DHAKA : The central bank is likely to support a move to keep e-commerce transactions out of the purview of value added tax (VAT) for three to five years to encourage the country’s nascent digital economy, reports UNB.
An indication to this effect was made by the Bangladesh Bank governor Dr. Atiur Rahman on Sunday while he was addressing a function at Bangabandhu International Conference Centre in the city. The Bangladesh Association for Software and Information Services (Basis) and some online business firms engaged in e-commerce jointly organized the function on the occasion of launching their new alliance under the banner of Basis-e-Commerce Alliance. Dr. Atiur mentioned that Basis has been demanding the transactions under e-commerce be exempted from VAT for the next 3-5 years. “If it is allowed, it will help spread trading through e-Commerce. I think it’s possible for the government,” he said. The function was also addressed by FBCCI president Kazi Akram Uddun Ahmed and Basis president Shamim Ahsan and its vice president Russel K Ahmed.
The governor said many entrepreneurs have been showing their interest in e-commerce or online business. In recent times, online shopping or e-commerce trading have been gaining in popularity day-by-day. The buyers and sellers are choosing their products and making their transactions through credit or debit cards. This has brought about immense opportunities to enter into the global market for local firms.
“So it’s impossible to undermine the importance of the e-commerce for a country with a growing economy like Bangladesh,” the governor observed, adding that such online businesses have reduced the hazards of unnecessary movement.
He said that currently about Tk 200 crore is being transacted through e-commerce or online transactions annually. Bangladesh Bank has taken various measures to ensure their authenticity and security through introducing different systems and also giving appropriate instructions to banks. He observed that some 50 online or e-Commerce service portals are actively offering their services while about a hundred fashion houses are selling their products. More than 500 Facebook pages are engaged to promote the online products sale. It is mainly the young generation who are engaged in such businesses.

Bangladesh Bank on Sunday warned six new banks due to their aggressive banking as advance-deposit ratio of some banks increased abnormally in the recent months. The BB asked the banks not to go for aggressive banking as some new banks are not maintaining adequate mortgage against their disbursed loans which may put an adverse impact on their financial health. The directives came from a meeting between the BB and the six new banks at the central bank headquarters in the capital. Central bank governor Atiur Rahman presided over the meeting while managing directors of the six banks were present. The six banks are: The Farmers Bank, Midland Bank, Modhumoti Bank, South Bangla Agriculture and Commerce Bank, Meghna Bank and Union Bank. The central bank at the meeting expressed concern over the aggressive lending by the new banks in the recent months despite a dull business scenario caused by political unrest, a BB official told New Age on Sunday. He said the advance-deposit ratio of the new banks was yet to cross the lime, but it might cross shortly if they did not take cautionary measures in this regard. The BB data showed that as of February 26, 2015, the ADR stood at 74.50 per cent in South Bangla Agriculture and Commerce Bank, 78.88 per cent in Meghna Bank, 83.67 per cent in, 84.13 per cent in The Farmers Bank, 78.84 per cent in Union Bank and 53.96 per cent in Modhumoti Bank. As per the BB rules, the conventional banks are allowed to disburse maximum 85 per cent loan against their deposit position while the ratio for the Islamic banks are 90 per cent. The BB warned the banks as most of them are close to the highest level ADR ratio, the central bank official said. The central bank has asked the banks not to plunge under capital shortfall as aggressive banking fuels up the risk to face defaulted loans, the BB official said. The BB criticised the new banks due to their excessive expenses for their interior decorations asking them to avoid unnecessary expenditures. Some of the new banks have already set up huge number of branches although they failed to expand their expected business, the official said. Some banks did not follow the recruitment policy in line with the central bank’s directives which put a negative impact on their good governance, he said. The BB asked the banks to prepare recruitment policy before initiating fresh recruitment. Meghna Bank managing director Nurul Amin told reporters after the meeting that the central bank asked the new banks not to go for aggressive banking in a bid to maintain a sound banking operation. The BB has asked the banks to maintain their financial indicators accurately, he said. Amin said, ‘The BB may arrange one-to-one meeting with the banks which fail to maintain their indicators.’ The central bank issued licences to nine banks including three NRB banks in 2012 despite facing huge criticisms from different corners, he said. A good number of ruling party-backed politicians and businesspeople got the licences to operate the banking business, said the BB official. Experts and economists had expressed their concern at that time over the issuing fresh licences to the new banks as they thought that the initiative would create major indiscipline in the financial sector.

