The central bank has issued show-cause notices on three commercial banks for their alleged violation of announced interest rates on deposit, officials said Tuesday.

The Bangladesh Bank (BB) has also asked the managing directors and chief executive officers of these banks to explain within a week their positions and why disciplinary action will not be taken against them under the existing Bank Company Act.

The BB's inspection teams are now investigating into allegations of offering higher interest rates on deposits contrary to announcement by three other private commercial banks (PCBs).

"We'll take the next course of action in line with the existing Bank Company Act after receiving replies from the CEOs of the banks within the stipulated timeframe," an executive director of the BB told the FE.

The central bank issued the notice to the MDs of the three commercial banks on the basis of its probe report.

The central bank has conducted the inspections acting on a tip off, the BB executive director said without elaborating.

Currently, four teams are probing into allegations of offering higher interest rates on deposit by the PCBs through violating their announced interest rates.

The commercial banks earlier this month announced their interest rates on deposit maximum at 12.50 per cent in line with the Association of Bankers, Bangladesh (ABB) decision.

"It has been reported that a few banks offered higher interest rates on deposit ranging between 13 per cent and 15 per cent to attract depositors from both public and private sectors to their banks from other ones," another BB official said.

He also said the central bank has advised all concerned to act rationally in fixing both deposit and lending rates to avoid any 'unhealthy' competition in the country's financial sector.

On February 7 last, the ABB called upon its member-banks to re-fix the deposit at a maximum of 12.50 per cent and lending rate at a maximum of 15.50 per cent.

The ABB's decision followed the withdrawal of capping of interest rates by the central bank in early January, 2012. Before that, the central bank had enforced on April 19, 2009, the capping of lending rate at 13 per cent in five specific areas to help mitigate the impact of the then global economic meltdown.

A deposit brokers' class has already been created in the financial sector to deal with cash money from depositors to the commercial banks and non-banking financial institutions (NBFIs), according to some senior bankers.

The deposit brokers' have negotiated with the banks and NBFIs about the deposit interest rate keeping a substantial commission from them, they added.

They also raised a question about higher rates on deposit particularly of the government funds, saying that who are getting benefit from the higher interest rates?

Financial Express/Bangladesh/ 29th Feb 2012

Bangladesh needs to create 1.5 million new jobs every year over the next 20 years to ensure development in line with its socio-economic demand, a World Bank report says.

Accelerating growth in Bangladesh’s per capita income has added nearly 1.2 million new jobs every year and improved job quality between 2000 and 2010, the World Bank said in its report titled “More and better jobs in South Asia”.

The report states that the South Asian economic growth, which has been second only to East Asia, needs to be sustained to create more and better jobs and reduce poverty. Bangladesh along with other South Asian countries has seen steady job growth and a substantial decrease in poverty over the past three decades, and South Asia will be the largest contributor to the global workforce over the next two decades, it adds.

The report was presented by Reema Nayar, lead economist, South Asia region of World Bank, on Tuesday at a function at Brac Inn Center in the capital. Atiur Rahman, governor of Bangladesh Bank, was present as chief guest.

Ellen Goldstein, country director for World Bank, Bangladesh, Kalpana Kochhar, chief economist of South Asia region, World Bank, Ahsam H Mansur, executive director, Zaidi Sattar, chairman of Policy Research Institute, Wahiduddin Mahmud, eminent economist, were also present.

The demographic transition in South Asia will result in more than 350 million people to enter the working age population over the next two decades, the report predicts. Despite growth, the region is still home to half billion poor people -- the largest in the world. Since labour is the primary asset of the poor, having more and better jobs is the key employment challenge facing the region, it adds.

The South Asia region, defined by the World Bank as Afghanistan, Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka, will need to add between 1 and 1.2 million additional jobs every month for the next twenty years, equivalent to about 40 percent of the increase in the global labour force, the report says.

Goldstein said, “The challenge for Bangladesh is to create higher quality jobs. Investing in education, health and nutrition and infrastructure, along with economic reforms would help create more and better jobs.”

“But the greatest payoffs to improve skills and the consequent ability to access better jobs may come from interventions before children enter formal schooling,” she added. “It’s not only the quantity of jobs but the quality of the jobs being created in the region is relevant,” said Kochhar.

She said wage workers in Bangladesh have seen their wages rise for price increases by nearly 2 percent a year and poverty rates among the self-employed have fallen. While quality of jobs has improved, little upward mobility has seen across the self-employed, casual laborers, and regular wage or salaried earners, Kochhar added.

The report suggests, among other things, sustained attention to electricity, education and utilising the demographic dividend can make an important difference. The working age (15-64) population in Bangladesh is growing more rapidly than the dependents, it adds.

“The resources that would have been required to support an otherwise larger dependent population are thus potentially available for the high-priority physical and human capital investment needed to create better jobs,” Atiur Rahman said.

Since the demand for labour is derived from businesses, it is important to address electricity shortages, which affect the functioning of virtually all firms in Bangladesh. The report suggests that improvements in the regulatory framework and governance are as critical as investments in those sectors.

The Independent/Bangladesh/ 29th Feb 2012

The Bangladesh Bank (BB) has undertaken a new policy to stimulate the bonds market.

At a tri-monthly coordination meeting, the BB on Monday urged the Insurance Development Regulatory Authority (IDRA) to enhance their investment in the government securities.

A regulatory guideline for life insurance companies to investment 30 percent of their paid-up capital in the government securities was suggested so that the banks can sell out their bonds for raising liquidity position.

BB governor presided over the meeting, while representatives from the Securities and Exchange Commission (SEC), IDRA, Department of Cooperatives, Micro-Credit Regulatory Authority (MCRA) and Registrar of Joint Stock Companies and Firms, deputy governors of the BB Najnin Sultana and SK Sur Chowdhury were present.

Emerging from the meeting, SK Sur Chowdhury said the meeting discussed the ways to develop the bond market, enhance liquidity of banks and ensuring stability in the capital market.

He said a strong bond market would play an important role in developing the country’s capital market.

The BB also urged the stakeholders of the coordination committee to keep close coordination with the BB to avoid baseless rumours for the overall development of the economy.

The Daily Sun/Bangladesh/ 28th Feb 2012

Officials of the Dutch-Bangla Bank Limited is seen at a workshop on “Rationalised Input Templates for Banks” at the Bank’s training centre at Dilkusha in the city recently.

Dutch-Bangla Bank Limited (DBBL) has organised a workshop on “Rationalised Input Templates for Banks” for its officials.

KS Tabrez, managing director of the Bank, inaugurated the workshop at the Bank’s training centre at Dilkusha in the city recently, said a press release.

The main objective of the workshop was to familiarise the Bank officials with use of rationalised input templates for reporting of banking activities to Bangladesh Bank through the web portal.

The Daily Sun/Bangladesh/ 27th Feb 2012

The foreign exchange reserve is rising with falling import costs and a better remittance inflow, according to the Bangladesh Bank (BB).

The forex reserve that stood at $9.96 billion yesterday may exceed $10 billion this week, said an official of the central bank.

Saidur Rahman, general manager of BB, attributed the continued reduction in import costs and healthy export growth to improvements in the forex market.

According to the BB, the country imported goods worth $17.82 billion during the first six months of the current fiscal, which is 16.91 percent higher than the same period a year ago.

M Akhtaruzzaman, economic adviser to the BB, said all financial institutions have been advised not to sanction loans for import of unnecessary and luxury items, which had a positive impact on the country's overall import.

The Daily Star/Bangladesh/ 27th Feb 2012