April-2012 - ificbank.com.bd · April-2012 Moody’s bank review may mark new era of lower ... The...

KNOWLEDGE UPDATE (A MONTHLY PUBLICATION OF HR DEVELPOMENT & TRAINING INSTITUTE, IFIC BANK LIMITED, HEAD OFFICE,

DHAKA) ON CURRENT FINANCIAL AFFAIRS: VOLUME-13, NO.-04. PAGE NO. of 21

April-2012

Moody’s bank review may mark new era of lower ratings The largest US banks including Morgan Stanley, Bank of America and Citigroup are facing what could be a

historic shift to lower credit ratings which could increase their cost of funding and reduce competitiveness in

their capital markets businesses. Moody‘s Investors Service is reviewing 15 of the world‘s largest banks for

possible credit ratings downgrades in mid-May, and broad cuts could send banks on average to their lowest

historical levels. In the US Morgan Stanley could see the largest cut after being warned of a possible three-

level downgrade to the Baa category, a rating that has traditionally been associated with more speculative risk

than some investors and trading partners have been comfortable with. Bank of America and Citigroup, which

are currently lower rated than Morgan Stanley, are also under review for downgrades to the same Baa2 level,

and all three-banks are under review to lose their top tier short-term debt rating which would effectively cut

their access to some short-dated funding markets. Moody‘s action is unlikely to spark funding stress at the

banks. Many banks have been dramatically scaling back their reliance on short-term and ratings-sensitive

funding since 2008, when fears over exposure to risky mortgage-backed debt caused short-term debt investors

to pull back from lending to the firms. The banks have also increased deposits and capital cushions, making

them less vulnerable to the type of client runs that felled banks including Bear Stearns and Lehman Brothers.

Nevertheless, new downgrades may disrupt some short-dated debt markets and have knock-on effects for

municipal issuers, who sell debt that is backed by the strong bank ratings. Downgrades may also hurt the

lowest-rated banks relative to competitors including JPMorgan and Goldman Sachs which are expected to

maintain ratings in the more solid single-A category. New Age: 01.04.2012

Remittance inflow drops in March as dollar weakens

Inflow of remittance dropped further in March from that of previous two months because of the decline in

value of dollar against Bangladeshi Taka. The country received remittances worth $1.107 billion in March

whereas the migrant Bangladeshis had sent $1.13 billion in February and a record $1.22 billion in January,

according to Bangladesh Bank data released. The inflow of remittance in July-March of the current financial

year, however, was 10.67 per cent higher than that of the same period of last financial year. The remittance

inflow in March declined as the interest of expatriate Bangladeshis to send more money faded in the month

because of declining value of US dollar against Taka. The rate of dollar decreased to around Tk 81-Tk 82 in

March from that of Tk 85-Tk 86 in January. The remittance inflow in January and February hit records as

migrant Bangladeshis sent more dollars for getting higher rate for the greenbacks. There was almost no growth

in remittance inflow in March compared to the same month of the previous fiscal year when the monthly

IFIC BANK LIMITED

HR Development & Training Institute

Head Office, Dhaka

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remittance was $1.102 billion. During July-March, the total remittance stood at $9.53 billion whereas the total

remittance was $8.61 billion in July-March of 2010-11 financial years. New Age: 02.04.2012

BB warns against illegal banking Bangladesh Bank on 1

st April asked people not to transact with unauthorized financial institutions. In a notice

the central bank said: ―Some institutions are operating business in different districts under various names and

collecting money from people, luring them by prospect of getting high interest and attractive profits.‖ ―People

are being requested not to make any investment in these organizations because there is a possibility of being

cheated and these institutions have no approval from the appropriate authorities. Daily Star: 02.04.2012

Slight fall in remittance

Inward remittances fell 1.77 percent to $1.11 billion in March from a month ago, but analysts projected a

bright outlook for 2012. More than $1 billion was remitted from abroad by Bangladesh's migrant workers

every month, except September and November, in the first nine months of the current fiscal year, according to

data from the central bank. In February, the remittance inflow stood at $1.13 billion. Remittance increased by

11 percent to $9.53 billion in the first nine months of current fiscal year. The banking regulator projected that

remittance will be worth around $13 billion in the current fiscal year, which will have a positive impact on the

country's balance of payments. The exchange rate in the inter-bank foreign exchange market hovered around

Tk. 82 against the dollar last month, which was over Tk. 85 a month ago. Daily Star: 03.04.2012

High inflation has positive impact on remittance inflow A research work of the Bangladesh Bank (BB) has found that the country's high inflation has positive

relationship with its remittance earning. The positive relationship implies that higher inflation in home

country, which reduces the purchasing power of migrants' families, induced the migrants to send more

remittance to Bangladesh. Remittance, which emerged as the key driver of economic growth, can help

improve the country's development prospects, maintain macro economic stability, and mitigate impact of

adverse shocks. The other factors to affect remittance earnings are exchange rate, wage rate, and regulatory as

well institutional arrangements, made by the government . Fin. Exp: 04.04.2012

US sues Royal Bank of Canada for massive fraud US regulators on April 02 , 2012 announced charges against Royal Bank of Canada, accusing the major

Canadian bank of ‗washing‘ hundreds of millions of dollars through fraudulent trading. The US Commodity

Futures Trading Commission said it had filed a complaint in federal district court in New York accusing RBC

of ‗conducting a multi-hundred million-dollar wash sale scheme in connection with exchange-traded stock

futures contracts.‘ The Canadian bank and financial services company does business in New York. ‗The

trading scheme was allegedly designed as part of RBC‘s strategy to realize lucrative Canadian tax benefits

from holding certain public companies‘ securities in its Canadian and offshore trading accounts,‘ the CFTC

said. CFTC also charged that the bank concealed material information from, and made material false

statements to, a futures exchange. New Age: 04.04.2012

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NBR selects 26 banks for online tax payment The National Board of Revenue has selected 26 commercial banks through which taxpayers would be able to

pay their income tax, value-added tax and duties under e-payment system. ‗The taxpayers having accounts

with these banks linked with Q-cash network will be able to pay their taxes at anytime from anywhere under e-

payment system using Q-cash debit and credit cards and bank accounts. Gradually other banks would come

under the network for enabling e-payment. Taxpayers will also be able to pay taxes using electronic fund

transfer services of Bangladesh Post Office through Q-cash. The revenue board is planning to introduce e-

payment of taxes from early May in a bid to simplify the tax collection procedures, reduce hassle of taxpayers

and make the system transparent. In this system, taxes could also be paid online if the taxpayers have the

access to online banking. The NBR will soon sign an agreement with Sonali Bank and Q-cash to introduce the

system. After signing the agreement, the tax administration will go for a trial to be started after mid-April to

find out whether there are any flaws in e-payment system. Though all the taxpayers will be able to pay their

taxes through e-payment, the revenue board will make e-payment system mandatory for individual and

corporate taxpayers under large taxpayers unit and some other tax offices. Under e-payment system, taxpayers

could pay their taxes using Q-cash cards from ATM (automated teller machine) booths of selected banks or

using internet banking instead of traditional system in which taxpayers have to go to Bangladesh Bank or

Sonali Bank for paying taxes through treasury chalan or pay order. The board will carry out a massive

campaign before and after introduction of the system to create awareness and encourage people for using

it. The banks selected for handling taxes include Basic Bank, Bank Asia, Bangladesh Commerce Bank, Eastern

Bank, IFIC Bank, ICB Islamic Bank, Janata Bank, Jamuna Bank, Mercantile Bank, Mutual Trust bank,

National Bank, NCC Bank, Pubali Bank, Shahjalal Bank, Sonali Bank, Social Islami Bank, Standard Bank,

State Bank of India, The City Bank, Trust Bank, Uttara Bank, EXIM Bank, Dhaka Bank, Southeast Bank,

UCBL and BRAC Bank. New Age: 04.04.2012

BB approves three NRB banks The central bank has approved three new commercial banks sponsored by non-resident Bangladeshis (NRBs)

on the condition that those would contribute to boosting the inflow of foreign exchange. The three approved

