Managing Director of Export Import Bank of Bangladesh Limited (Exim Bank) M Farid Uddin Ahmad addressing the customers and well-wishers of Mirpur branch of the Bank in the city recently.

Additional Managing Director Mohammad Haider Ali Miah, Deputy Managing Directors Abdul Latif Barbhuiyan and M Sirajul Islam were also present. Member of Paliament from Nilphamari-1 Zafar Iqbal Siddiqi also spoke on the occasion.

The Financial Express/Bangladesh/ 10th Feb 2012

The Reserve Bank on Thursday said companies incorporated in China, Pakistan, Bangladesh, Sri Lanka, Iran and Afghanistan will have to seek its permission to set up branch or liaison offices in India as general permission granted to entities of other nations will not apply to them.

“It is clarified that the general permission accorded in terms of the November 15, 2003 guidelines is subject to the adherence to the provisions of Regulation 4 (dealing with restrictions on setting up branch offices) ... dated May 3, 2000, along with their specified conditions,” the RBI said. 

As per the RBI guidelines, “... no person, being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran or China, shall establish in India, a branch office or a liaison office or a project office or any other place of business by whatever name called, without the prior permission of the RBI”. 

The central bank had in 2000 barred citizens from the six neighbouring countries from opening any place of business in India under the Foreign Exchange Management (Establishment in India of Branch or Office or other Place of Business) Regulations, 2000. 

Subsequently, in guidlines released in 2003 the bank had granted general permission to a foreign entity for setting up a project office in India subject to certain conditions. Foreign companies were allowed to open project office if they have secured from an Indian firm a contract to execute a project in India and if the project is funded by inward remittance from abroad. 

Besides, permission was granted if the project is funded by a bilateral or multilateral international finance agency or if the project has been cleared by an appropriate authority. Overseas firms were allowed to open project office if a company or entity in India awarding the contract has been granted term loan by a public financial institution or a bank in India for the project. 

The Daily Independent/Bangladesh/ 10th Feb 2012

City Bank has recently appointed Badrudduza Choudhury and Sheikh Mohammad Maroof as its deputy managing directors, the bank said in a statement yesterday.

Choudhury started his career with IFIC Bank as a probationary officer in 1984. He joined City Bank in 2002 and worked as head of credit.

He is a postgraduate in public administration from Dhaka University.

Maroof joined City Bank in 2007 as head of treasury and market risks, according to the statement.
He started his career as a management trainee with American Express Bank in 1995. He also served Eastern Bank as head of treasury.

The Daily Star/Bangladesh/ 10th Feb 2012

A contract to create a common platform for the country's commercial banks for electronic payments was signed at the premises of Bangladesh Bank recently.

The deal will implement the National Payment Switch (NPS) under the Central Bank Strengthening Project of the World Bank.

The switch will connect all child switches already in place in the private sector, including the mobile operator switches and the internet banking solutions of the banks enabling banks inter-bank mobile and internet banking transactions respectively.

The commercial banks having an ATM/POS/e-payment gateways/ mobile payment switches or being connected to any other shared switch network will be able to send inter-bank payment instructions to the NPS for clearing and settlement purpose.

The Daily Star/Bangladesh/ 10th Feb 2012

The central bank yesterday came down heavily on foreign banks having operations in Bangladesh for a high interest rate spread, which is depriving both depositors and borrowers.

Bangladesh Bank (BB) asked all commercial banks, including foreign banks, to keep the interest rate spread at 5 percent. The average interest rate spread for foreign banks is around 9 percent, which is below 6 percent for the local commercial banks.

The suggestion came at a meeting on implementation of the monetary policy, which was announced last month, at the central bank office in Dhaka with its Governor Atiur Rahman in the chair.

A participant in the meeting quoted Rahman as saying the BB will closely monitor the interest rate spread to keep it below 5 percent, except for small and medium enterprises and consumer loans.

Hassan Zaman, senior economic adviser to the governor, presented a keynote paper on the latest monetary policy and current economic situation.

Zaman said the BB will also ensure adequate liquidity for productive investment, according to the participant in the meeting who requested not to be named.

The spread refers to the difference between the interest rates for lending and deposit.
BB statistics showed the weighted average deposit rate of the foreign banks was 4.51 percent in November 2011, while the weighted average credit rate was 13.34 percent at the same time.

In case of private banks, the weighted average deposit rate was 8.53 percent in November 2011, while the weighted average lending rate was 13.87 percent, BB data showed.

On one hand, the foreign banks are paying less interest to the depositors and on the other, they are making huge profits from a high interest on loans, the BB official said.

The foreign banks have made substantial profits over the years, although they have a limited scale of operations in Dhaka and Chittagong alone.

In 2009, the foreign banks made a net profit of Tk 930 crore, which was Tk 915 crore in 2010, according to BB data.

After the meeting, Sitangshu Kumar Sur Chowdhury, deputy governor of the BB, told journalists, “We asked the commercial banks to discourage loan disbursement to non-productive sectors and encourage loans for the productive sectors.”

He also said one of the major objectives of the recently launched monetary policy is to bring down the inflation rate to a single digit.

He said the BB also called upon bankers not to discourage imports of basic commodities.
Mohammed Nurul Amin, chairman of the Association of Bankers Bangladesh (ABB), said he supports the central bank's move to discourage loan disbursement to non-productive sectors.

The latest monetary policy targets to cut credit growth to the private sector to 16 percent by June. It was around 20 percent in December.

Both the BB deputy governor and ABB chairman said bringing down credit growth for the private sector to 16 percent is enough to achieve the current fiscal year's economic growth target.

A few days ago, the ABB leaders set a self-imposed cap on deposit and credit rates at 12.5 and 15.5 percent, to discourage unhealthy competition in the banking system.

At yesterday's meeting, all bankers committed to following the self-imposed cap on deposit and lending rates, said Chowdhury, adding that the central bank did not intervene in this process.

In addition, the primary dealer banks are currently facing a liquidity crisis as they cannot cash the excess investment in bonds at around Tk 16,000 crore.

The Daily Star/Bangladesh/ 10th Feb 2012