Bangladesh Bank is not going to bring any change in its monetary policy right now though inflation rate was shown around 3 percentage points less as per the new base year over the old one.

BB Governor Atiur Rahman said they will continue the existing monetary policy stance till December and will go by the inflation rate of the old base year till then.

The government last month introduced a more representative index of wholesale prices and brought forward the base year -- to 2005-2006 from 1995-1996 -- for calculating inflation in the changing structure of the economy.

The government will continue releasing two types of inflation data till December, on the basis of both the new and old base years.

The central bank governor said they will compare the two inflation rates in January, and if necessary, they will then bring changes in the monetary policy.

In line with the new base year, inflation on a point-to-point basis stood at only 5.21 percent in July, while the rate was 8.03 percent according to the old base year.

The central bank in July announced the monetary policy for the first six months of the current fiscal year and adopted a tight stance to contain inflation.

Inflation had been in double digits since March last year before starting to fall in April this year. The rate went down by 0.53 percentage point in July as per the old base year.

As inflation, especially that of non-food, had been soaring, the central bank in its monetary policy in January adopted a tightening stance to rein in credit growth.

The BB also asked the government to reduce its dependence on banks' money, and took some steps to hold back the depreciation of the dollar.

Finance Minister AMA Muhith yesterday at a programme told journalists that the falling trend in inflation was due to the central bank's monetary policy stance.

Muhith said the government has also followed a tightening approach in its fiscal policy from the beginning of the current fiscal year to minimise its wasteful expenditure.

He admitted the government was relaxed about its expenditure in the first six months of the last fiscal year.

The BB governor said, besides the tight monetary policy, the appreciation of the dollar also caused a fall in inflation.

He said a decline in the prices of imported products also contributed to the ease in inflation.

The BB will always remain active to bring down inflation, the governor said.

The Daily Star/Bangladesh/  7th Aug 2012

Taka has gained nearly five per cent against the US dollar over the past six months as import of products except fuel oil fell and foreign remittance rose. The foreign currency reserve touched $10.70 billion mark on Thursday as the 2012-13 fiscal kicked off with a downtrend of opening of import LCs (letter of credit) while around $1.2 billion came in as remittance in July.

The current foreign reserve can meet up import costs for more than four months, officials at the central bank said. The reserve dropped below $10 billion mark around a month ago as the government had to pay import costs to the Asian Clearing Union.

The officials said the local currency in gaining on the greenback thanks to the 'satisfactory' inflow of dollar through remittance.

On Thursday, the value of US dollar in the inter-bank currency market was Tk 81.60 which was Tk 0.10 less than the previous day. The price of dollar had climbed nearly to Tk 85 last January.

The central bank bought nearly $ 500 million from the market to offset its impacts on export income and remittance flow, but failed to arrest the slide of dollar.

Officials say Bangladesh Bank is purchasing dollar out of the fear that expatriates will remit less if the dollar slides.

Bangladesh Bank Governor Atiur Rahman said bumper production over past several seasons meant Bangladesh did not have to import rice.

Moreover, he said, the central bank clamped massive restrictions to discourage import of unnecessary and luxurious products. "The import cost dropped for this reason," Atiur explained.

Economist Zaid Bakht, however, called for caution to see to it that capital machinery imports, needed for setting up industries, did not suffer. According to the central bank's import related information on the first two weeks of July, first month of 2012-13 fiscal, LCs worth nearly $1.158 billion were opened for import.

The amount is 58 per cent less than it was in the same time in the previous year.
The clearance procedure has also reduced by nearly 60 per cent in the first 14 days of July.

The import cost came down significantly by the end of the previous fiscal, according to Bangladesh Bank, as the amount of LCs opened for importing products stood at nearly $36.92 billion which was 4.27 per cent less in 2011-12 fiscal.

In total, $32.94 billion worth of goods were imported during the 11 months (July-May) of the last fiscal year, 7.16
per cent more than the previous year, according to the central bank.

The import bill had inflated by 42.76 per cent in the first 11 months of 2010-11 fiscal.
Expatriates, however, had sent remittances worth $12.85 billion in the past financial year, a 10.26 per cent growth over the previous fiscal while export earnings stood at $24.28 billion with a growth of 5.93 per cent.
The import sector saw increase only in fuel import, greatly reducing import cost in the last fiscal while the amount of LCs for fuel import increased by 47.35 per cent.

The amount of LCs opened for importing rice and wheat decreased by 66.34 per cent in the July-May period of the fiscal gone by.

LCs for capital machinery fell 21.52 per cent, import for industrial raw materials was down six per cent and import of the other goods decreased by 5.26 per cent.

Governor Atiur Rahman said the economy was getting back on its feet: "Economy is getting stable following decrease in import cost.

The key indices are positive, remittance is increasing and revenue collection rate is very good. I hope the reserve will be over $10 billion," he told bdnews24.com.
He also hoped the economy will be in 'even better shape" in the future.

Zaid Bakht, also Research Director at the Bangladesh Institute of Development Studies (BIDS), told bdnews24.com: "The overall decrease in import cost is fine. But if import of capital machinery, needed for setting up industries, is reduced, there will be a negative impact on the economy." "It will impact the industries sector negatively and may not let the government reach its goal of 7.2  per cent GDP in this fiscal year," he warned.

The Daily Independent/Bangladesh/ 4th Aug 2012

The Bangladesh Bank has taken a special move to increase the inflow of remittance along with boosting sales of three bonds and holding investment fair in a bid to build up foreign exchange reserve.

On the basis of the latest move taken by the Bangladesh Bank, a high-powered team of the central bank will visit the United Kingdom and United States in the second and third week of September this year to create awareness among non-resident Bangladeshis (NRBs) through arranging road shows.