NRB banks are: NRB Commercial Bank Limited, NRB Bank Limited and NRB Bank Limited. The name of

one NRB Bank will require to be changed. The new NRB bank will be established with a paid-up capital of

not less than Tk 4.0 billion. The shareholding of the NRB bank will be 50 per cent from the NRB sponsors and

the rest 50 per cent will be collected through public offerings. Each sponsor of the NRBs will have to hold a

minimum stake of Tk 100 million in the holding of shares and the maximum stake will be 10 per cent of the

bank's total paid-up capital. Fin. Exp: 05.04.2012

Pvt. sector credit growth rises in Feb The expansion of credit flow to the private sector witnessed a rising trend in February 2012, following

increased trade financing, after facing fall in the past few months. The rate of private sector credit growth rose

to 19.55 per cent in February from 18.94 per cent in January, according to the central bank statistics. The

credit flow to the private sector rose to Tk 622.29 billion in February 2012 on a year-on-year basis from Tk

702.79 billion in the corresponding month of the previous year, the BB data showed. The import orders for

scrap-vessels increased by 123 per cent to $134.49 million in February 2012 from $60.26 million in January

2012, while the letters of credit (LCs) against imports worth $66.82 million were settled in February against

$83.28 million in January. The central bank unveiled a 'restrained' monetary policy on January 26, aiming to

bring down inflation to a single-digit from the current level of over 10 per cent through discouraging credit

flow to unproductive sectors. Fin. Exp: 06.04.2012

Six more new banks get BB approval The central bank has approved six more private commercial banks (PCBs), aiming to help strengthen the

ongoing financial inclusion programmes through bringing unbanked people under the banking network. The

six approved PCBs are: Union Bank Limited, Modhumoti Bank Limited, the Farmers Bank Limited, Meghna






Bank Limited, Midland Bank Limited and South Bangla Agriculture and Commerce Bank Limited. The

proposed chief executive officers (CEO) of the approved PCBs will have to present their business plan before

the board. The authorities concerned of the approved PCBs will have to deposit the amount of their paid-up

capital worth Tk 4.0 billion with the central bank, before starting their operation, the BB deputy governor said.

The proposed chairmen of newly-approved banks are: Union Bank Limited -- Shahidul Alam, Modhumoti

Bank -- Humayun Kabir, Farmers Bank -- Dr Mohiuddin Khan Alamgir, Meghna Bank -- AHN Ashiqur

Rahman MP, Midland Bank -- Moniruzzaman Khandker and South Bangla Agriculture and Commerce Bank -

- SM Amjad Hossain. The population per branch (21065) and the ratio of loan accounts per 1000 adults (42)

suggest that the outreach of the formal financial sector in Bangladesh is lower than that in India (14485 and

124 respectively) and Pakistan (20340 population per branch and 47 loan accounts per 1000), according to the

statement. For new banks the ratio of opening rural and urban branch will be 1:1 which will help increase bank

branches in rural areas and improve financial inclusion, the central bank said. Earlier, 37 applications were

submitted to the central bank for setting up of new PCBs. Of them, 21 were rejected by a preliminary scrutiny

committee mainly due to lack of necessary papers and documents. Currently, a total of 47 commercial banks

are in operation in Bangladesh. Fin. Exp: 06.04.2012

Import growth declines to 13.63pc in July-Feb The country‘s import bill payment in July-February of the current financial year grew by 13.62 per cent from

that of the same period in the previous year when payment grew by 44.30 per cent year-on-year. According to

data released by BB, the settlement of letters of credit for import in July-February stood at $ 24.17 billion,

growing by 13.62 per cent from the same period of FY 2010-11. LC settlement in July-February of FY 2010-

11 was $ 20.59 billion, or 44.30 per cent higher than the figure of same period of previous FY 2009-10. Import

payments declined because of tighter monetary policy taken by the central bank amid shortage of foreign

currency reserve. The forex reserve tumbled below $10 billion mark after an import payment of $893.5 to the

Asian Clearing Union in the first week of March. Short supply of dollar had also contributed to lower import

orders during the period. Most of the private commercial banks were now facing dollar shortage. According to

BB data, the opening of LCs had registered a negative growth of 7.54 per cent in July-February compared to

that of 48.91 per cent growth in July-February of FY 2010-11. LC opening in July-February stood at $ 24.17

billion against $ 26.14 billion during the same period of the previous financial year. The growth in settlement

of LCs or actual import payment for industrial raw materials dropped by 12.61 per cent and capital machinery

by 19.82 per cent in July-February compared to that of 54.58 per cent and 39.71 per cent growth respectively

in the same period of FY 2010-11. LC settlement in the first seven months of the current financial year for

industrial raw materials and capital machinery was worth $ 9.21 billion and $ 1.58 billion respectively against

$ 8.18 billion and $ 1.32 billion in the corresponding period of the previous financial year. On the other hand,

LC opening for industrial raw materials and capital machinery in July-February posted a negative growth of

8.64 per cent and 26.87 per cent compared to that of 68.60 per cent and 71.65 per cent respectively in the same

period of the previous financial year. LCs worth $9.66 billion and 1.45 billion were opened for industrial raw

materials and capital machinery in July-February against $10.50 billion and $1.98 billion in the corresponding

period of last financial year. LC settlement for food grains in July-February registered a negative growth of

36.83 per cent from 116.55 per cent in the same period of FY 2010-11.LC settlement for food grains in July-

February of the current financial year was worth $704.01 million against $1.11 billion in the same period of

the previous year. New Age: 06.04.2012

Asian banks warm to bond market innovation A shortage of US dollars, new banking regulations and strong investor demand means Asian banks are set to

help spur long-awaited innovation in the region‘s debt capital markets. Singapore is consulting on new

guidelines to help its banks issue covered bonds and Hong Kong plans to study investor appetite for similar

products, while banks across Asia are looking at forms of debt previously unseen in the region, such as hybrid

or perpetual bonds. Although most Asian banks are flush with local currency retail deposits, many have been

struggling to get access to enough US dollars, so they are looking at new ways of issuing bonds to raise these

funds. In Singapore, for example, Fitch Ratings estimate that while local banks‘ overall loan-to-deposit ratio is

around 90 per cent, the figure for their US dollar trading books exceed 100 per cent. The incoming Basel



liquidity rules are also encouraging regulators in the region to help develop markets for highly-rated liquid

assets that banks can hold to comply with more stringent capital requirements, such as covered bonds. All

these moves are likely to be lapped up by investors, with demand for Asian bank bonds strong given their

reputation as being some of the safest lenders in the world in which to invest. Demand for unsecured Asian

corporate bonds has been buoyant so far this year, with issuance in first quarter alone more than half that seen

for the whole of 2011. The Monetary Authority of Singapore issued a consultation on covered bonds last

month, saying that the assets could provide an additional longer-term funding source for banks. Covered bonds

are secured against a basket of assets, typically home mortgage loans. They are a popular safe-haven holding

for investors, as if the issuer goes into bankruptcy investors can lay claim to the underlying assets. For banks,

covered bonds also tend to be a cheaper source of funding as investors are willing to accept a lower yield. New Age: 06.04.2012

Credit growth in private sector increases in February The credit growth in private sector in February 2012 increased for the first time in the current financial year

due to high growth of opening of letters of credit for certain products. According to the BB data, the private

sector in February borrowed Tk 38,0511.60 crore, which was 19.55 per cent higher than the same month of the

last financial year when the borrowing was Tk 31,8281.8 crore. BB data showed that the private sector credit

growth had decreased continuously from July to January of FY 2011-12 compared to that of the same months

of the previous fiscal year. The credit growth in July reached 24.36 per cent, in August 23.19 per cent,

September 21.97 per cent, October 21.46 per cent, November 19.33, December 19.39 per cent and January

18.94 per cent. But the credit growth in February increased from that of the previous January, BB data

showed. In its latest half-yearly monetary policy for January-June 2012, the central bank stated that it would

aim at containing inflationary pressures through discouraging credit flow to public and private sectors. BB had

also taken another contractionary monetary policy for July-December 2011. Under the new monetary

programme, credit growth rate for public and private sectors was envisioned to be limited to 31 per cent and