Bangladesh Bank Governor Atiur Rahman yesterday advised the newly approved banks to avoid “aggressive” banking, reports BSS.
“The banks should not do hurry in appointing manpower, opening new branches, collecting deposit, distributing loan and carrying out other activities for good business ... hurriedness would push them (banks) into difficulties, which would be hard to overcome,” he added. The governor made the advice during separate meetings with the nine banks that got approval.
Atiur told them (banks) to concentrate on doing good business instead of only putting emphasis on extending coverage.
BB Deputy Governor SK Sur Chowdhury, executive directors SM Moniruzzaman, Nawshad Ali Chowdhury and Saiful Islam and managing directors of concerned banks were present at the meetings.

Provisions for Ananda Shipyard's bad loans have been eating up Islami Bank Bangladesh's profits as it had to set aside Tk 178 crore a year since 2013 for the shipbuilder's bad debts.

“We are not too worried now as we have been able to make a two-year provision against the loans. We have one more year to go in the three-year provision requirement for this bad debt,” MA Mannan, managing director of IBBL, told The Daily Star.

“We will be free after this year.” Ananda has not been able to sell the ships funded by the bank.

“Ships are not perishable. So Ananda may take more time to sell the ships,” said the chief executive of the bank whose profits have been eroding since 2012.

Earlier in 2007, Ananda Group received orders from German and Singaporean buyers for eight ships worth $89.4 million or about Tk 700 crore, to be delivered between September 2009 and December 2010.

The local shipbuilder failed to stick to the lead time, which made the buyers withdraw the orders in 2010.

The move put its financier -- IBBL -- in a sticky position, as it had to honour its performance bonds and refund guarantees worth $58.71 million to the buyers.

Ananda's total liabilities with IBBL now stand at Tk 534 crore, and the central bank instructed the bank to make provisions against the sum, which IBBL has duly acted on, Mannan said.

The bank's earnings per share (EPS) came down to almost half between 2012 and 2014 because of bad loans, especially of Ananda Shipyard.

The bank's EPS was Tk 4.42 in 2012, which came down to Tk 3.45 in 2013 and Tk 2.46 in 2014 -- this erosion in income has been depriving the shareholders of good dividends.

IBBL paid 32 percent dividends for 2011, 25 percent for 2012, 18 percent for 2013 and 15 percent for 2014.

In response to a query on whether IBBL is facing trouble in accepting its letters of credit (LCs) by some banks in the United States and Europe, the chief executive said the bank's data does not reflect that.

IBBL is the top bank in terms of the number of LCs issued and volume of imports, he said.

The bank facilitated imports worth Tk 31,697 crore in 2014 and issued LCs for imports worth Tk 7,985 crore in the first quarter of the current year, up by 7 percent from the same period in the previous year.

Bank Asia has re-elected Mohd Safwan Choudhury and AM Nurul Islam Anu as vice chairmen, the bank said in a statement.

Choudhury is a former president of Sylhet Chamber of Commerce and the managing director of M Ahmed Tea and Lands Company, Phulbaria Tea Estates, M Ahmed Cold Storage, Premier Dyeing and Calendaring and M Ahmed Food and Spices, according to the statement.  

He also serves Bangladesh Tea Association as chairman and Friends in Village Development Bangladesh as president.

Anu is the chairman of the board risk management committee and a financial adviser to Opex group, the bank said. 

He previously worked as chairman of Bank Asia's audit committee for three years and also sat on the board of National Bank. He is a former teacher of Dhaka University.