Thirteen out of 29 non-bank financial institutions (NBFIs) have increased their minimum paid-up capital to Tk 1 billion each from Tk 500 million following a central bank directive.

Bangladesh Bank (BB), earlier in July last year, asked the NBFIs to double their minimum paid-up capital or the portion of the authorised stock to Tk 1 billion by June 2012.

The rest of the NBFIs have been working to raise their paid-up capital and meet the target by the 30 June deadline, insiders said.

Only three NBFIs had paid-up capital of Tk 1 billion each in September 2011 while the number was nine at the end of 2011, according to BB data.

The central bank in its directive further asked the NBFIs to issue rights and bonus shares to raise their paid-up capital within the stipulated timeframe.

Asad Khan, chairman of Bangladesh Leasing and Finance Companies Association (BLFCA), told daily sun that most of the firms have already raised their paid-up capital and the country’s non-banking sector would be able to stand on a strong financial footing soon.

Khan, managing director of Prime Finance and Investment Limited, also described the directive to double paid-up capital of NBFIs as a positive approach by the central bank.

The non-bank financial institutions have been increasing their paid-up capital in recent times and currently they have over Tk 24 billion for long-term investment, he said.

The amount can be and needs to be bigger, he added.

BLFCA sources said 16 out of 22 listed NBFIs are yet to fulfill certain conditions to maintain optimum business standards while seven others are considered to be compliant.

Companies who are yet to fulfill the conditions are – Bangladesh Industrial Finance Company Ltd (BIFC), Bangladesh Finance and Investment Company Ltd (BFIC), FAS Finance and Investment Ltd, First Lease Finance and Investment Ltd, GSP Finance Company (Bangladesh) Limited, Islamic Finance and Investment, Midas Financing Ltd, National Housing Finance and Investment Ltd, Phoenix Finance and Investment, Uttara Finance and Investment Ltd, Hajj Finance Company Ltd, Industrial and Infrastructure Development Finance Company (IIDFC), IDCOL Ltd, National Finance, Reliance Finance, Saudi-Bangladesh Industrial and Agricultural Investment Company (SABINCO) and UAE-Bangladesh Investment Company Ltd (UBICO).

Some executives of those firms said they have an option to appeal to the central bank to extend the deadline for raise the paid-up capital to Tk 1 billion.

Hajj Finance Company Ltd has already sought more time from the central bank, BLFCA officials said.

They also expressed the hope that the firms would be able to fulfill the paid-up capital requirement soon since the country’s economic situation is currently considered favourable for the NBFIs.

Prime Finance and Investment Ltd, which currently maintains a paid-up capital of Tk 2.27 billion, has emerged as the biggest capital holder among the private sector NBFIs.

State-run Investment Corporation of Bangladesh (ICB) has Tk 3.38 billion in paid-up capital.

Industrial Promotion and Development Company of Bangladesh Limited (IPDC), IDLC Finance Ltd, Delta Brac Housing Finance Corporation Ltd (DBH), Bay Leasing and Investment Ltd, Premier Leasing and Finance Ltd, Union Capital Ltd, United Leasing Company Ltd, Far-East Finance and Investment Ltd, Lanka Bangla Finance and International Leasing and Financial Services Ltd (ILFSL) have already increased their paid-up capital to Tk 1 billion each.

The Daily Sun/ Bangladesh/ 19th May 2012

Bangladesh Bank (BB) Governor Dr Atiur Rahman will leave here for Nepal today to attend 41st meeting of the board of directors of Asian Clearing Union (ACU) and SAARCFINANCE governors' symposium and SAARCFINANCE group meeting.

The governor will leave Dhaka by a Biman flight at 8.50am, said a BB press release on Monday.

General manager AFM Asaduzzaman, GM (forex) Kazi Saidur Rahman and DGM, BB's training academy Dr Md Habibur Rahman will accompany him.

The Daily Sun/ Bangladesh/ 15th May 2012

Bangladesh Bank Governor Dr Atiur Rahman, speaks at the formal launching of BB’s online library and e-news clippings at the Bank’s conference room on Sunday.

Bangladesh Bank (BB) Governor Dr Atiur Rahman on Sunday stressed the need to digitise the country’s banking and financial sector as the first step towards building the digital Bangladesh.

He said the central bank has already undertaken all out efforts to digitise the activities of Bangladesh Bank as well as the overall banking sector of the country.

The BB governor was addressing a programme marking the formal launching of BB’s online library and e-news clippings at its conference room.

Atiur said as part of the massive digitisation endeavor the central bank has started modernising its library maintaining international standard.

He said the central bank has enhanced its supervisory role sufficiently for strengthening the institutional good governance of the banks side by side its risk reduction; building a firm footing for risk management and also enhancing the capability of the central bank.

He hoped that central bank will be the most digitised institution in Bangladesh very shortly.

Deputy Governor Nazneen Sultana, Executive Director M Ahsanullah, general manager of IT-OCD Qazi Nasir Ahmed, Assistant Director Shasanka Kumar Singha also spoke on the occasion.