The three bonds are: US Dollar Premium Bond, US Dollar Investment Bond and Wage Earner Development Bond.

The decision was taken at a meeting with managing directors of different commercial banks of the country at the Bangladesh Bank’s conference room Thursday with Dr Atiur Rahman, Governor of Bangladesh Bank in the chair.

Abul Kashem, Deputy Governor of Bangladesh Bank, Senior Executives of BB and other Chief Executives Officers of different commercial banks were present at the meeting.

Giving emphasis of the present government’s importance on the increase of selling bonds, the BB Chief said the central bank has taken a wide-ranging activities for selling the bonds to the NRBs that will contribute to development in Bangladesh.

In this regard the bank has already been providing advertisements to the print and electronics media, distributing leaflets and giving information about bonds related matters through different help desk of the bank.

"The delegation will go to the United Stats after completing visit to the UK," the BB chief Boss told daily sun after the meeting, adding they have also planned to visit the Kingdom of Saudi Arabia (KSA) in the near future.

During the awareness building campaign, the delegation will take help of Bangladeshi banks' exchange houses abroad to arrange road shows.

The bank took an initiative to arrange road show in the United Kingdom, United States, Kuwait, Malaysia, Singapore and UAE.

Remittances from expatriate Bangladeshis came US$1.2 billion in the first month of the current fiscal, exchange companies of abroad played an important role in this regard, the BB Governor said.

The Daily Sun/Bangladesh/ 4th Aug 2012

A Bangladeshi Islamic bank went to court to take three Jeddah-based terror-link suspected entities off its shareholders' list in an attempt to avoid international business restrictions.

Social Islami Bank Ltd, known as SIBL, has filed a lawsuit with the Fifth Joint District Judge's Court in Dhaka on Monday, said Ahsanul Karim, a lawyer for the Bank.

The case was filed against two non-government organisations -- International Islamic Relief Organisation (IIRO) and Islamic Charitable Society (ICS) -- and one Saudi individual named Shahir Abdulraouf Batterjee, the scion of a wealthy Saudi family. There are allegations against them that they have terrorist financing links.

“The Bank (SIBL) has filed the case seeking the court's direction on how to take them off its shareholders' list,” Karim told The Daily Star.

He said the SIBL has also sought the court's directive on the fate of the three entities' investments in the bank.

The IIRO and ICS came under the spotlight last month in the media after disclosure of a probe report by the US Senate Permanent Subcommittee on Investigations, on HSBC's lax governance to control money laundering.

The report detected that two Bangladeshi private banks -- Islami Bank and SIBL -- have foreign shareholders who are allegedly involved in terrorist financing.

According to SIBL data, both the IIRO and ICS became the bank's shareholders at the time of its inception in 1995.

Though the IIRO owned 8 percent shares of the Bank's Tk 20 crore paid-up capital in 1995, it is not a promoter. The IIRO, which is allegedly linked with Al-Qaeda founder Osama bin Laden's brother-in-law, now owns only 1.61 percent shares, equivalent to Tk 10.29 crore of the Tk 639.4 crore paid-up capital of the bank.

The ICS now owns only 0.14 percent shares of the bank, equivalent to Tk 89 lakh. Batterjee also has an insignificant number of shares, Bank officials said.

“Their names on our shareholders' list will hamper our international business. We want to get rid of them,” said Muhammad Ali, managing director of the Bank.

"After all the bank has to do business as it deals with Tk 8,000 crore (nearly $1 billion) deposits," he said.

Ali said the IIRO, ICS and the Saudi national have been implicated in terrorist financing by the US government and included on the list of those prohibited to do business in the US.

These organisations also face sanctions from the US Treasury Office of Foreign Asset Control (OFAC) and the United Nations.

“None of these three shareholders has transacted any amount from their accounts till date,” Ali said.

AMM Farhad, deputy managing director of the Bank, said they have communicated several times with these shareholders, including IIRO's Dhaka office, after the central bank asked the bank in 2006 not to transact with these terror-suspect organisations and person. But the Bank did not get any response from them.

“We had no way but to seek the court's intervention to remove them,” said Farhad. “We have taken the move for public interest,” he added.

Bangladesh Bank, the country's central bank, in 2006 took actions against Islami Bank and SIBL for their involvement in money laundering. The central bank in 2006 banned IIRO and ICS and prohibited transactions with them.

“We stopped depositing dividends to IIRO and ICS's accounts since the ban. But we credited dividends after the BB withdrew the restriction in 2010,” said the deputy managing director.

SIBL again froze these organisations' share accounts after their names came in the US Senate probe committee, said Farhad.

Ali said the three became the shareholders of the Bank when MA Mannan, one of the founders of the bank, was in Saudi Arabia on his job in the Organisation of Islamic Conference (OIC) and collected money from there for setting up the Bank.

Ali said, at that time Hamid Algabid, the then OIC secretary general (1989-1996) and a Nigerian politician, also bought some shares of the Bank that now values at Tk 7-Tk 8 lakh.

The Daily Star/Bangladesh/ 1st Aug 2012

Sheikh Mozaffar Hossain, Deputy General Manger of Bangladesh Bank has been promoted to General Manager Thursday.

Hossain obtained his BSS Honours, MSS degree in economics from University of Dhaka and started his banking career in 1988 as an Assistant Director of the central bank.

During his career in Bangladesh Bank, Hossain worked in various departments like Foreign Exchange Policy Depart-ment, Monetary Policy Department, BBTA, Department of Offsite Supervision and Depar-tment of Banking Inspection in various capacities.

The Daily Sun/Bangladesh/ 31th July 2012