Bangladesh Bank (BB) has extended the deadline for repayment of classified term loan and agriculture credit by six months.

In a circular issued Thursday evening, the central bank authority asked the banks to comply with the extended timeline from the expiry date for repayment of last installment of classified term loans and agriculture credit.

“Because of the latest circular, banks will need less amount of money for adjustment of provisioning against classified loans. As result, banks net profit will increase,” said a BB official, seeking anonymity.

Earlier in June, the central bank had tightened the rules for banks and loan-defaulters to repay classified loans.

Following the BB’s move, the banks needed to keep extra money from profit for provisioning as the amount of classified loans had increased, according to the sources.

Banks were advised to follow other regulatory directives, which mentioned in the master circulars issued on June 14, sources said.

News: The Daily Sun/Bangladesh/23-Nov-12

Aggressive lending has doubled state-owned BASIC Bank's non-performing loans (NPL) in just nine months this year, data shows.

The bank's NPL was 4.38 percent of its outstanding loans at the end of December last year, but the amount shot up to 8.10 percent in September this year, indicating a rise in its loan defaults.

Such loans were 4.83 percent of its total loans, both in 2009 and 2010.

Despite a dramatic rise in its bad loans, the bank's top officials think they are on the right track and the situation might improve at the end of the year.

“Some big loans were classified, pushing up the NPL of the bank,” Kazi Faqurul Islam, its managing director, told The Daily Star.

“Some of our loans were classified on qualitative judgment,” said Islam.

Data shows the bank received Tk 1,412.45 crore in deposits during January-September, but it lent Tk 1,456.71 crore during the period violating the Bangladesh Bank rules.

According to BB, a bank cannot lend more than 85 percent of its deposits.

“We're on an aggressive expansion drive; we cannot sit on idle funds,” said A Monaem Khan, deputy managing director of the bank.

Khan said the bank had only 32 branches in September 2009, but now it has 56, excluding those in the pipeline.

A fully government-owned bank different in its objectives from other banks, BASIC started its operations in January 1989.

The bank is a blend of development and commercial banks. Of the bank's total loanable funds, 50 percent are meant for small and cottage industries.

Recently, BASIC Bank came as news reports after the Anti-Corruption Commission launched an inquiry into alleged embezzlement of funds from the bank.

Finance Minister AMA Muhith also said in parliament that there were some irregularities in the bank, but he did not disclose the amount involved.

News: The Daily Star/Bangladesh/23-Nov-12

Jim McCabe, CEO of Standard Chartered Bangladesh, speaks in a press briefing in Dhaka yesterday to announce the Bangladesh Investment Summit to be held in Singapore on December 4. K Mahmood Sattar, managing director of the City Bank, was also present.

A daylong event dedicated to Bangladesh will take place in Singapore next month to convey the country's success stories and potential to foreign investors.

The conference, known as Bangladesh Investment Summit, is tipped to be an important platform for Bangladesh's businesses and policymakers to market the country -- as it will be attended by more than 200 potential investors from across the world.

FinanceAsia and AsianInvestor, both published by Haymarket Financial Media Group, will host the summit at the Marina Bay Sands Convention Centre in the city-state on December 4.

Asset owners, private banks, asset managers, investment banks and other financial institutions will also take part in the summit, which will address all issues pertaining to investing on the continent.

The summit will showcase the vast opportunities available in Bangladesh, Jim McCabe, chief executive officer of Standard Chartered Bangladesh, told reporters in Dhaka yesterday.

"The potential of Bangladesh is real. We see a huge potential in the country. There is also a plenty of scope to engage in investment in the country," he said.

The summit, sponsored by Standard Chartered Bank, the City Bank Ltd and Deutsche Bank, will help leading Bangladeshi businesses access foreign capital to expand their businesses, he said.

McCabe said prestigious speakers from government, leading Bangladeshi corporate world, financial institutions and Asian investors, would lend their expertise on driving inward investment to Bangladesh.

Topics to be covered include access routes for investment, Bangladesh's strategic potential, success stories of inward investment and discussions on how to stimulate exports and improve the country's infrastructure.

In a statement circulated at the press briefing, Jonathan Hirst, publisher of FinanceAsia and AsianInvestor, said although the profile of Bangladesh as an investment destination is gaining momentum, a large part of it remains an untold story.

"The summit represents a significant step in the right direction, which we hope will go some way in helping to attract investment into the country,” Hirst said.

The event, the first-of-its-kind for Bangladesh, represents an opportunity for international investors to learn and share ideas on unlocking capital to grow business, increasing exports in existing and new industries and developing key infrastructure projects, he said.

McCabe said Bangladesh has demonstrated rapid progress since independence and has been rightly identified as one of the “next 11 economies”.

"We need to showcase the investment opportunities that Bangladesh offers to the world."

