A greater number of people in the country now have an access to formal financial services as Bangladesh Bank (BB) has undertaken a number of initiatives to bring the unserved and under-served under the umbrella of financial systems, said the bank's chief.

At present, around 87 percent of adults in the country have an access to formal financial services, which was around 78 percent three years back, BB Governor Atiur Rahman said at a seminar.

“This has been possible due to some milestone programmes initiated by Bangladesh Bank in recent years,” said Rahman.

The Institute of Chartered Accountants of Bangladesh (ICAB) yesterday organised a conference on “Alternative Financial System for Inclusive Growth and Sustainable Development” at its office in Dhaka.

The governor said these initiatives include sharecropper financing schemes; 'Ten Taka' accounts for farmers, students, and freedom fighters; online and mobile banking; directing banks to open bank branches in rural areas; green banking and banking automation.

Sharecroppers have long been excluded from the formal financial system because of a lack of collateral and the fact that they are treated as 'too small' by banks and 'too large' by the microfinance institutions, said Rahman.

As a result, they have long been left behind as the 'missing middle' and excluded from formal financial services, he added.

He said the BB launched a total of Tk 500 crore refinance lines for the sharecroppers.

Till November 2011, the central bank provided BRAC, a leading non-government organisation, with a refinance facility of Tk 310 crore, which has provided loans to 270,802 sharecroppers in 160 upazilas of 37 districts, said the governor.

He said another initiative that fosters financial inclusion is opening bank accounts for farmers with an initial deposit of only Tk 10. More than 90 lakh accounts have already been opened under this scheme and are being used for government transfers, such as diesel subsidies.

The BB has also issued guidelines for mobile financial services to reach out to the excluded population, particularly in rural areas. Many banks have already started their operations in partnership with telecom companies, said Rahman.

The Daily Star/Bangladesh/ 7th Feb 2012

Bangladesh Bank Governor Atiur Rahman yesterday strongly refuted the view expressed in some quarters of the country being mired in a macroeconomic crisis and said there are pressures on the country's economy but not the crisis.

He invoked Rabindranath Tagore to liken the Bangladesh economy to an autumn sky [shoroter akaash], filled with dark as well as silver clouds.

“Yes, there're pressures but no crisis of the sort being talked about. We're taking measures to make sure the silver clouds edge out the dark ones, and they are starting to bear results,” Rahman told the news agency in an interview at his office.

He revealed that the downward spiral in the exchange rate of the taka against the dollar had been “arrested” in the last two-three days. He and his team expect to see a further easing of the downward trend yesterday.

Styling himself “not your conventional central banker”, the former development economics professor signed off on a note of optimism that a difficult few months would soon give way to “a new equilibrium” for the Bangladesh economy.

"We've been going through a correctional phase. This has presented a number of challenges, but we've responded with appropriate measures, in conjunction with the government," he said.

"As a result, within a couple of months, we can look forward to the exchange rate, the rate of interest, and inflation settling at a new equilibrium."

The governor attributed the policy of cutting down to non-essential import items (luxury goods) in recent weeks, something he had advised to ease the pressure on the balance of payments while releasing the latest Monetary Policy Statement on January 26.

Back in office after his return on Saturday from a trip to India- where apparently other central bankers and economists from the region all had very positive things to say about the Bangladesh economy, some even branding it the “best-placed” under current circumstances in South Asia- the governor also sounded a positive note on inflation.

He said he expects food inflation, in particular, to decline during February.

Although that would be offset by an increase in non-food inflation spurred by increased fuel prices and electricity rates, he is confident that the overall inflation rate will start witnessing a slowdown in the coming months.

He also expressed his confidence over securing the $1 billion extended credit facility (ECF) loan from the Washington-based lender International Monetary Fund (IMF).

"The IMF mission arrives here tomorrow (yesterday) to finalise the details …things look positive. If we get the loan, it'll help a lot cut pressures on the Balance of Payments," he said.

He brushed off sugges-tions that availing of the loan would leave economic policymaking beholden to IMF conditions. “This is essentially a budget support for the government.”

“They don't advise anything that is outside the purview of our own reform agenda. They only want those to be implemented. Anyway the ECF (the scheme under which the loan would be disbursed) is different from the IMF's Structural Adjustment Policies of the past, as it doesn't attach any conditions.”

The continuous price hike of food, fuel, fertiliser and essentials on the international market, food price hike in the internal market, high growth of money supply against the target and depreciation of the taka were the reasons behind the rising inflation in 2010-2011 fiscal, he said.

"Given that situation, we've taken cautious monetary policy. It's corrective phase. Situation will improve."

The Daily Star/Bangladesh/ 7th Feb 2012

Bangladesh Bank (BB) has issued some guidelines on uniform accounting procedures for Repo transactions of government securities by all scheduled banks and financial institutions.

In view to help the process of liquidity support, given by the central bank to the primary dealer banks of government securities, it has been decided to consider as Collateralised REPO Transaction instead of outright buy/sell.

The Department of Offsite Supervision (DOS) of BB issued a circular in this regard on Sunday.
The circular said the Collateralised REPO Transaction will only be applicable for taking liquidity support from central bank by the primary dealer banks of government securities.

The Daily Sun/Bangladesh/ 1st Feb 2012

The central bank yesterday issued a circular to clarify that non-bank financial institutions' investment in their subsidiary would not be considered while measuring their exposure to the capital market.

In line with the circular, long-term capital investment of non-bank financial institutions in other companies will not be considered as its exposure limits to the stockmarket.

On November 23, the Securities and Exchange Commission declared short-, mid- and long-term steps to stabilise the market.

The SEC said: “The loans provided by banks and financial institutions to their capital market subsidiaries and long term equity investment will not be taken into account while estimating their 'exposure to stock market'.”
The Bangladesh Bank has extended the deadline for financial institutions to adjust their single-party exposure relating to the stockmarket by one year to December 31 of 2013, according to the circular.

Single party exposure limit is 15 percent. It means if a financial institutions' paid-up capital is Tk 200 crore, it cannot lend more than Tk 30 crore to its subsidiary.

Besides, in case of provisioning stockmarket investment by financial institutions, gains and losses would be considered instead of net loss only.

The copies of the central bank circular have been sent to chiefs of all financial institutions.

The Daily Star/Bangladesh/ 1st Feb 2012

Dr Atiur Rahman, governor of Bangladesh Bank, poses with the departing deputy governors of the bank: Nazrul Huda, Ziaul Hassan Siddiqui, and Murshid Kuli Khan at their farewell. The newly appointed deputy governors: Nazneen Sultana, Abu Hena Mohd Razee Hassan and Shitangshu Kumar Sur Chowdhury were also present.

The Daily Star/Bangladesh/ 1st Feb 2012