16 per cent respectively by the end of June 2012 from 62 per cent and 18 per cent at the end of December

2011. BB data showed that particularly the government sector in February had borrowed Tk 89,669.60 crore,

which was 59.92 per cent higher compared to that of February 2011. On the other hand, the public including

government sector credit growth in February stood at 43.32 per cent compared to that of the same month of the

previous year. New Age: 07.04.2012

Exports earning turns negative in March The country‘s export earnings in March for the first time showed negative growth of 7.23 per cent in current

fiscal year totaling $1,982.26 million against $2,136.86 million fetched in March last year. The strategic target

of export earning for March this fiscal was $2342.60 million. According to the statistics of the Export

Promotion Bureau, export earnings in the first three quarters (July-March) of the current fiscal year, however,

witnessed a 10.36 per cent growth to $17,886.06 million, driven by moderate performance of RMG, frozen

foods, footwear, and leather and leather products. The overall figure for the nine-month period was, however,

6.15 per cent lower than the strategic target of $19,058.80 million. Total export earnings during the last fiscal

stood at $22,924.38 million, which was higher by 23.92 per cent than the target of $18,500 million. According

to the EPB statistics for the July-March period, woven garments fetched the bulk of the earnings with

$7,108.59 million that represented a 19.24 per cent growth over the same period last year while knitwear

accounted for $6,996.26 million having a growth of 5.92 per cent. During the period, the export of home

textiles totaled $645.78 million with a good growth of 11.38 per cent; footwear exports fetched $260.85

million, primary commodities $756.39 million, frozen foods including frozen fish, shrimps and others $473.53

million, and agricultural products $282.86 million. Of the other major performing commodities, fruits exports

totaled $40.78 million with a 49 per cent growth, computer services (July-January) 38.47 million having 73.21

per cent growth, cement, salt and stone $10.07 million while tea export accounted for $2.52 million with a

9.09 per cent growth. The export trend for leather and leather products and plastic products maintained their

upward trend during the July-March period. Leather exports totaled $236.83 million, while leather products

$59.26 million, cotton and cotton products together earned $77.80 million, plastic products $67.15 million and

rubber fetched $11.83 million. The country also earned $25.62 million from ceramic exports.

The export of jute and jute goods during the July-March period declined to $710.57 million, registering a



12.49 per cent fall. Raw jute exports fetched $198.55 million with a 25.88 per cent decline, jute yarn and twine

$341.06 million, and other items brought some $34.76 million. Jute sacks and bags, however, notched a

positive growth of 7.82 per cent as exports totaled $136.20 million. Engineering products, including iron and

steel, bicycle and electronic products fetched almost $260.15 million. Engineering equipments fetched $35.89

million with a growth of 107.34 per cent. The export of manmade filaments and staple fibres totaled $55.88

million, caps $36.60 million while the export of ships, boats and floating structures fetched $24.32 million.

The export of handicrafts totaled $3.49 million, while paper and paper products $20.10 million, furniture

$18.84 million, chemical products $85.52 million (including pharmaceuticals $34.13 million), while ores, slag

and ash brought $19.77 million. Specialized textiles, including terry towel, showed a negative growth of 23.61

per cent, earning $96.20 million during the July-March period of the current fiscal while export of petroleum

byproducts accounted for just $207.01 million. New Age: 09.04.2012

Trade deficit hits $5.70b in 9 months on falling export Despite the decrease in import payments, the country‘s trade deficit soared by 17.32 per cent to $ 5.70 billion

in the first eight months of the current financial year compared to the same period of FY2010-11 due to falling

export growth. The current account balance from July to February also declined by 31.83 per cent year on year

but the balance continued to remain in positive zone for the sake of double digit remittance growth in the

period. A fall in imports in the first eight months could not help much in narrowing the trade gap amid a sharp

decline in export growth. According to Bangladesh Bank data, the country‘s import payments surged to $

21.70 billion against exports worth $ 16 billion in July-February in the current FY2011-12. In the first eight

months this year, import grew by 14.44 per cent against 41.92 per cent in the same period last year. However,

during the period this year, exports rose by 13.45 per cent, while the growth was around 40.42 percent last

year. The total trade gap was $ 4.85 billion in July-February FY2010-11 whereas the trade gap in the first eight

months of the current financial year stood at $ 5.70 billion. Import of food, raw materials and capital

machinery went down but that of petroleum marked a sharp rise in the first eight months. New Age: 10.04.2012

BB's e-tender cuts muscle power, time The introduction of e-tender at Bangladesh Bank enables bidders to take part in the bidding freely in a process

that eliminated domination of muscle power and shortened the procurement cycle. Since its introduction in

May 2010, the banking regulator gave 350 contracts out of 400 to winning bidders for procurement of goods

through e-tender. The BB developed the electronic tender system software with own expertise and resources

for tender call, collection and evaluation to quicken its procurement process. Users will have to sign up for the

e-tender system with valid email addresses. A user can log into the system with an ID and password.

Unregistered users who want to participate in the bidding have to click the link 'Register Now' of the tender

site. Daily Star: 10.04.2012

Exports falter on Euro debt crisis

Exports grew at a slow pace at 0.15 percent to $1.99 billion in March from a month ago for the ongoing debt

crisis in the Eurozone. The country's export figure has been showing a slow growth over the last few months

due to a drop in demand for the main export earner, readymade garments (both woven and knitwear), in the

debt-ridden Eurozone. Exports fell short of the monthly target by 15.38 percent in March, while such shortfall

was 7.97 percent in February, according to data released by state-owned Export Promotion Bureau on 9th



April. The monthly target for March was $2.34 billion. Earnings fell by 7.23 percent in March, compared to

the same month a year ago. This is the first time that the monthly earnings have gone in the negative territory

in the current fiscal year. Exports in July-March registered a 10.36 percent growth to reach $17.89 billion

compared to the same time last fiscal year, data shows. Bangladesh's knitwear exports rose by 5.92 percent to

$7 billion and woven by 19.24 percent to $7.10 billion in July-March from the same period a year ago. Daily Star: 10.04.2012

BB to close counters for selling new notes, exchanging torn ones The Bangladesh Bank has decided not to sell new notes of currencies or exchange old and torn notes from its

counters from May 2. The central bank in a statement said people would be able to buy new notes and

exchange their torn currency notes and mutilated coins for new ones at over 8,000 branches of all 47 scheduled

banks from May 2. The BB said that the decision to close down the central bank counters was taken for

tightening the security of the BB, which is one of the key point installation institutions of the country. Besides,

the measure has been taken so that the people across the country could fulfill their business related demand by

exchanging their torn currency notes and mutilated coins for new ones and buying new notes from the banks

from their respective area. As part of the move, the central bank will provide the scheduled banks with new

currency notes and coins. The central bank will monitor the exchanging process by the scheduled banks. New Age: 11.04.2012

BB to measure 'core inflation' Bangladesh is going to introduce the system of measuring 'core inflation' along with the existing headline

inflation to help formulate credible monetary policy and forecast inflation. Core inflation is a measure of

inflation which excludes temporary noise components, notably food and fuel, from consumers' price index

(CPI) basket. The key objective of computing core inflation is to separate the components of 'headline

inflation', officially known as general inflation, that are caused by non-monetary events as these price changes

do not reflect the impact of underlying monetary policy decisions. The central bank has already calculated

core (non-food, non-fuel) CPI inflation using data of the Bangladesh Bureau of Statistics (BBS) on trial basis

which will be used by the policy makers in the near future. The core inflation rose to 10.54 per cent in March

last from 10.15 per cent of the previous month, according to the central bank estimate. Currently, the central

bank monitors the 12- month moving average of CPI inflation in defining the underlying trend that averages

out the short-term or transitory components (seasonal impact) in the CPI. Fin. Exp: 12.04.2012

