BEIJING: China is highly unlikely to see a mid-year liquidity crisis this year, and there will be no repeat of the "unusual market fluctuations" seen in June 2013, a central bank-affiliated newspaper said.

In an editorial published Saturday, Financial News, under the People's Bank of China (PBOC), dismissed fears of the reoccurring of a mid-year liquidity crunch in the wake of increases to deposit rates at a few banks, reports Xinhua.

As China's monetary policy is currently "neither too tight nor too loose," the overall liquidity condition in the banking sector is good, it said.

A credit crunch at Chinese banks in June 2013 caused interbank interest rates to surge by double digits and pounded the market, sparking concern among investors.

Only a few banks have increased deposit rates and they do not represent the whole picture, the newspaper said, noting that China's major lenders were stable with healthy debt structures.

Meanwhile, it's normal for commercial banks to adjust deposit rates and the yield rates of certain financial products, it added.

It also addressed fears over capital outflow due to the possible U.S. Federal Reserve rate hike this month, the central bank's macro prudential assessment (MPA) on commercial banks, and continued financial tightening and deleveraging will add pressure to market liquidity.

The authorities have already made moves ahead of the expected Fed rate increase, while the MPA, a formal evaluation covering loans and other assets, together with the ongoing financial scrutiny, will actually help stem financial risk, said the newspaper.

Financial institutions and market players should remain rational toward mid-year liquidity conditions by staying vigilant while avoiding panic and chaos."There is no need to exaggerate the liquidity risk," it said.

The PBOC injected 498 billion yuan (73.3 billion U.S. dollars) into the financial system via medium-term lending facility (MLF) on Tuesday, which is described by the newspaper as "a clear signal" of keeping liquidity "basically stable" by providing medium- and long-term funds.

NEW DELHI: Country's largest lender State Bank of India (SBI) has expressed apprehensions that demonetisation may continue to result in slowing down of the economy, and adversely affect its business.

The government had discontinued Rs 500 and Rs 1,000 banknotes from November 9, 2016 and issued new Rs 500 and Rs 2,000 currency notes in exchange for the discontinued ones, reports PTI.

The long-term impact of this move on the Indian economy and the banking sector is uncertain, SBI told institutional investors prior to its Rs 15,000 crore share sale through private placement.

The effects of India's recent demonetisation decision are uncertain, which may adversely affect the bank's business, results of operations and financial condition, the bank said in the Preliminary Placement Document to investors while flagging the 'risk factors'.

"The demonetisation has and may continue to result in a slowing down of the Indian economy, which may adversely affect the Bank's business," it said.

The document, SBI had said contains forward-looking statements that involve risks and uncertainties. Further, the financial performance may differ from "such forward-looking" statements as a result of certain factors.

WASHINGTON: For the second time this year, the US central bank appears poised to raise interest rates despite fresh signs the world's largest economy is not in peak condition.

The recent soft numbers on the economy may have weakened the case for an increase in the benchmark lending rate by the Federal Reserve, which begins a two-day meeting on Tuesday to review monetary policy, reports AFP.

But the Fed is widely expected to stick to its guns, having built up expectations that it will tighten monetary policy at this meeting, although further rate hikes this year are now in doubt.

At the policy meeting last month, the central bank left rates unchanged at between 0.75 and one percent, and policymakers said they would wait to see whether evidence supported another rate hike.

But they also said first-quarter sluggishness was "likely to be transitory" and that a rate hike would likely be appropriate "soon."

This has prompted criticism that the policymakers' forecasts are flawed and they are not basing decisions on the data, as they pledged to do.

"They seem to be more committed to just getting back to some version of normal than following the numbers," Jared Bernstein, economic advisor to former Vice President Joe Biden, told AFP.

"It's a little puzzling since Chair (Janet) Yellen and others have said they're going to be data-dependent." Since the May Fed meeting, the picture has not grown much brighter, especially

in the key areas the central bank watches: employment and inflation.

Government data have shown clear signs of flagging job growth and a shrinking work force, with average job creation in the March-May period down 40 percent from the prior three months.

Inflation moved even further from the Fed's two percent target in April, with the Fed's preferred inflation measure at 1.7 percent for the latest 12 months. And, while first-quarter GDP growth was revised upwards by a sharp 0.5 points to 1.2 percent, this is still no better than sluggish.

Given the weak data, the Fed's persistent belief the sun will come out tomorrow, and inflation will stabilize at two percent in the medium term, has drawn sharp criticism from some quarters.

