People will be discouraged to deposit their money with the banks as the government has imposed tax at source on profits and interests.

This will decrease the amount of deposits, which will ultimately lower investment in the country, affecting the country’s overall economy negatively, experts said.

Moreover, it is also not clear to the people whether the government will charge 15 percent tax on all fixed deposit accounts.

Economists opine, the government has imposed tax on deposits as it can be collected easily. What the government should do is to find out the persons who are able to pay tax. This kind of decision is not justified for all citizens, they said.

While placing the Finance Bill in the parliament for passage on June 27, the finance minister made a proposal to deduct 10 percent tax on profit and interests at source for depositors bearing TIN certificates and 15 percent for those who do not have the TIN.

The National Board of Revenue (NBR) has already taken initiative to deduct tax at source as per the provision. The NBR has issued circular to the banks about executing the provision from July 2012, which the banks have started informing their clients through letters.

The finance minister while placing the Finance Bill at the House said, “Those who have more than Tk 100,000 deposit but does not have any tax identifying number (TIN) will have to pay 15 percent tax at source. The clients having TIN will have to pay 10 percent tax.

Earlier in his budget proposal, the finance minister proposed to impose tax on all deposit accounts whatever the deposit amount was. Later, in face of criticism, Prime Minister Sheikh Hasina proposed to impose tax on clients who have at least Tk 100,000 deposit.

HSBC’s retail banking and wealth management chief Md Shafkat Hossain told banglanews24.com: “We are informing our clients about the government decision through letters, e-mails and SMSs. Using all kinds of communication system we have requested our clients to submit their TINs.”

Former Bangladesh Bank Governor Saleh Uddin Ahmed said, “According to my consideration, this kind of tax collection is not right and injustice to general clients.General people will be discouraged to deposit money in the banks. On the other hand, it is contradictory to another section of tax collection that states free income limit as two lakhs.”

The former BB governor observed that the government should reconsider the decision.

Non-government research organisation Centre for Policy Dialogue (CPD) Executive Director Dr Mostafizur Rahman said, “The decision will discourage small investors to keep money in the banks. Those who deposit pension money in the banks will be affected.”

“Due to this decision, those who are not under tax limit will also have to pay tax, creating discrimination among the people.”

The Daily Sun/Bangladesh/ 18th July 2012

Mahtabuddin Ahmed, Chief Financial Officer of Robi and Md Ahsan-uz Zaman Additional Managing Director of Mutual Trust Bank Limited (MTBL) exchange documents after signing an agreement at MTB head office at Gulshan in Dhaka Tuesday.

Robi Axiata Limited signed a corporate agreement on “Nationwide Collection Service” with Mutual Trust Bank Limited on Tuesday.

Mahtabuddin Ahmed, Chief Financial Officer of Robi and Md Ahsan-uz Zaman Additional Managing Director of Mutual Trust Bank Limited (MTBL) signed the agreement on behalf of their respective organisations, said a press release.

This online collection service system will benefit the Robi customers by updating their bill payment instantly.

Among others, from Robi, Dewan Nazmul Hasan, Vice President, Md Shahedul Alam, Head of Corporate Finance, VP – Legal and Compliance, Md Badar Uddin Sabery, Manager Treasury, Md.Abdur Rahim Khan were present at the deal signing ceremony.

The Daily Sun/Bangladesh/ 18th July 2012

Abul Kashem Md. Shirin, Deputy Managing Director of DBBL, seen at a workshop at LGED auditorium in Sunamganj.

Dutch-Bangla Bank Limited organised a day-long workshop on 'Money Laundering Prevention' for the managers of all private commercial banks at the LGED auditorium in Sunamganj.

Fifty managers from different commercial banks participated the workshop, said a press release Monday.

Abul Kashem Md. Shirin, Deputy Managing Director of DBBL inaugurated the workshop.

Officials from 'Bangladesh Financial Intelligence Unit' of Bangladesh Bank presented the keynote paper on managers' role regarding effective action plan of the Central Bank on prevention of Money Laundering.

Moreover, DBBL's Deputy Managing Director Abul Kashem Md. Shirin presented keynote paper on 'Mobile Banking', a revolutionary invention in the banking sector of Bangladesh, from the viewpoint of prevention of money laundering.

The Daily Sun/Bangladesh/ 18th July 2012

WASHINGTON: The International Monetary Fund stepped up its warnings yesterday on risks to the global economy, mainly from the crisis-mired eurozone, as it trimmed its growth forecast for the rest of the year.

IMF economists said that the frail situations in Spain and Italy especially could quickly turn worse amid market doubts over eurozone leaders' resolve in implementing pledged reforms.

But they also pointed to the US "fiscal cliff" trajectory which, if not corrected, could crunch the US economy and heavily impact the rest of the world.

"In the past three months, the global recovery, which was not strong to start with, has shown signs of further weakness," the fund said in its quarterly economic forecast.

"Financial market and sovereign stress in the euro-area periphery have ratcheted up," it said, while growth has fallen below expectations in a number of major emerging-market economies.

If policy reactions in major economies remain inadequate or too slow, the IMF said, fissures could deepen, they added. "The main risk is obvious," IMF chief economist Olivier Blanchard told reporters.

"It is that the vicious circle in Spain and Italy becomes stronger, that output falls even more than it does, that one of these countries loses its financial access to markets," he told reporters.

"The implications of such an event could easily derail the world recovery."

The IMF said that largely due to sharper-than-expected slowdowns in newly industrialized Asia and in large emerging economies like China, India, and Brazil, it had cut 0.1 percent off its April forecast for global growth, to a rounded 3.5 percent. For 2013, the forecast is 3.9 percent, down from 4.1 percent.

Emerging economies were generally taking correct measures to deal with slowdowns, the IMF said. But many "have also been hit by increases in investor risk aversion and perceived growth uncertainty, which have led not only to equity price declines, but also to capital outflows and currency depreciation."

The Daily Sun/Bangladesh/ 18th July 2012

NEW YORK: Investors see big banks as riskier than before the first flames of the financial crisis flared five years ago and probably always will, according to a new report from Moody's Analytics, a sister company of the bond-rating agency.

Risk premiums for bank debt are "highly unlikely ever to return to their former levels, both in the U.S. and Europe," according to the report by a team led by David Munves.

For big U.S. and European banks, the cost of credit default insurance, a measure of investor fear, is still nearly 20 times as high as it was in early July 2007 before the failure of two Bear Stearns hedge funds. The funds were filled with mortgage-related securities and funded largely with short-term instruments.

Among the reasons cited for the persistent doubts among bank investors are steps governments are taking to make creditors bear more of the losses of future bank failures. For example, nine major banks were required to submit to US regulators on July 1 so-called "living wills" that map out steps to take to liquidate mortally wounded institutions and turn creditors' claims into losses or stock.

The Daily Sun/Bangladesh/ 18th July 2012