New banks must show competence to get licence : Bangladesh Bank Bangladesh Bank governor Dr Atiur Rahman said the six new banks that were given approval amid

speculations must prove their competence to get the final central bank licences. "This (approval) is just the

letter of intent, which was issued after diligent scrutiny of procedures. But they must prove their competence

to get the Bangladesh Bank licence," Rahman told. The central bank chief said the banks must show a paid up

capital of Tk 4.0 billion, doubled the amount compared to the previous, and comply with other conditions for

getting the final nod. According to the guideline for establishment of banks issued by the central bank in

September last year, the bank would be a public limited company incorporated in Bangladesh, having a Tk 4.0

billion paid-up capital. An entrepreneur can hold a minimum of Tk 100 million in shares or a maximum of 10

per cent of the total shares. No share of the entrepreneur can be transferred in three years without the central

bank's permission. Fin. Exp: 13.04.2012

Banks lag behind in farm loan disbursement target Banks disbursed only 66.59 per cent of their annual target of agricultural loans in the first nine months of the

current financial year. According to the latest provisional data released by Bangladesh Bank, state-owned,

private and foreign commercial banks, and the specialized banks from July to March of FY2011-12

collectively disbursed Tk 9,189.49 crore in farm loans against the annual disbursement target of Tk 13,800

crore. Agricultural loans disbursed by the banks in the same period of previous financial year

totaled Tk 9,154.69 crore, 72.56 per cent of the annual target of Tk 12,617.40 crore in agriculture credit. BB

data, however, showed that the agricultural credit disbursement from July to March of the FY2011-12 slightly

increased by 0.38 per cent from that of the same period of the previous financial year. Banks usually disburse





large amounts of agricultural loans during Boro season. For this reason, the agriculture loan disbursement

significantly increased in the pervious month than that of the other months of the current financial year, he

said. Moreover, the private and foreign commercial banks also increased their targeted loan disbursement in

the period due to pressure from the central bank. BB data showed that the state-owned commercial banks and

the two specialized banks in the first nine months of the current financial year had disbursed Tk 6,144.68 crore

in farm loans or 72.21 per cent of their annual disbursement target of Tk 8,510 crore. The PCBs and the FCBs

in the period disbursed Tk 3,044.82 crore in agricultural loans, which was 57.56 per cent of their total annual

disbursement target of Tk 5,290 crore. In the same period of the previous financial year, they disbursed 59.06

per cent of their annual target of the agricultural lending. New Age: 13.04.2012

Automation enables BB to double cheque-clearing speed The high value cheque clearing has doubled and the duration of clearing time has reduced significantly

maximizing speedy payments as Bangladesh Bank is clearing high value cheques and regular value cheques

with an automated cheque processing system. Through the automated system, the central bank cleared an

average 85,000 regular value cheques and high value cheques worth Tk 4,700 crore in a day while some cases

earlier took 7 to 30 days. According to BB, of the total 85,000 cheques, 80,000 are regular value (below Tk 5

lakh) and the remaining 5,000 are high value (worth Tk 5 lakh and above) cheques. The number of high value

cheques rose to 5,000 in the automated system from 2,000 in the manual system, and the number of regular

value cheques also increased to 85,000 from 70,000 in the previous system. The BACPS started operations in

October 2010 by replacing the manual cheque clearing system with image and date-based cheque truncation

system where Magnetic Ink Character Recognition encoded cheques are exchanged in encrypted form between

the participating banks through a secured communication link. Daily Star: 13.04.2012

BB to detect gaps in import costs to get right Bop scene The central bank has initiated a step to identify the clandestine income and expenditure related to export and

import trade aiming to have a correct picture of the balance of payments (BoP) situation of the country. The

Bangladesh Bank (BB) took the step following suggestions in this regard made by International Monetary

Fund (IMF), which said the country's BoP is not being measured correctly. According to an observation of the

IMF, the country's import expenditure is not measured correctly as the letters of credit (LCs) don't mention the

freight charges of imports. The country's BoP deficit reached US$ 516 million in the July-February period of

the current fiscal 2011-12, which IMF and the central bank have predicted to be increasing further if the actual

import costs are mentioned. The BoP deficit was $813 million in the July-January period of the current fiscal,

while the deficit was only $222 million during the same period in 2010-11 fiscal. Fin. Exp: 14.04.2012

BB governor warns against illegal banking Amid growing unauthorized financial institutions, Bangladesh Bank governor urged people to remain alert

against illegal banking. The institutions that are doing business without approvals aren‘t banks. Their

transactions are illegal. People need to understand which institutions are banks and which aren‘t. The central

bank governor was speaking as chief guest at a bankers‘ summit, ‗Fifty Years of Banking in Bangladesh-

Vision 2021‘. Governor said the country‘s banking sector had grown several-fold since independence in 1971

in tandem with the uninterrupted spell of steady, stable growth of the economy. ‗Just one indicator may be

enough to demonstrate the spectacular magnitude of banking business growth. Credit and investment assets of

scheduled banks amounted in December 1972 to a minuscule Tk 7.07 billion; this stood 654 fold higher at

Tk 4,625.85 billion as of December 2011. Excellence in banking services would require quick attention to and

remedy to customer‘s grievances. Banks will need to attach the same high priority to this in their own strategic

plans, putting in place processes and access channels like help desks; and above all, sensitising bank personnel

to respond properly and swiftly to customer grievances. The central bank was looking forward to steadily

increasing openness and integration of our financial markets with the global financial system, for widening the

cost effective access to investment resources from the global savings pool. Strategic plans of banks will need

to have corresponding objectives and action agenda for strengthening external contacts and correspondent

relationships. The central bank head also said banks would need to carry out stress-testing exercises regularly




to identify and address the emerging institutional vulnerabilities against shocks of both internal and external

origins. New Age: 14.04.2012

Call to lower gap between lending and deposit rates Economists and bankers have recommended slashing the interest rate spread by creating competition among

banks. The recommendation came at the three-day Bankers Summit organised by Financial Excellence Ltd

(FinExcel), a private advocacy organisation on April 12-14. The commercial banks will have to take effective

measures to minimise the asset-liability mismatch by improving fund management. The speakers urged the

government to ensure operational independence of Bangladesh Bank for better monitoring and supervision,

saying the central bank should act without fear or favour. They also feared that the new banks may face

problems in recruiting skilled manpower, particularly to manage their foreign exchange operations. The BB

chief said bank lending continues to be channeled largely to well-off borrowers, often with insufficient

diversification and inappropriate asset-liability maturity mismatches. Credit and investment assets of

scheduled banks grew to Tk 4,625.85 billion in December 2011 from Tk 7.07 billion in December 1972. Daily Star: 16.04.2012

Limiting of public sector credit growth within 31pc unlikely The Bangladesh Bank‘s target to contain public sector credit growth within 31 per cent by the end of the

current financial year might not be achieved as the government decided to increase its bank borrowings by

more than 47 per cent to Tk 27,900 crore. A meeting of the cash and debt management committee at the

secretariat on March 28 decided to increase the government borrowing target from banking source. Under the

revised target, the government will borrow Tk 27,900 crore from the country‘s banking system against the

original budgetary target of Tk 18,957 crore for the current fiscal year. In its latest half-yearly monetary policy

for January-June 2012, BB stated that it would aim at containing inflationary pressures through discouraging

credit flow to public and private sectors. Under the new monetary programme, credit growth rate to the public

sector, including the government, and private sector would be limited to 31 per cent and 16 per cent

respectively by the end of June 2012 from 62 per cent and 18 per cent at the end of December 2011.

