The government is set to receive US$200 million as syndicated loan from overseas sources for importing petroleum products, officials said Sunday.

Three foreign commercial banks (FCBs) are mobilising the loan from the global market for the state-run Bangladesh Petroleum Corporation (BPC) at 5.25 per cent rate of interest.

The banks are Standard Chartered Bank, Hongkong and Shanghai Banking Corporation Limited, generally known as HSBC, and Citibank N.A.

"All official formalities have been completed. The SCBs are scheduled to start disbursing the loan from Tuesday (March 6)," a senior official of the Bangladesh Bank (BB) told the FE.

He also said the hard-term loan committee has already approved the loan proposal to ease pressure on the country's foreign exchange reserve.

"The loan will help keep the foreign exchange market stable to some extent," another BB official said, adding that the loan will be treated as 'revolving facility' initially for a period of one year.

The latest move of the government came against the backdrop of reluctance on the part of the state-owned commercial banks (SCBs) to open letters of credit (LCs) for importing fuel oils by the BPC.

The dues of BPC with five state-run banks stood at more than Tk 170 billion till January 2012.

The BPC's overdues to the banks have gradually been rising in the recent times. As a result, the banks are facing liquidity problem.

Financial Express/Bangladesh/ 5th March 2012

ERF members called on Bangladesh Bank (BB) Governor Dr Atiur Rahman on Sunday.

Economic Reporters Forum (ERF) members requested the Bangladesh Bank (BB) Governor Dr Atiur Rahman for organising training programmes for journalists on economic issues.

They made the request at a meeting with BB Governor at the latter’s office on Sunday. BB Governor assured the ERF members of his all out support.

BB Executive Director Md Ahsan Ullah, Senior Consultant and Adviser to Governor Md Allah Malik Kazemi, Deputy Governor Begum Naznin Sultana, Executive Director Md Jahangir Alam, Senior Economic Adviser to Governor Dr Hassan Zaman, General Manager AFM Asadu-zzamn, ERF President Khawza Mainuddin, Vice President Mir Mostafizur Rahman, among others, were present at the meeting.

The Daily Sun/Bangladesh/ 5th March 2012

The rising trend of remittance remained in February this year thanks to the depreciation of the taka against the dollar and various initiatives taken by the Bangladesh Bank (BB).

The Bangladeshi migrant workers remitted US$1130.90 million, up by 14.58 percent than that of the same month of last year. In February 2011, the remittance was US$986.97 million, according to the central bank statistics.

“Higher manpower export, increase of overseas exchange houses of commercial banks, simplifying the process of opening foreign currency account and making the foreign currency exchange policy flexible contributed to boost the inflow of remittance,” a BB press release signed by AFM Asaduzzaman, General Managing of BB, said. However, remittance narrowly declined compared to the previous month. Over US$1.21 billion was remitted in January this year by the overseas Bangladeshi workforce that is the highest ever monthly inflow.

The Daily Sun/Bangladesh/ 5th March 2012

The central bank has proposed extensive amendments to the banking law, including changes to the definition of default loan and lenders' involvement in the capital market, to ensure better governance in the sector.

A finance ministry official said the central bank sent the 75-page proposal to the Banking Division early this month.

In line with the proposal, Bangladesh Bank (BB) will have to have the right to make public any information regarding loan defaulters in any form.

The existing law does not explicitly allow this disclosure.

The official said the government will form a committee led by a former secretary or additional secretary to scrutinise the BB proposal.

The committee will also include representatives from different ministries and the business community.

The initiative to amend the Banking Companies Act was taken during the immediate past tenure of the BNP government, but it could not be realised due to opposition by various influential quarters.

Even during the immediate past caretaker government, a law was promulgated through an ordinance but after the present government assumed power the ordinance did not get passage in parliament.

Former deputy governor of the central bank Nazrul Huda was actively involved with the formulation of the draft law when it was first introduced in 1991. He was also closely related with the amendment process.

Huda said the world economic system went through a lot of changes in recent times. In light of that, the amendments to the Banking Companies Act are essential, he said.

As per international standard, Bangladesh's banking sector requires to include the new amendments to combat risk. The amendments will also ensure good governance in the banks, he added.

As per the existing rules, if any loan remains overdue for six months, it is identified as default loan. The proposal said the BB will have the powers to redefine the word “default” as and when needed.

Also the definition of borrower will be widened to include guarantor in case the principal borrower defaults. The amended law will give highest emphasis on capital maintenance.

According to the new law, if any bank fails to maintain a minimum paid-up capital and statutory reserve for a long period, it may be closed down.

In case of banking, if any bank fails to comply with the international best practices, heavy fines, restrictions on new deposits, credits or branches will be imposed.

A new clause has also been proposed prohibiting commercial banks to engage in brokerage house, portfolio manager, and merchant banking business, or businesses that require licences from Securities and Exchange Commission.

The amended law will provide that two independent directors will replace depositor-directors. The number of directors in the board will be a maximum of 13.

If any family holds more than 5 percent share, it will have two directors and if the amount of share a family holds is less than 5 percent it will get one director, according to the proposed amendments.

If a director of a bank fails to repay loans taken from any bank or financial institution, he or she will be barred from selling the shares he or she holds until the defaulted loan is paid off. Legal challenges against any actions taken under this clause can only be lodged in a relatively higher court.

In case of subsidiary companies, specific legal provision has been suggested so that commercial banks can form subsidiaries to engage in stock brokerage or merchant banking business with prior approval of the central bank.

The definition of share-holding has been streamlined to avoid ambiguities. Several caps have been introduced to limit the exposure of banks in the capital market, including overall portfolio exposure limit of 25 percent of the banks' capital. At present the exposure limit is 10 percent of the liabilities.

The Daily Star/Bangladesh/ 4th March 2012

Islami Bank Bangladesh Limited (IBBL) shared responsibilities of financial support to four families of the martyred army officers in the Pilkhana carnage amounting Tk 40,000 per month for each family totaling Tk 1 crore 92 lakh for ten years.

Prime Minister Sheikh Hasina handed over cheque for Tk 19 lakh and 20 thousand of fourth year to the four army officers’ families on February 29 at the Gono Bhaban in the city, says a press release.

Prof Abu Nasser Muhammad Abduz Zaher, chairman, board of directors and Mohammad Abdul Mannan, managing director of IBBL were present on the occasion.

Abul Kalam Azad, press secretary of Prime Minister, chiefs of the three services and officials of Bangladesh Association of Banks (BAB) were also present on the occasion.

The Independent/Bangladesh/ 1st March 2012