses responsibilities, he said, the stock exchanges can shift trading of securities from public market to spot market by their own decision, and can also stop trading of stocks considering the price movement or the market situation.

"They only have to inform the commission after taking such a decision," the SEC executive director said, adding: "It will help the stock exchanges to play their role as statutory regulatory organisation."

News: The Daily Star/ Bangladesh/ Feb-02-2011

Reining in inflation main goal

Posted by BankInfo on Mon, Jan 31 2011 05:15 am

The central bank unveiled Sunday its half-yearly monetary policy that aims at keeping inflation rate at around 7.0 per cent by the end of this fiscal through discouraging credit flow to unproductive sectors.

Other major thrust of the policy will on achieving an inclusive economic growth by facilitating productive sectors while keeping inflationary pressure under control.

"Monetary policy stance in the second half (H2) of this fiscal will, as before, remain accommodative for productive economic activities; while also firmly discouraging diversion and undue expansion of bank credit for wasteful unproductive uses, to stem build-up of inflationary pressures," Bangladesh Bank (BB) Governor Atiur Rahman told reporters at the central bank while releasing the monetary policy for January-June period of the fiscal 2010-11 (FY11).

He also said climatic adversities disrupting output in many regions around the world are pushing up global prices of food commodities; strong growth performance in emerging and developing economies is propping up global prices of energy and non-food industrial commodities as well.

"Against this backdrop, decline in the 12-month average CPI inflation in Bangladesh in H2 FY11 may be slower than expected earlier, remaining above the 6.5 per cent level targeted in government's FY11 budget. A level around 7.00 per cent appears to be likelier for June 2011," the central bank chief added.

He also said the government could re-fix energy price in H2 of this fiscal that will impart some upward spurt on non-food CPI inflation.

"Food price inflation remained volatile in H1 FY11 both domestically and globally, at 9.80 per cent in November in Bangladesh against 10.88 percent of June 2010," Dr. Rahman added.

The country's inflation as measured by consumers' price index (CPI) moved slightly in the month of November last mainly because of increase in prices of food items.

The inflation rate moved up to 8.14 per cent in November from 8.12 per cent of the previous month on the annual average basis, according to the Bangladesh Bureau of Statistics (BBS) data.

On the other hand, the point-to-point inflation rate rose to 7.54 per cent in November from 6.86 per cent in October 2010 despite declining prices of non-food items.

Stubbornly high food price inflation in neighboring fast growing India, and prevailing high international prices of food commodities mean that no calming influence on food prices are to be expected from private sector imports, the reason why local rice prices are high and rising even after a good aman harvest, the BB said.

"Monetary policy actions will have little leverage on rising food prices in this situation, fiscal measures by way of subsidized food grain sales from public stock may need to be expanded to ease hardships faced by low income population segments," the monetary policy said.

It also said higher food grain prices for growers have important medium term upsides however; enabling the government to scale down input subsidies as growers get market prices adequately covering their costs and remunerating their efforts, and the price incentive eliciting higher output responses is eventually stabilising prices.

"Barring unforeseen new difficulties, the economy looks well poised to attain the 6.7 per cent real gross domestic product (GDP) growth targeted for FY11, as also to leap forward to growth performance well beyond seven percent in FY12," the BB governor noted.

The central bank has taken measures to reduce credit flow to the private sector through asking some banks to bring down their credit deposit ratio (CDR) at a rational level and imposing restriction on consumer financing.

"We've already imposed restriction on consumer financing so that banks are discouraged to lend to unproductive sectors," BB Senior Deputy Governor Nazrul Huda said while replying to a query.

Credit flow to the private sector recorded a growth of 27.77 per cent to Tk 658.938 billion in November 2010 on a year-on-year basis compared to 16.73 per cent or Tk 340.175 billion in the same period of the previous calendar year, according to the central bank statistics.

However, the BB had set the private sector credit growth target at 16 per cent by the end of June 2011.

The BB deputy governor also said the central bank has sat with the banks, which have higher credit growth than that of deposit, separately to discuss the issue.

"Actually, the private sector credit growth was high last year," Mr. Huda said, adding that the credit flow to the private sector will come down at reasonable level if the banks maintain the existing CDR norm.

At least six commercial banks have CDR ranging between 84 and 94 per cent, instead of the standard 81 per cent, the central bank officials confirmed.

In conformity with the monetary policy stance and the financial inclusion initiative, the BB's credit policies in H2 FY11 will seek to redirect credit flows for unproductive wasteful uses into productive, employment and income generating uses.

"Supervisory vigil on lending and loan administration discipline in banks will remain stricter, lapses and laxities in lending banks will be dealt with sternly, eschewing forbearance," the BB said.

The central bank has kept broad money supply target unchanged at 15.2 per cent for FY11, which is higher considering the country's inflation and GDP growth, Deputy Governor of the BB Ziaul Hassan Siddiqui said.

"It's an accommodative monetary policy," Mr. Siddiqui said while mentioning the definitions between concretionary and neutral monetary polices.

Regarding energy prices revision, the BB deputy governor said the government will take decision on rising prices of fuel oils considering the country's macroeconomic stability. "It's not our basic task," he noted.

The first-ever monetary policy statement was formally published in January 2006 and the central bank of Bangladesh declared that it would publish it on a half-yearly basis along with a half-yearly policy review.

News: The Financialexpress / Bangladesh/ jan-31-2011

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