According to the latest data released by BB, the government‘s bank borrowing increased to Tk 18,013 crore on

April 5, 2012 from Tk 15,117 crore as on March 3. BB data showed that the government‘s bank borrowing

had stood at Tk 21,321 crore on December 4, 2011. The government‘s borrowings from banks, however,

decreased in phases later, but the borrowing significantly increased recently. BB data showed that the public,

including government, sector credit growth in January and February had stood at between 43.20 per cent and

43.32 per cent compared with that of the same months of the previous year. On the other hand, private sector

credit growth in the two months stood at between 18.94 per cent and 19.55 per cent from that in the same

months of the last financial year. New Age: 16.04.2012

BB issues LoIs to nine new banks The Bangladesh Bank has issued Letters of Intent (LoI) to the newly-approved nine commercial banks

including three non-resident Bangladeshi banks, asking them to fulfill 29 conditions within the next six

months. The newly-approved banks would get the licences from the central bank if they could fulfill the

conditions within the specified timeframe. The banks would have to start their business activities within six

months from the date of issuing LoI. The process of LoI issuance to the new banks was completed on April

17,2012. The new banks will have maximum 20 directors in their boards. But once the proposed bank

company act is passed, the banks will have to bring the number of directors down to 13. The new banks will

have to disburse in the agricultural sector at least 5 per cent loan of their total credit disbursement. A

sponsor/director of a new bank would hold minimum share of Tk 1 crore and highest 10 per cent of the total

capital of the bank. Earlier this month, the central bank approved six private commercial banks and three NRB

banks. New Age: 19.04.2012

'Rural women get little credit' Women entrepreneurs in rural areas have little access to credit as much of 15 per cent of small and medium

enterprises (SME) loans goes to their urban counterparts. Leaders of women entrepreneurs urged banks to




funnel at least three per cent of SME lending to the rural areas where access to finance is limited. The project

is aimed at facilitating the access of rural women entrepreneurs to the SME credit and marketing their products

by involving local lawmakers, which will ultimately help formulate a separate policy for women

entrepreneurship development. The chamber leader called upon the policymakers to formulate specific policy

guidelines for the development of women entrepreneurs so that the rural women entrepreneurs get a congenial

environment and the whole process not remains urban centric. Fin. Exp: 19.04.2012

Bureaucratic tangle 'a major hindrance to CSR activities' Governor of the central bank and leaders of the country's banks and financial institutions recently expressed

their resentment over the existing bureaucratic complexities in implementation of the tax rebate facility for

spending on CSR (corporate social responsibility) activities. Terming the bureaucratic tangle 'a major

hindrance' to the promotion of CSR activities in the country, they said the National Board of Revenue (NBR)

is unwilling to give the existing 10 per cent tax rebate on the CSR spending. "There are many bureaucratic

hurdles and many of banks do not want to break those hurdles," the BB governor said. He said he was trying

hard to facilitate the banks in terms of easing the process but found bureaucracy to be much difficult even for a

central bank chief. He urged the bankers, who really want to contribute, not to be disheartened with the

bureaucracy. Fin. Exp: 20.04.2012

Import payments decline in March The country‘s import bill payment in March declined sharply compared to the same month of the last financial

year due to tighter monetary policy taken by the central bank amid shortage of foreign currency reserve.

Provisional data of Bangladesh Bank showed that the settlement of letters of credit for import declined by 3.53

per cent in March compared to March 2011 when import payment grew by 24.62 per cent year-on-year. The

total import bill payment in March stood at $ 2.78 billion against $ 2.88 billion in March 2011. The import

payment in March 2010 was $ 2.31 billion. LC settlement in March also declined by 3.39 per cent compared to

the previous month of February when import payment grew by 18.63 per cent year-on-year. Besides, the

growth in opening of letters of credit in March declined by 18.52 per cent year-on-year compared to 31.80 per

cent growth in March 2011 year-on-year. The total LC opening in March stood at $ 2.81 billion against $ 3.45

billion in March 2011. The LC opening in March 2010 was $ 2.62 billion. New Age: 20.04.2012

Branch opening policy to deepen financial inclusion The banking facilities for the poor in Bangladesh are far better than those in India and Pakistan, Bangladesh

Bank Governor said. He also hinted at more actions being taken for facilitating the access on the part of the

poorest section of the country's population to the banking facilities. Dr Atiur said 1:1 branch approval policy

will further help deepen financial inclusion in Bangladesh. Already three million people among the poorest

segment among the country's population have ten-taka accounts for getting payments relating to safety net

programmes. Meanwhile, the World Bank (WB) report said only 37% of women in developing countries have

an account, whereas 46% of men do. That gap is even bigger among those in poverty: Women living below

$2.0 a day are 28% less likely than that of the male population having bank accounts. Fin. Exp: 21.04.2012

IMF raises $430 billion for crisis firewall Members of the International Monetary Fund will discuss future action plans after the IMF raised $430 billion

in new funds for crisis intervention, with China and other emerging economic giants taking part. After weeks

of seeking pledges for its ‗global firewall‘, the fund said the BRICS group — China, Russia, India and Brazil

— had helped put it over its goal. ‗We have commitments that are north of $430 billion. That almost doubles

the lending capacity of the fund,‘ IMF managing director said after meetings of the IMF and the finance chiefs

of the Group of 20 economic powers. The figure ‗signals the strong resolve of the international community to

secure global financial stability and put the world economic recovery on a sounder footing.‘ The BRICS and a

handful of middle-sized economies came in with $68 billion at the end, though specific amounts were not

mentioned. That came on top of $200 billion promised by the eurozone, $60 billion from Japan, and $15

billion each from Britain, South Korea and Saudi Arabia each pledged $15 billion. Smaller amounts from the





Nordic countries, other European governments and Singapore filled out the total. New Age: 22.04.2012

S Korea central bank warns of surge in govt debt South Korea‘s government debt could surge above 100 per cent of the country‘s annual gross domestic

product by the year 2030 from just a little more than 34 per cent now, the country‘s central bank said in a

report. Asia‘s fourth-largest economy would see slower growth due to the declining pace of increases in

capital and labour input, whereas government spending would surge to cover financial debts at public

companies and public pension schemes, it said. ‗The country needs to begin drawing up counter-measures

from now to get better prepared for the aged society (aging population) society and prevent macroeconomic

instability in advance arising from the weakening fiscal position,‘ the Bank of Korea report said. If the

government did not need to provide support for the public corporations, the report said its baseline projection

was for the central government‘s debt to grow only modestly to 37.3 per cent of GDP by 2030. New Age: 23.04.2012

Default loans at state banks still high: BB State-run commercial banks are running with 11.27 percent default loans, double the industry average,

although they were corporatised about five years ago to make a turnaround, the central bank said on 22nd

April. Sonali Bank, the country's largest bank, has the highest percentage of non-performing loans at 17.89

percent or Tk 5,705 crore. Janata Bank has 10.7 percent bad loans compared to the 6.12 percent industry

average. ―The amount of default loans at the state banks is still high despite being corporatised,‖ said

Bangladesh Bank Governor Atiur Rahman. The four banks sign memorandum of understanding (MoU) every

year with the central bank for developing banking operations including operation costs, availability of capital,

realization of default loans, reduction of loss incurring branches and risk management. The BB also sets some

targets for the banks through the agreement and reviews their achievements in every three months. Rahman

said both the amount and the rate of non-performing loans of all the state banks went down in the last quarter

of 2011 compared to the previous quarter. The bad loan recovery rate is also not satisfactory with the three

banks apart from Janata. The banks need to hold at least 10 percent capital adequacy. The governor asked the

banks to prepare and submit a comprehensive capital plan in the next two months, as the central bank is going

ahead with implementing Basel-III. Rahman said the banks' implementation of the core risk management

guideline has been at a marginal or fair level in most cases, which has to be improved to a satisfactory level.

