BEIJING: China�s central bank on Friday said it will continue with its prudent monetary policies in 2015 with better coordination of tight and loose monetary measures and proper fine-tuning.

The central bank will adapt to China�s economic �new normal� of slower growth but higher quality and highlight industrial transformation and restructuring, said the People�s Bank of China (PBOC) at a meeting on its work in 2015, reports Xinhua.

The central bank will strengthen support for the real economy and cut fund-raising costs, said a statement on the PBOC website.

Zeng Gang, researcher with Chinese Academy of Social Sciences, said monetary policy should support the real economy and structural adjustment amid increasing downward pressure.He expects more liquidity in 2015.

The growth of M2, a broad measure of money supply that covers cash in circulation and all deposits, slowed to 12.3 per cent on a year-on-year basis by the end of November.

�Economic growth can not rely on money supply,� Guo Tianyong, professor of Central University of Finance and Economics, �but policies with better coordination of tight and loose measures can stabilize the economy.�

The meeting said various tools should be used flexibly to maintain the reasonably rich liquidity in the bank system.

The PBOC implemented new tools to tackle changing situations in 2014, including Medium-term Lending Facility (MLF) and Pledged Supplementary Lending (PSL).

The new tools are more flexible and targeted to ensure sufficient liquidity, support the real economy and facilitate structural adjustment, Zeng said. Traditional measures like adjustment in interest rates and reserve requirement ratio (RRR) still remain an option.

The central bank lowered interest rates in November, fanning speculation on further moves, including RRR cuts.

The PBOC said lending and private financing should grow in a steady and moderate way. Macro-control measures in a targeted approach will be continued and lending support will be given to key or vulnerable links.

Finance Minister AMA Muhith yesterday criticised Islamic banking, saying the system has been built on "misconception".

"The system seems to me absolutely fraudulent," he told parliament, replying to a question of a lawmaker.

Muhith said the banking model has become popular around the world. "It is unfortunate that many organisations like IMF [International Monetary Fund] talk about it."

The minister said "riba" and interest rates are not the same.

Riba is a concept in Islamic banking that refers to charged interest. It is forbidden under sharia because it is thought to be exploitive, according to Investopedia. "Riba is forbidden in Islam. It is a compound interest. But the interest rate in the conventional banking system is fixed taking into account the cost of fund,” Muhith said.

He also said he has nothing to do in this regard. "The Muslims and those who think about Islam can do something."

Replying to another query, Muhith said no specific allegation has been received so far against any bank capitalising on religion.

Dhaka: Islami Bank Bangladesh Limited is providing special services this year to the visitors and the participating companies from home and abroad at Dhaka International Trade Fair, reports in press release.
The Bank officials at the pavilion are providing information to the visitors about different types of accounts, investments and services of the Bank. Visitors can open new account of any branch of the Bank, deposit and withdraw money from the Pavilion. The visitors can also open mCash mobile banking account.
A deposit machine (IDM) has been installed in a corner of the Pavilion for depositing money at any branch of the Bank. Businessmen in the fair can deposit the sales money to avoid the risk of carrying cash. Besides they can withdraw money from the ATM booth.
Islami Bank is working for sustainable development of the country. The bank conducts its investment operation giving priority of human need. The pavilion is decorated with five basic needs such as food, clothing, accommodation, treatment and education. A jute belt has been placed at the pavilion to revive the lost glory of the golden fiber in Bangladesh.
The pavilion has been decorated with pigeon, symbol of peace. A transparent bridge has connected the floating bridge. Fountain, handicrafts and photos of the toiling people of the rural Bangladesh has added aesthetic beauty of the pavilion.
Visitors throng to the pavilion for snapshots. The pavilion of Islami Bank was awarded for three consecutive years in different category.

Spillover effect of loan scams continues in the banking sector 

The country’s banking sector witnessed lowest return on assets in 10 years due to the rise in default loans.

Return on Asset (ROA) was declining since December 2010 from 1.8% to 0.6% in June 2014 thanks to maintaining higher provision against the bad assets, according to Bangladesh Bank monetary policy statement that announced on Thursday last for H2.

The banks, however, bagged highest return on assets above 1.5% during the year 2010 and 2011 when the private sector credit growth was also highest ever 24.2% and 25.8% respectively according to the Bangladesh Bank data.

The return on asset witnesses a sharp fall in the year 2012 as several loan scams took heavy toll on the banking sector.

Loans over Tk4,500 crore have been taken away from the banking sector through forgery by Hallmark and  Bismillah group between the year 2010 and 2012. Loan forgery of around Tk4,500 crore took place in BASIC Bank during the same period.

The spillover effect of the loan scams continued in the banking sector with eroding its earnings, said a senior executive of Bangladesh Bank.

The ROA increased to 0.9% in December 2013 mainly because of the temporary relaxation of loan rescheduling policy, according to the central bank monetary policy statement.

The required provision against bad debt for the year 2013 came down to Tk4,600 crore compared to Tk8,640 crore for 2012 thanks to huge loan rescheduling under the relaxed policy that was given from December 2013 to June 2014.

The earning ratio declined again to 0.6% at the end of June 2014 due to further increased amount of default loans and the net losses made by state-owned commercial banks, said the statement.

The private sector credit growth also remained in slower pace ranged between 10% and 12% during last one and a half year.

The return on asset of the state-owned commercial banks, including Sonali, Janata, Agrani and Rupali became negative in June 2014 from 0.6% in the year 2013, according to the central bank data.

The return of these four banks grew consistently since the year 2008 and reached to the highest 1.4% in the year 2011. Later, it turned negative in the year 2012 due to the huge corruption in loan disbursement.

The banks showed artificial return of 0.6% in the financial statement of the year 2013 through regularising huge amount of default loans under relaxed policy. But it did not sustain as clients fail to continue installment amid political unrest. As a result, the ratio of return again turned to negative in June last year.

The default loan rate also pushed the capital adequacy ratio of banking sector down to 10.6% at the end of September last year from 11.5% in December 2013. The private commercial bank though successfully maintaining the CAR standard of 10% since December 2010 but the state-owned commercial banks are still struggling to fulfill the regulatory requirements.

The rise of default loans continued during the first three quarter of 2014 because of the implementation of the new guideline for loan classification and rescheduling, Bangladesh Bank explained in its monetary policy stance.

In addition, the lack of profitability due to the uncertainties emanating from political factors contributed to this increased volume of default loans, said the policy. 

Chairman of Rupali Bank Amalendu Mukharjee, managing director M Farid Uddin and other high officials of the bank Sunday greeted the Governor of Bangladesh Bank Dr Atiur Rahman on winning the 'Best Governor' award in the Asia-Pacific zone by a prestigious publication of London-based Financial Times. The Governor also greeted the Rupali Bank on winning First Division Women's Cricket League, 2014-2015.