The experienced banker said although it could not be said immediately how much the summit would help Bangladesh attract in investment, but the event would offer fantastic networking opportunity for the people who want to expand their footprint.

Mahmood Sattar, managing director and chief executive officer of City Bank, said investors are looking for new markets and opportunities as growth in the western world, including the US and EU, have come to a standstill due to the ongoing crisis.

"Historically it could not have been a more appropriate time than this for Bangladesh to assert its potential abroad to attract foreign investors. The same is true from the investors, as Bangladesh offers vast opportunities for foreign funds and others."

He said Bangladesh has to be sold well outside because its achievements and what it can offer to the world.

Both McCabe and Sattar said time is right for the summit as investors with funds would decide in December where to put their money next year and the year beyond. The networking will translate into follow-up meetings and visits.

The Daily Star and the Financial Express are the media partners of the event.

News: The Daily Star/Bangladesh/23-Nov-12

Bad loans increased by Tk 7,282 crore or 1.58 percentage points in the third quarter this year as a significant amount of loans related to the recent incidents of scams was classified.

The central bank is putting pressure on the banks to get the real picture of their loan defaults.

On September 30, the total amount of bad loans in the banking sector was Tk 36,282 crore or 8.75 percent of the total outstanding loans.

The amount was Tk 29,000 crore or 7.17 percent of total loans on June 30.

According to Bangladesh Bank statistics, the highest increase in such loans was in the state-owned commercial banks that saw a rise by Tk 3,746 crore in the third quarter.

The amount of total classified loans at these banks stood at Tk 15,518 crore on September 30.

The classified loans at the private banks also marked a rise, by Tk 3,280 crore during the same period, and reached Tk 13,585 crore.

Bankers said the central bank recently detected loan-related irregularities in some public banks, and put pressure on the banks to classify the loans.

Hall-Mark Group and some other businesses embezzled Tk 3,547 crore from Sonali Bank's Ruposhi Bangla branch on forged documents.

On November 18, Finance Minister AMA Muhith also said in parliament that a significant amount of funds was also embezzled through Sonali Bank's Gulshan and Agargaon branches.

The finance minister said incidents of forgery were also detected in the accounts of some customers of Rupali, Janata, Agrani and BASIC Bank.

According to BB statistics, the amount of bad loans increased by Tk 1,733 crore in Sonali Bank, by Tk 758 crore in Janata, by Tk 1,092 crore in Agrani, and by Tk 163 crore in Rupali Bank during the July-September period.

Though BASIC is not a state-owned commercial banks, it is run under the government's control. During the period, bad loans increased by about Tk 200 crore at BASIC Bank.

The entire amount of the money involved with the irregularities unearthed recently has not yet been classified and the loan defaults may increase further in December when these loans will be classified.

Pradip Kumar Dutta, managing director of Sonali Bank, told The Daily Star that Tk 400 crore, a portion of the loans taken by the Hall-Mark Group, was classified in September.

The rest of the amount is likely to

be classified in December this year,

he added.

On the increase in loan defaults, the Sonali Bank's chief executive said the amount of bad loans marked a rise as their recovery, write-off and rescheduling was less this year compared to the previous year.

He also said they wrote off around Tk 800 crore last year, but the amount was only Tk 2 crore so far this year.

Dutta also said, to realise the loans from the Hall-Mark Group, the bank has taken the Group's 88 acres of land as mortgage. The lands are worth about Tk 560 crore on conservative estimates made by the bank.

Another 45 acres of land are being taken as mortgage, said the official of the bank.

He said, as a result they hope to securitise about Tk 1,000 crore against the loans given to Hall-Mark.

A central bank official said the BB has tightened its supervision after the incidents of loan scams were detected in some state banks.

The central bank also identified irregularities in some private banks that have already classified the loans, leading to a rise in default loans in those banks, he said.

News: The Daily Star/Bangladesh/23-Nov-12

The Bangladesh Bank (BB) asked the financial institutions (FIs) to go by SEC rule on margin loan ratio set by the securities regulator in operating their subsidiary companies – merchant banks and brokerage houses. The margin loan is the credit provided by the merchant banks against securities held by the investors.

The central bank recommended that all the financial institutions should follow margin loan ratio in line with the SEC guidelines in managing their subsidiary companies, said BB in its statement issued on Wednesday.

On September 30, the Securities and Exchange Commission (SEC) has set new margin loan ratio for merchant banks and brokerage firms. It decided to bring down the ratio of share credit in phases.

Under the new guideline, the existing margin loan ratio at 1:2 will remain unchanged till June 30, 2013.

The ratio will come down to 1:1.5 from July 2013 and will remain effective until December of the same year. From January 2014 the ratio will be 1:1 and from July 2014 it will be 1:0.5.

News: The Daily Independent/Bangladesh/22-Nov-12