He also asked the banks to be more cautious about their asset liability management. Daily Star: 23.04.2012

'Delay in LC settlement by BD banks is main barrier' Japanese investors blamed delay in settlement of letters of credit (LCs) by commercial banks of Bangladesh as

the main barrier to trade and investment expansion between the two countries though both have agreed to

expand bilateral trade relations. They notified the Japanese Embassy in Dhaka that a total of 2,100 LC

transactions were delayed only in 2011 which raised serious concern among them. Fin. Exp: 24.04.2012

Forex reserve crosses $10b mark again The country's foreign exchange reserve (forex) crossed US$ 10 billion mark again on 23

rd April, largely

because of lower import payments. The forex reserve rose to $10.007 billion on the day from the previous

working day's $9.859 billion, according to the Bangladesh Bank (BB) statistics. Earlier on March 05 this year,

the country's forex reserve stood at $10.02 billion. The US dollar was quoted at Tk 81.82- Tk 81.83 in the

inter-bank foreign exchange market Monday against Tk 81.79-Tk 81.83 on the previous working day, the BB

data showed. The country received $760.47 million as remittances between April 1 and April 20 from the

Bangladeshi nationals who are working abroad. The Bangladeshi nationals working abroad sent US$ 1.107

billion in the month of March last. The amount was $25.52 million lower than that of the previous month. In

February 2012, the remittance earnings stood at $1.133 billion, the BB data showed. Fin. Exp: 24.04.2012

Spain’s economy plunges into recession Spain‘s jobs-scarce economy plunged back into recession in the first quarter of 2012 as employment slumped

even further, the Bank of Spain said. Barely two years after emerging from the last downturn, Spain slid into





recession again with two consecutive quarters of economic contraction, the central bank said in a report. Gross

domestic product fell by an estimated 0.4-per cent in the first quarter of 2012 after a 0.3-per cent decline in the

last three months of 2011, the bank said. Spain, whose unemployment rate at the end of 2011 was already the

highest in the industrialized world at 22.85 per cent overall and nearly 50 per cent for the young, suffered a

further jobs slump. ‗Employment fell again, sharply, with an estimated year-on-year decline of 4.0 per cent,‘

the report said, noting also a ‗significant‘ decline in unit labour costs. The government forecasts the jobless

rate will rise to 24.3 per cent this year as the sagging economy struggles to absorb millions of jobs destroyed in

the collapse of a property boom in 2008. Spain has promised to cut its public deficit to 5.3 per cent of GDP in

2012 and just 3.0 per cent of GDP in 2013, after allowing last year‘s deficit to hit 8.5 per cent of GDP 2.5

percentage points over target. Desperate to meet its targets, the government has approved 27 billion euros in

spending cuts and tax increases in its 2012 budget, after an earlier round of 8.9 billion euros in cuts and 6.3

billion euros in extra taxes. Analysts say the recession will make those targets even harder to reach, as tax

income declines and welfare costs rise. New Age: 24.04.2012

FARM LOAN DISBURSEMENT TARGET

BB to act against failed banks

Bangladesh Bank will take punitive action against the commercial banks which will not be able to fulfill their

annual farm loan disbursement target in the current financial year. The central bank will cut the non-disbursed

farm loan amount of money of the commercial banks which is reserved as deposit money of the banks in the

BB fund at the end of the FY2011-12. The failed banks will get an interest of 5 per cent for their amount, a

much lower rate than traditional interest rate. The central bank is going to hold a meeting on April 25th

with

the private and foreign commercial banks‘ officials regarding the issue of farm loans disbursement. The banks

will be appraised of the BB stance in this regard. The BB had held another meeting with the state-owned

commercials banks in this regard. According to BB data, the state-owned, private and foreign commercial

banks and the specialized banks from July to March of FY2011-12 have collectively disbursed Tk 9,189.49

crore, or 66.59 per cent in farm loans against the annual disbursement target of Tk 13,800 crore. 24 banks in

the first nine months of the current financial year had disbursed below 60 per cent farm loan of their annual

target. The commercial banks have to disburse at least 2 per cent loan in the agriculture sector of their total

credit distribution in a year. In the first nine months, all the PCBs and FCBs collectively disbursed 57.56 per

cent farm loan of their annual target. New Age: 25.04.2012

BB detects irregularities in loan sanctioning by 2 banks The Bangladesh Bank (BB) has unearthed irregularities in sanctioning of a large amount of loan by a state-

owned specialized bank and a private commercial bank to a business firm in Chittagong in early last year. A

special inspection team of BB investigating into the allegation early this month found that the public sector

bank approved Tk 0.85 billion (85 crore) to a trading firm without following rules and regulations concerned.

The specialized bank approved funded and non-funded composite loan worth Tk 0.85 billion to the firm in

question and its associates on 'falsified documents'. The branch had actually recommended for approval of Tk

1.85 billion. In another irregularity, Khatunganj branch of a private commercial bank recommended its head

office for approval of Tk 0.58 billion (58 crore) loan to the same firm. The financial information of the firm

including its current capital review, credit risk grading and over all business performance was not followed in

either of the cases in accordance with the rules and guidelines of the BB. The BB inspection team held the

branch managers responsible for recommending loans on fake documents and asked the management of both

the banks to take punitive action against them. The BB has also asked the banks to inform it about actions

taken against their branch managers immediately. Fin. Exp: 25.04.2012

BB asks banks not to exceed consumer credit growth Bangladesh Bank (BB) has asked the commercial banks not to exceed the consumer credit growth more than

its total average growth of loan portfolios. They have taken the latest measure aiming to achieve a sustainable





economic growth through increasing credit flow to the productive sectors by slashing loans from unproductive

sectors including consumer financing. The central bank issued a circular in this connection and asked the chief

executives of all 47 scheduled banks to follow the latest instruction relating to increasing credit flow to the

productive sectors. The BB's latest measure came against the backdrop of the rising trend of consumer loans

despite repeated attempts by the regulator to discourage loans for the same. Earlier on January 22 this year, the

central bank asked the commercial banks to discourage credits to certain sectors including consumer financing.

It brought about certain changes in the margin ratios of various loans to discourage lending to 'unproductive'

sectors. Currently, the banks are maintaining a 70:30 loan margin ratio, instead of the existing 80:20 earlier, in

the housing finance. The ratio for the car loans and all other consumer financing is 30:70 instead of the

existing 50:50. Fin. Exp: 26.04.2012

IMF releases $141m installment of ECF International Monetary Fund released the first installment of $141 million of around $1 billion loan sanctioned

for Bangladesh under its Extended Credit Facility. The central bank had received the first installment of the

credit facility on behalf of the government on April 25th

. Earlier on April 12, the IMF approved a $987 million

loan to Bangladesh under its ECF to ‗help‘ the country overcome macroeconomic pressures. The loan, under

a three-year arrangement, was approved by the IMF executive board at its meeting in Washington DC, and

will be given in seven equal installments in three years. After getting the first installment, the country‘s forex

reserve increased slightly to $10.15 billion. Bangladesh government had sought the credit to improve the

country‘s overall balance of payment (BoP) position as the trade deficit kept on increasing every year. Under

the loan facility, the IMF had earlier set a number of conditions including increase of fuel prices, amendment

to the Bank Companies Act and forming a new Vat law. New Age: 26.04.2012

Britain back in recession Britain‘s economy sank back into recession in the first quarter, when it contracted by 0.2 per cent amid

ongoing state austerity and the eurozone debt crisis, official data showed. The British economy has now

returned to a technical recession, defined as two successive quarters of contraction, after shrinking by 0.3 per

cent in the previous three months, the Office for National Statistics revealed. The data confounded most

analysts‘ expectations that gross domestic product would grow by 0.1 per cent in the quarter from January to

March, compared with the final quarter of last year. The ONS added in a statement that the decline in first-

quarter GDP — the value of all goods and services produced by the economy — was driven by a poor

performance by the construction and manufacturing sectors. Britain‘s economy had clawed its way out of a

record-length recession in the third quarter of 2009 following a downturn sparked by the global financial

crisis. But it has now returned to recession amid painful government spending cutbacks and fallout from the

debt crisis in the neighboring eurozone, which is a key trading partner. Britain joins a number of eurozone

countries in recession, including Spain, and bailed-out nations Greece, Ireland and Portugal. Overall, the 17-

nation eurozone‘s output shrank by 0.3 per cent in the fourth quarter of last year, while recent weak data has

sparked deep worries that the region is also back in recession. Highlighting the extent of Britain‘s debt strains,

official data showed public sector net debt as a percentage of GDP — excluding the cost of bank bailouts —

hit a record high 66 per cent in March. Britain‘s total debt stands at £1.022 trillion (1.25 trillion euros, $1.65

trillion), the ONS had revealed. New Age: 26.04.2012

IMF cautions central bank on new banks, economic stress "The central bank should enforce stricter licensing criteria in considering any application for a new bank," said