Economists J Bradford DeLong and Narayana Kocherlakota, a former president of the Minneapolis Fed known for advocating a cautious approach to raising rates, each accused the Fed in recent days of persistently overstating the strength of the US economy and inflation.

"Elementary mathematics dictates that credible forecasts should at least overestimate half the time and undershoot half the time," DeLong wrote, saying the Fed has overestimated the economy for 11 years in a row, making them less reliable than a coin toss.

Even with the growing doubts, as of Friday, futures markets still were forecasting a better-than-99-percent chance of an increase at this week's Fed meeting.

But they are now evenly split on the prospects for another rate increase by the end of the year. Previously, analysts were betting on another hike in September.

Some economists, however, say the economy can tolerate higher rates, as they remain low by historical standards.

Mickey Levy of Berenberg Capital Markets points to falling long-term interest rates and rising equities prices, with the S&P 500 up eight percent since the start of the year.

"Even though the soft inflation may give the Fed pause, the significant easing in financial conditions gives them more room to continue to 'tighten' policy," Levy wrote in a research note.

And Joseph Gagnon, senior fellow at the Peterson Institute for International Economics, told AFP the slowing job creation may in fact be a sign of full employment.

"Some people have been saying it's a little weak. I actually read it the opposite way," he said. "It's actually more hawkish because there is less ability for the labor force to grow."

Bernstein, however, said raising for the sake of raising, or to avoid having to cut rates too suddenly down the road, is not justified.

"You're either data-driven or you're not. You either have evidence of price pressures or you don't," he said.

"These rate hikes are not costless," he added. "Working people need a hot economy if they're going to get ahead and so tapping the breaks doesn't help them."

AB Bank President and Managing Director Moshiur Rahman Chowdhury speaks at an Iftar party organised by the bank in the capital on Saturday.AB Bank Limited, the first private sector bank of the country, hosted an Iftar mahfil in honour to media personnel of the country.

Iqbal Sobhan Chowdhury, Editor of The Daily Observer and Media Adviser to the Prime Minister, daily sun Editor Enamul Hoque Chowdhury and journalists from print and electronic media were present at the Iftar mahfil, said a press release.

 Senior officials of the bank were also present on the occasion.

AB Bank President and Managing Director Moshiur Rahman Chowdhury praised the media community for their contribution and support over the years for developing a healthy banking sector in Bangladesh.

AB Bank since its commencement 35 years ago always strived for effective media support in enhancing modern and sustainable banking in the country, he added.

State minister for finance tells city discussion

State minister for finance and planning MA Mannan said excise duty on bank accounts is not new as it was there since 1947 and the rate of this duty was adjusted upward at different times, reports BSS.

Addressing a city discussion on Sunday, the state minister said account-holders having deposits of Tk 20,000 are now paying Tk 500 as excise duty.

In the budget for the fiscal year 2017-18, the government has proposed for the account-holders having deposits of Tk 100,000 to pay Tk 800 as excise duty, he said.

In this context, he said quoting a Bangladesh Bank information that says around 80 per cent bank accounts have deposits below Tk 100,000.

The Daily Sun organised the discussion on the new VAT rate and its impact on businesses and consumers with its editor Enamul Hoque Chowdhury in the chair.

Consumers' Association of Bangladesh (CAB) president Ghulam Rahman, Bangladesh Dokan Malik Samity president Helal Uddin, research director of CPD Khandaker Golam Moazzem, Bangladesh Super Market Owners' Association president Neaz Rahim and Kamrul Islam of the Dhaka Chamber of Commerce and Industry (DCCI), among others, took part in the discussion.

Md. Zakir Hossain, deputy project director of VAT online under the National Board of Revenue, presented the keynote paper.

About the new VAT law, Mr Mannan said 80 per cent products are exempted from the value added tax (VAT) so that the low income people are not affected.

According to him, the average VAT rate is 16.5 per cent in different countries in the world, but there will be a 15 per cent uniform VAT rate in Bangladesh from July 1.

"The uniform VAT rate in Nepal and Bhutan is also 15 per cent . . . if they can pay it, then why cannot we do that?" he said.

"We'll be able to enforce the new VAT law properly," he said.

CAB president Ghulam Rahman said supplementary duty has been increased on some products and hence suggested maintaining the supplementary duty on soaps and toothpaste at the present rate as it affects the consumers.

If the new VAT law is not implemented properly, consumers will ultimately be affected, he observed.

Md Zakir Hossain in his keynote paper said proper implementation of new VAT law will help improve Bangladesh's ranking in the global doing business index.