The non-resident Bangladeshis can directly invest in the Bangladesh Fund, which was floated last year following the stockmarket debacle.

The NRBs can buy the units of the fund by using their Non-Resident Investors Taka Account (NITA).

The permission came at a meeting of the Securities and Exchange Commission yesterday with its Chairman M Khairul Hossain in the chair, according to a press statement.

Earlier, ICB Asset Management Company, the issue manager of the fund, requested the regulator to allow investments from the NRBs in the fund.

Before the permission was given, the NRBs were allowed to invest in the open-ended fund as foreign investors.

The government launched the Tk 5,000-crore Bangladesh Fund after the market debacle early last year with the Investment Corporation of Bangladesh (ICB) as the lead sponsor.

Seven other sponsors were Sonali Bank, Janata Bank, Agrani Bank, Rupali Bank, Bangladesh Development Bank, Sadharan Bima Corporation and Jibon Bima Corporation.

The sponsors contributed Tk 1,500 crore to the fund, while the rest Tk 3,500 crore are kept for public.

The open-ended mutual fund, a professionally managed collective investment scheme with unlimited lifetime and size, was approved by the SEC on May 4 last year and the public subscription started in October the same year.

The fund manager pools money from many sponsors or investors through its selling agents and invests it in stocks, bonds and short-term money market instruments, and pays out dividends to the unit holders annually.

At yesterday's meeting, the SEC formed two separate committees to modify public issue and rights issue rules.

The panels will advise the commission within the next one month which changes should be brought to the rules.

The two-member committee on public issue rules comprises the commission's Executive Director M Hasan Mahmud and Director Mohammad Rejaul Karim, while the two-member committee on rights issue rules comprises directors Kamrul Anam Khan and Prodip Kumar Basak.

The stockmarket regulator also formed another two-member panel on formulation of a guideline on asset revaluation of listed companies.

The committee, comprising SEC directors Mahbubul Alam and Abul Kalam, will submit a set of recommendations on the guideline to the commission within the next one month.

The SEC also formed a two-member inquiry committee to investigate the irregularities of NBL Securities.

Earlier, the Dhaka Stock Exchange through an investigation found irregularities in the NBL Securities and sent a probe report to the commission.

At the meeting, the regulator also imposed a Tk 1 lakh fine on each managing directors and each directors of Bangla Process Industries and Mita Textile for failing to submit audited financial reports for the year that ended in June 2011 to the commission.

The SEC also gave permission to Baizid Steel Industries, Kores (Bangladesh) and Popular Pharmaceuticals to raise their paid-up capital.

Baizid Steel Industries will issue three crore ordinary shares of Tk 10 each to raise its paid-up capital by Tk 30 crore to Tk 40 crore, while Kores (Bangladesh) will issue 1.3 crore ordinary shares of Tk 10 each to increase its paid-up capital by Tk 13 crore to Tk 23 crore.

Popular Pharmaceuticals will issue 64.61 lakh ordinary shares of Tk 100 each to raise its paid-up capital by Tk 64.61 crore to Tk 119.71 crore.

The SEC also gave a go-ahead to Sk Akijuddin to raise Tk 100 crore through issuing subordinated non-convertible unsecured bond.

With a two-year time for full redemption, only banks and non-banking financial institutions can buy the bond through private placement.

Face value of each unit of the bond will be Tk 1 crore. Race Portfolio and Issue Management is the sole lead arranger of the bond.

At yesterday's meeting, the SEC also extended the subscription period of MTB Unit Fund to January 31 next year.

News: The Daily Star/Bangladesh/21-Nov-12

From left, Riti Ibrahim, secretary of Statistics Division; Hasan Mahmud, environment minister; Hossain Zillur Rahman, executive chairman of Power and Participation Research Centre; Ghulam Quader, a former adviser to caretaker government; and Abu Alam Md Shahid Khan, secretary of Local Government Division, attend the opening ceremony of a workshop on urbanisation at Ruposhi Bangla Hotel in Dhaka yesterday.

Bangladesh should set up a local government finance commission to help cities and municipalities become self-sufficient, former central bank governor Salehuddin Ahmed said yesterday.

"I think it is very necessary.”

“The dependence of local government bodies including the urban ones on central government for finance must be reduced. The present ad-hoc and discretionary practices of central government in allocating resources should be abandoned to achieve fiscal decentralisation,” Ahmed said.

The best way to achieve fiscal devolution is to set up a permanent local government finance commission, he said.

His comments came at a daylong workshop, "Bangladesh Urban Dynamics", organised by Power and Participation Research Centre (PPRC) at the capital's Ruposhi Bangla Hotel.

Presenting a keynote paper on urban public finance, Ahmed said the importance of tying both political and fiscal decentralisation together has to be recognised.

In order to capture the efficiency gains of local government, it would be necessary to have a significant set of expenditure responsibilities and taxing powers, he added.

The local government, especially city corporations, may also consider issuing municipal bonds for fund raising purposes, Ahmed said.