David Cowen, IMF mission chief for Bangladesh, Asia and Pacific Department. ―Bangladesh Bank should

ensure that it has the resources it needs to properly supervise and regulate all the banks, including possible new

banks on the list,‖ he said. The central bank should also ensure that the liquidity conditions are supportive in

allowing new entrants into the market. Recently, the central bank has granted permissions to set up nine banks

in the country. At present, 47 public, private and foreign banks are already operational in the country, although

only about 8 percent of the population is covered by financial institutions. Daily Star: 26.04.2012



Increase share supply to market: top bankers Top leaders of the Association of Bankers Bangladesh (ABB) on 26

th April said the supply of new shares to

the market needs to be increased to meet demand for good stocks. The chairman of ABB said a supply of new

shares is important for the market to meet investors' demand. The banks are investing in the market for the

development of the market. Daily Star: 27.04.2012

No of SCB losing branches down Number of loss-making branches of four state-owned commercial banks (SCBs) declined significantly in the

past one year, according to recent data of Bangladesh Bank (BB) reports. The data shows a total of 156

branches of the four commercial banks - Sonali, Janata, Agrani and Rupali - became profitable in the past one

year. The four banks had 290 loss-making branches in 2010, which came down to 134 at the end of 2011.

Besides skill development and improved management, the losing branches became profitable on the measures

including better management of deposit and advances, steady inflow of remittance and increase of purchasing

power of people in general. Among the four commercial banks, Rupali Bank and Agrani Bank achieved most

in turning their losing branches into profitable ones. Rupali Bank brought down its loss-making branches to

only two last year from 22 in 2010 when Agrani Bank made 71 branches profitable out of its 80 losing

branches a year ago. During the period, Sonali Bank cut the number of its losing branches to 65 from 90 and

Janata Bank slashed the number to 58 from 98. Fin. Exp: 27.04.2012

Bangladesh bank Circulars during April, 2012

Circular Number Date Subject

ACFID Circular Letter No. 02 02/04/12 Disbursement of Agricultural Credit in Apiculture

BRPD Circular Letter No. 04 17/04/12 Rate of Interest/Profit on Fixed/Term Deposit

DFIM Circular Letter No. 04 25/04/12 Financial Institutions remain closed on the occasion of

"Buddha Purnima"

FEPD Circular No. 04 25/04/12 Term lending in Taka to foreign owned/ controlled

companies

BRPD Circular No. 05 25/04/12 Increase in Credit flow in productive sector

DOS Circular Letter No. 05 29/04/12 Bank Holiday on "Buddha Purnima (Baishakhi Purnima) " Source: BB website

Information on Economy

Amount Previous year’s/ month’s Position

1. Foreign Trade: Million US$ Million US$

a. Exports (2011-12) - 22928.20

b. Exports (February-2012) 1979.30 2149.90

c. Imports (2011-12) - 33657.50

d. Imports (February-2012) 2955.10 3346.00

2.Workers’ Remittance (February-2012) 1133.01 1221.41

3.Inflation: point to point (February-2012) 10.43 11.59

Export= FOB Value, Import = CFR Value

Economic Trends: April 2012

Banking Sector and Economic Information:




Amount (TK in Cr.) Amount (TK in Cr.)

December - 2011 November - 2011

1.Bank Deposit (excluding inter bank) 443867.30 432809.0

2.Bank Credit (excluding inter bank) 462584.70 452081.80

3. Money Supply

a. Currency Outside Banks 58145.30 58575.30

b. Demand Deposit 49524.10 45512.50

c. Deposit with BB other than DMBs 286.90 279.70

d. Narrow Money (a+b+c) 107956.30 104367.50

e. Time Deposit 367540.60 360154.40

02. Broad money (d+e) 475496.90 464521.90

4. Excess Reserve (Liquidity) 1396.00 2028.60

5. Weighted average rate of Deposits of Schedule Banks(Quarterly) 7.55 7.53

6. Weighted average rate of Advances of Schedule Banks(Quarterly) 13.01 12.83

7. Ratio of DMBs Credit to Deposits (%) 104.22 104.45

8. DMBs Total Assets/Liabilities 1147905.80 1183285.00

9. F.E. Reserve (million $US ) 9634.90 9285.20

10. Cash Base of the Economy 92248.10 92651.10

Narrow Money (M1) = Currency outside Banks+ Demand Deposits +Deposit with Bangladesh Bank Broad Money (M2) = M1 + Time Deposit DMBs = Deposit Money Banks

Cash Base of the Economy = Currency in Circulation+ Balances with Bangladesh Bank Monthly Economic Trends: April 2012 (p)= Provisional

Academic Activities in April, 2012:



I. A Three week long “Foundation Course for Officers Grade-II” was inaugurated by Mr. Mati-ul-

Hasan, Deputy Managing Director (Business) of the Bank on April 01, 2012 at IFIC Bank Training

Institute at Chamber Building 8th

floor, 122-124, Motijheel C/A., Dhaka. 29 Officers Grade-II working

at various desks at the Branches and Head Office attended the course. It may be mentioned here that, it

was the 5th

programme of IFIC Bank Training Institute in the year 2012.

II. A one day Workshop on “Training For Direct Sales Team of Retail Banking” was held on April 01,

2012 at IFIC Bank Training Institute at Chamber Building 8th

floor, 122-124, Motijheel C/A., Dhaka

during the opening session Mr. Dipankar Das, First Asstt. Vice President & Head of Liability-New

Acquisition- Retail Banking Division present and contributed in the topic. 35 Sales Agent of the Bank

attended the workshop. It may be mentioned here that, it was the 6th

programme of IFIC Bank Training

Institute in the year 2012.

III. A day long Dialogue meeting with "R.M. along with BAMLCO of Dhaka City & Adjacent area

branches” was inaugurated by Mr. Syed Zahidul Islam, SEVP & CAMLCO, of the Bank on April 07,


floor, 122-124, Motijheel C/A., Dhaka.

82 Executives & Officers of the Bank working at Head Office and different branches attended the

Dialogue. It may be mentioned here that, it was the 7th

programme of IFIC Bank Training Institute in

the year 2012.

IV. A half day “Training Workshop For Direct Sales Team of Retail Banking” was held on April 07,








V. A half day “Training Workshop For Direct Sales Team of Retail Banking” was held on April 09,








VI. A one day long Workshop on “Inward Foreign Remittance & Opening of Foreign Currency A/Cs”

was inaugurated by Mr. Mati-ul-Hasan, The Deputy Managing Director (Business), of the Bank on

April 21, 2012 at IFIC Bank Training Institute at Chamber Building 8th

floor, 122-124, Motijheel

C/A., Dhaka 22 Officers working at different branches has attended the workshop. It may be

mentioned here that, it was the 10th

programme of IFIC Bank Academy in the year 2012.

VII. A half day “Presentation of Variance Analysis” was held on April 16, 2012 at IFIC Bank Training

Institute at Chamber Building 8th

floor, 122-124, Motijheel C/A., Dhaka during the opening session

Mr. Kazi Saifuddin Ahmed, Senior Vice President & Head of Branch Distribution present and

contributed in the topic. 54 Executives & Officers of the Bank attended the Presentation. It may be

mentioned here that, it was the 12th

programme of IFIC Bank Training Institute in the year 2012.

VIII. A half day “Training Workshop For Direct Sales Team of Retail Banking” was held on April 24,






programme of IFIC Bank

Training Institute in the year 2012.

IX. A half day Workshop on “Training Workshop For Direct Sales Team of Retail Banking” was held



on April 25, 2012 at IFIC Bank Training Institute at Chamber Building 8th


C/A., Dhaka during the opening session Mr. Dipankar Das, First Asstt. Vice President & Head of

Liability-New Acquisition- Retail Banking Division present and contributed in the topic. 55 Sales

Agent of the Bank attended the workshop. It may be mentioned here that, it was the 14th

programme of

IFIC Bank Training Institute in the year 2012.