Nazneen Sultana said skilled manpower and updated information both are similarly important for ensuring expected and timely development of any organisation.

Archiving various news on national and international banking, finance and socio-economic conditions, providing news clipping service to the end users, single point access of all the archived news, alert readers about the news clippings according to reader’s interest list are the vital objectives of developing the e-library.

The central bank is working to introduce two modern information service centers named “Institutional Repository (Archive)” and “Audio Visual, Language and Cyber Section” immediately.

Data on BB, banking sector and socio-economic situation of the country will be available on both the sites.

central bank officials will be able to log-in to both the sites by using network ID and password in the Bangladesh Bank’s website.

IT operations and communication department of BB worked both to develop the online library and e-news clipping management software.

Presently there are 33682 books, 7210 e-books, 520 CD-ROM, 25,000 e-journals, 655 journals articles, 13 magazines, 21333 journals in the archives, 29 daily news papers, 3 foreign daily news papers, 648 e-annual report, have been preserved in the Bangladesh Bank Library.

The Daily Sun/ Bangladesh/ 14th May 2012

Regulatory bindings have forced private commercial banks to roll out more money to the farm sector in the current fiscal year, according to data from Bangladesh Bank.

Agriculture credit disbursed by private banks, both local and foreign, rose 42.68 percent to Tk 3,471 crore in the 10 months through April from Tk 2,433 crore in the same period a year ago.

“We have made farm credit compulsory and set an annual target for banks,” SM Moniruzzaman, an executive director of the central bank, told The Daily Star yesterday.

If any bank fails to achieve the target, it will have to deposit the same amount to the central bank that will pay only 5 percent interest on the fund.

It means an interest loss to a bank if it does not provide agriculture credit at 10 percent rate. “It might compel the banks to speed up farm credit disbursement,” Moniruzzaman said.

As the local private and foreign banks have a limited number of branches, the BB has allowed them to take help from microfinance institutions to disburse the loans across the country.

Farm credit disbursed by state and private banks combined increased 5.67 percent to Tk 10,200 crore during July-April against an annual target of Tk 13,800 crore, which is 9.4 percent higher than the previous year's target, the data shows.

The total disbursement will stand at Tk 10,853 crore if loans for sharecroppers disbursed through BRAC and credit provided by state-owned BRDB are taken into account.

The central bank has adopted a new agricultural credit policy, strengthened the monitoring system and opened help desks to boost farm credit that remained ignored for years.

According to the policy, no report from the Credit Information Bureau is required for a bank to lend up to Tk 1.5 lakh in agriculture loans. A sanctioned loan must be distributed in 10 days, the policy says. The loan can also be distributed through a farmer's account opened with Tk 10.

If anybody faces difficulty getting the agriculture loan he can lodge complaints with the central bank's help desk at its headquarters or regional offices.

An inspection team has been deployed at the BB headquarters to monitor hassle-free disbursement of loans and help the farmers use the money properly.

The Daily Star/ Bangladesh/ 14th May 2012

Bank loans to women entrepreneurs under SME (Small and Medium Enterprises) category increased by 1 percent in the first quarter of the year 2012 compared to the previous year. From January to March, all banks have disbursed Tk 646.59 crore in loans among 4,481 women entrepreneurs across the country. The amount was 5 percent of total SME loans disbursed by banks Tk 14,281 crore in the same period, according to statistics provided by SME and Special Service Department of Bangladesh Bank (BB).

The target set by the central bank for the year 2012 is to disburse Tk 59,012 crore as SME loans.

In 2011, a total of 16,996 women entrepreneurs have received Tk 2048.5 crore which was 4 per cent of total amount disbursed under SME category by banks. In the year 2010, some 13,831 women entrepreneurs have obtained Tk 1,804.92 crore in loans.

Meanwhile, BB statistics suggests that the trading sector is still on the top of priority by banks to endorse loans, though it is maintaining a slightly declining trend year-on-year.

In percentage point share, disbursement of SME loans to trading sector was 66 per cent in 2010 and 64 per cent in 2011. It has come down to 62 per cent in the first quarter of 2012.

Industrial sector followed the next position as the bank loans to this sector increasing slightly year-on-year. The sector has received 28 per cent of total SME loans in 2010, 29.4 per cent in 2011. Data for January-March of 2012 showed that this sector has received 32 per cent, out of total disbursement.

Total disbursement of SME loans in the year 2010 and 2011 was Tk 53, 544 crore and Tk 53,719 crore respectively.   

The share of bank loans to the service sector was 6.6 per cent in 2010 and 2011 while it came down to 6 per cent in first quarter of the year 2012.

A BB official said the central bank has been persuading banks for long to raise loans to productive pursuit which is directly involved in employment generation. “To this effect, the BB authority has separated the SME department with adequate manpower to monitor banks’ performance in this regard,” said Sukumol Sinha Chowdhury, general manager of the department.

He said the central bank believe that SMEs alone can generate huge employment across the country.
“Employment will help grow trade and commerce and industries which are important to accelerate economic growth,” said the official.

The Independent/ Bangladesh/ 13th May 2012