“However, this is a complex process which, among other things, requires legal reforms.”

Ahmed said drastic changes to the physical, economic and social structure in the urban areas due to rapid urbanization has been posing serious challenges to sustainable urban development in Bangladesh.

Hossain Zillur Rahman, executive chairman of PPRC, said urbanisation is a major issue for Bangladesh as the country is going to have 10 crore urban population by 2030.

"It is a national, social and economic issue," he said.

The economist also said the government would have to make urbanisation one of its key agendas for transforming Bangladesh into a middle-income nation.

"It will be a growth driver of the country. Its potential has to be maximised."

Hasan Mahmud, environment and forests minister, calls for planned urbanisation so that services could be provided in an efficient manner.

He is totally against the continued expansion of Dhaka, which has already been termed as one of the top most unliveable cities in the world.

"Although urbanisation is a reality we have to be tough on urbanisation. We have to have a long-term effective vision," Mahmud said.

Akbar Ali Khan, a former caretaker government adviser, said nobody can stop urbanisation.

"So, we have to think about it afresh. We have to be prepared."

He said it is not true that people do not want to pay for the services they get from the local governance bodies.

"In many parts of Dhaka we are seeing dwellers take private initiatives to avail the civic amenities."

ABM Mirza Azizul Islam, a former finance adviser to caretaker government, said the problems regarding urbanisation are well-known and solutions, in most cases, are also known.

"But we do not see their implementation."

He said different government agencies -- and not the local governance system -- provide services in the urban areas and they lack co-ordination among them, either in planning or in service delivery.

However, he said, there are both good and bad news for Bangladesh when it comes to urbanisation.

"The good news is: Bangladesh is still one of the least urbanised countries in the world, as only 22 percent of the country's population live in the cities. So, there is a potential for balanced growth."

"And the bad news is: Dhaka is the second most unliveable city in the world. So, there is a need for decentralisation of services, management, and administrative system."

Mahabub Hossain, executive director of BRAC, the world's largest non-governmental organisation, said it is universal true that whenever there is any economic growth there will be urbanisation.

He said the services provided by the local governance bodies could be privatised.

"The sooner we privatise them the better services the citizens will receive."

Hossain said that he does not understand why building the mass transit system is taking so much time.

"We have been hearing about this for years. We need a strong will to complete the project, which will allow us to largely avoid the greatest wastage -- people's time."

Mustafa K Mujeri, director general of Bangladesh Institute of Development Studies, described it as a collective failure as the country could not give adequate importance to the urbanisation issue on time.

"As a result, the problems have become very complex. It would be a challenge to solve them."

He said urbanisation could not be seen as a piecemeal issue; time has come to look at it from a comprehensive approach.

The former central bank chief economist said Bangladesh would see rapid urbanisation in its development process in the next one or two decades.

"We need to have urbanisation that supports growth."

Prof Jamilur Reza Choudhury, vice-chancellor of the University of Asia Pacific, supported immediate implementation of the mass road transit (MRT) project.

He said there are many low-investment solutions which can solve the city's notorious traffic system greatly, but neither the government nor the private sector pays any heed to them.

Prof Nazrul Islam, an urban specialist, said the World Bank should broaden its urbanisation strategy beyond Dhaka and Chittagong.

Abu Alam Md Shahid Khan, secretary of local government division, said the civic voice should be stronger and not bow down to any pressure in implementing the MRT project.

Tofail Ahmed, a former member of local government commission, said there is no financial discipline in the local governance bodies.

"We have to give them [the local authorities] power so that they can run on their own."

ATM Nurul Amin, a professor of North South University, said Bangladesh should construct the mass transit system on a priority basis to rid the city of congestion.

“The project should get priority over the Padma Bridge."

News: The Daily Star/Bangladesh/21-Nov-12

The International Monetary Fund said Tuesday it had reached a deal with Egyptian authorities on a 22-month loan totalling some $4.8 billion to help the country overcome economic difficulties.

The staff-level agreement is expected to be submitted to the IMF's executive board for approval in a few weeks, a statement said.

"The Egyptian authorities have developed a national programme that seeks to promote economic recovery, address the country's fiscal and balance of payments deficits, and lay the foundation for rapid job creation and socially balanced growth in the medium term," said IMF official Andreas Bauer, who led the Washington-based lender's mission to Cairo.

"The policies contained in the authorities' programme will help address Egypt's pressing economic and social challenges, and reduce vulnerabilities," he added.

The so-called Stand-By Arrangement will support the government's economic programme through the 2013/2014 fiscal year and support an economy left battered by the 2011 uprising that toppled Hosni Mubarak's regime.

Egyptian Minister of Planning and International Cooperation Ashraf al-Arabi said the agreement would be presented to the cabinet on Wednesday as a matter of procedure.

In Cairo, talk of an Egypt-IMF agreement had met some opposition from civil society groups and some political parties.

In a letter addressed to Egypt's Prime Minister Hisham Qandil and to IMF chief Christine Lagarde, 17 groups expressed concerns over the lack of transparency and called for the negotiations to be frozen.