X. A half day Workshop on “Training Workshop For Direct Sales Team of Retail Banking” was held

on April 26, 2012 at IFIC Bank Training Institute at Chamber Building 8th


C/A., Dhaka during the opening session Mr. Dipankar Das, First Asstt. Vice President & Head of

Liability-New Acquisition- Retail Banking Division present and contributed in the topic. 60 Sales

Agent of the Bank attended the workshop. It may be mentioned here that, it was the 15th

programme of

IFIC Bank Training Institute in the year 2012.

Readers please: What is the amount of loan sanctioned recently by International Monetary Fund

(IMF) for Bangladesh under its Extended Credit Facility? Match our answer with yours: Knowledge Update: 159

Answer: The total operating profits of all commercial banks in Bangladesh stood at Tk 197.38 billion by the end

of December 31,2011as per BB data.

Team Members

A. K. Mojibur Rahman, FAVP

Jayanta Sutradhar, OG-I

Barni Saha, OG – I

IT CORNER Basics of IT



Snapshot-4 Contributed by: Biprajit Saha, AVP, IT Division

National Payment Switch (NPS)

Bangladesh Bank (BB) is going to introduce National Payment Switch to strengthen electronic

payment system of the country. Bangladesh Bank has already taken initiatives to establish National

Payment Switch (NPS) in order to facilitate inter-bank electronic payments originating from different

delivery channels e.g. Automated Teller Machines (ATM), Point of Sales (POS), Internet, Mobile

Applications, etc. The main objective of NPS is to create a common platform among the existing

shared switches already built-up by different private sector operators. NPS will facilitate the expansion

of the card based payment networks substantially and promote e-commerce throughout the country.

Online payment of Government dues using cards, mobile and internet will greatly be enhanced using

NPS.

National Payment Switch is one of the key considerations in National ICT Policy 2009. BB with the

financial support from World Bank is implementing this initiative under ―Central Bank Strengthening

Project (CBSP)‖. For technological assistance the central bank has signed a deal with Singapore-based

Infotech Global Pvt. Ltd. on January 26, 2012.

Department of Currency Management and Payment Systems of BB in a circular issued to Chief

Executive Officers and/or Managing Directors of all commercial banks informed that NPS would act

as a ‗mother switch‘ and would gradually connect all the ‗child switches‘ owned or shared by the

scheduled banks in the country.

The circular said that the services of child switches, which are automated teller machines, point of sale,

electronic commerce, internet banking, mobile banking and other online related banking services

offered by banks, would be brought onto a common platform of the NPS under the Central

Bank Strengthening Project.

NPS will support transactions made through cards or account number (direct debit/credit), clear and

settle these electronic transactions through the settlement accounts of all the scheduled banks

maintained with Bangladesh Bank.

Besides, NPS will have interfaces with all the major international payment technology company

like VISA, MasterCard and American Express etc. so that the banks will be able to send the

transactions originating from those international branded cards through National Payment

Switch. NPS will also reduce the charges which the Banks would have to pay to international payment

Settlement Company for off-us and remote on-us card transactions.

BB said that they strongly believe NPS would help to grow the electronic payment infrastructure in

Bangladesh, facilitate electronic commerce and thereby reduce dependence on cash transactions

substantially.

Revisiting Basics



INCOTERMS 2010

The Incoterms rules or International Commercial terms are a series of pre-defined commercial

terms published by the International Chamber of Commerce (ICC) widely used in international

commercial transactions. A series of three-letter trade terms related to common sales practices, the

Incoterms rules are intended primarily to clearly communicate the tasks, costs and risks associated with

the transportation and delivery of goods. The Incoterms rules are accepted by governments, legal

authorities and practitioners worldwide for the interpretation of most commonly used terms in

international trade. They are intended to reduce or remove altogether uncertainties arising from

different interpretation of the rules in different countries. The Incoterms rules began development in

1921 with the forming of the idea by the International Chamber of Commerce. In 1936, the first set of

the Incoterms rules was published. The first set remained in use for almost 20 years before the second

publication in 1953. Additional amendments and expansions followed in 1967, 1976, 1980, 1990 and

2000. The eighth and current version of the Incoterms rules—Incoterms 2010—was published on

January 1, 2011.

The eighth published set of pre-defined terms, Incoterms 2010 defines 11 rules, reducing the 13 used in

Incoterms 2000 by introducing two new rules. ―Delivered at Terminal", DAT; "Delivered at Place",

DAP that replace four rules of the prior version "Delivered at Frontier", DAF; "Delivered Ex Ship",

DES; "Delivered Ex Quay", DEQ; "Delivered Duty Unpaid", DDU. In the prior version, the rules were

divided into four categories, but the 11 pre-defined terms of Incoterms 2010 are subdivided into two

categories based only on method of delivery. The larger group of seven rules applies regardless of the

method of transport, with the smaller group of four being applicable only to sales that solely involve

transportation over water.

Purpose of Incoterms Main task of Incoterms is to define the sharing of costs and transfer of risk or damage over the

goods, up to an agreed place

To avoid misunderstanding and disputes among the parties over the sharing of costs and

transfer of risk or damage over the goods

Users of Incoterms: Buyers and Sellers, directly

And indirectly

o Banks

o Insurers

o Carriers/Forwarding Agents

Use by Banks � Most credits will state an Incoterm

� This enable banks to check, to an extent, that:

– The documents called for in the credit are consistent with the term used

– The documents presented are consistent with the term used

Rules for Any Mode(s) of Transport

http://en.wikipedia.org/wiki/International_Chamber_of_Commerce



EXW –Ex Works: means that the seller delivers when he places the goods at the disposal of the buyer

at the seller‘s premises or another named place (I.e. works factory, warehouse, etc.) not cleared for

export and not loaded on any collecting vehicle.

FCA – Free Carrier: means that the seller delivers the goods, cleared for export, to the carrier

nominated by the buyer at the named place. It should be noted that the chosen place of delivery has an

impact on the obligations of loading and unloading the goods at that place. If delivery occurs at the

seller‘s premises, the seller is responsible for loading. If delivery occurs at any other place, the seller is

not responsible for unloading.

CPT - Carriage Paid To: means that the seller delivers the goods to the carrier nominated by him but

the seller must in addition pay the cost of carriage necessary to bring the goods to the named

destination.

CIP – Carriage and Insurance Paid to: means that the seller delivers the goods to the carrier nominated

by him but the seller must in addition pay the cost of carriage necessary to bring the goods to the

named destination and also pay the necessary insurance.

DAT – Delivered At Terminal: means that the seller delivers when the goods, once unloaded from the

arriving means of transport, are placed at the disposal of the buyer at a named terminal at the named

port or place of destination.

DAP – Delivered At Place: means that the seller delivers when the goods are placed at the disposal of

the buyer on the arriving means of transport ready for unloading at the named place of destination.

DDP – Delivered Duty Paid: means that the seller delivers the goods to the buyer, cleared for import,

and not unloaded from any arriving means of transport at the named place of destination.

Rules for Sea and Inland Waterway Transport

FAS – Free Alongside Ship: means that seller delivers when the goods are placed alongside the vessel

at the named port of shipment This means that the buyer has to bear all costs and risks of loss of or

damage to the goods from that moment.

FOB – Free On Board: means that the seller delivers when the goods are placed on board the ship at

the named port of shipment.

CFR – Cost and Freight: means that the seller delivers when the goods are placed on board the ship in

the port of shipment. The seller must in addition pay the cost of carriage necessary to bring the goods

to the named destination.

CIF – Cost Insurance and Freight: means that the seller delivers when the goods are placed on board

the ship in the port of shipment and also pay the necessary freight and insurance.

Corporate Activities during the month April 2012



IFIC Bank sponsored a live talk show

IFIC Bank was a sponsor of a live talk show titled “Kemon Budget Chai” organized by NTV.

IFIC Bank celebrated the Bangla New Year 1419

IFIC Bank celebrated the Bangla New Year 1419 in a befitting matter. The Bank distributed sweets

and hand fans and also decorated Head Office and branches with banners, festoons, danglers etc. as

part of the celebration.

April-2012 - ificbank.com.bd · April-2012 Moody’s bank review may mark new era of lower ... The...

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