"The negotiations of the terms and conditions of the loan agreement, including the government's economic reform programme, have lacked transparency on the part of both the IMF and the government of Egypt," the groups said in the letter.

"The austerity measures associated with this potential loan agreement, including cutting subsidies as well as other deficit reduction policies, may aggravate the economic deprivation of a large section of the population, threatening their basic economic and social rights," they said.

Political instability has hammered the tourism industry in Egypt, the country's major source of revenue, and has led to a drop in foreign investments, worsened the budget deficit and sparked social conflict.

The Egyptian central bank's currency reserves plunged, threatening the country's ability to import commodities and support the Egyptian pound.

News: The Daily Star/Bangladesh/21-Nov-12

Unlike the cash-strapped state banks, private commercial banks are sitting on surplus funds to the tune of Tk 20,000-25,000 crore, which indicates a slower demand for loans in the market, according to banks.

The loan-deposit ratio of the private banks has gone down significantly from the Bangladesh Bank's permissible limit of 85 percent. Call money rate has also come down to the single-digit level, which was unthinkable a few months ago.

Top bankers identified a set of reasons for an increase in liquidity in the banking industry.

The reasons include: infrastructure constraints, a low demand for loans, high lending rates, new rules on provisioning, tightening of imports and consumer loans, a decline in government's borrowing from banks, a rise in remittances and availability of loans from foreign sources.

The central bank's new rules to devolve investment in government securities to all banks from primary dealer (PD) banks alone created some funds for the PD banks.

“Imports and the private sector's demand for loans have gone down. But the growing tendency to borrow from foreign sources has created the surplus fund,” said Nurul Amin, managing director of NCC Bank.

Amin said local private companies borrowed $2 billion from foreign sources this year.

He said many banks are now investing in short-term treasury bills to earn something from their excess liquidity.

NCC Bank's present loan-deposit ratio is at 77 percent, meaning the bank gave Tk 77 as loans against a deposit of Tk 100.

The ratio is 71-72 for Mutual Trust Bank, which reflects a poor demand for loan.

“Disbursements are substantially lower than the credit facility in place,” said Anis A Khan, managing director of the bank.

His bank's surplus money is at around Tk 700-800 crore.

Khan said the government's borrowing from the banking sector has declined in the last 4-5 months. He sees the central bank's measures regarding the PD banks have also reduced the liquidity pressure on them.

Helal Ahmed Chowdhury, managing director of Pubali Bank, said a rise in remittances and a fall in imports have created some additional funds for the banks.

Chowdhury said his bank has nearly Tk 1,000 crore unused funds now.

SA Farooqui, managing director of Standard Bank that has Tk 800 crore unused funds, said a substantial reduction in import of food grains and 'any purpose loan' has contributed to an increase in the banks' funds.

Shafiqul Alam, additional managing director of United Commercial Bank that has Tk 1,000 crore in surplus funds, said they have been facing a shortage of borrowers in the call money market.

The call money rate, which was 10.21 percent on November 5, went down by nearly 2 percentage points to 8.26 percent on Monday.

central bank data shows excess reserves, which are equal to the balance of the scheduled banks' deposits held with the BB minus their cash reserve requirement or CRR, have also increased to Tk 18,011 crore as on Monday from Tk 14,520 crore on Tuesday last.

Muklesur Rahman, deputy managing director of Eastern Bank, explained the situation a bit differently.

“Banks have concentrated more on recovery than lending. They are busy with their housekeeping,” Rahman said.

News: The Daily Star/Bangladesh/21-Nov-12

Dr. AB Mirza Azizul Islam, former advisor of the caretaker government hands over ‘Strong Rated Banks Award 2012’ to Md. Mofazzal Hossain, Deputy Managing Director of Al-Arafah Islami Bank Ltd at a function in Dhaka recently.

The Industry, a financial weekly, awarded ‘Strong Rated Banks Award 2012’ to Al-Arafah Islami Bank Limited as per the international assessment method of capital, asset and management.

The award was handed over at a function in Dhaka recently. From 47 banks of the country, the organisers catagorised eight banks as ‘Strong Rated Bank’ which includes Al-Arafah Islami Bank Limited, said a press release.

The award distribution was held at the conference hall of FARS Hotel in Dhaka recently.

Former advisor to a caretaker government Dr. AB Mirza Azizul Islam was present as chief guest and handed over the award to Md. Mofazzal Hossain, Deputy Managing Director of Al-Arafah Islami Bank Ltd.

Among others, former deputy governor of Bangladesh Bank Ataul Haq, President of the Association of Bankers’ Bangladesh (ABB) Md. Nurul Amin, President of the Global Economist Forum Bangladesh Chapter Shah Md. Nurul Alam and Editor of The Industry Enayet Karim were present on the occasion.

Top executives of the banking sector attended the awarding ceremony.

News: The Daily Sun/Bangladesh/20-Nov-12