Atiur Rahman

The central bank has announced five steps that include hiking interest rates on savings certificates, mobilising more external and domestic resources and rationalising public expenditures to implement its monetary policy.

The plans came as Bangladesh Bank Governor Atiur Rahman yesterday announced the bank's Monetary Policy Statement for the second half of the current fiscal year, which tightened the policy further to curb soaring inflation and reduce pressure on rocketing exchange rate.

"Ensuring positive real interest rates will strengthen monetary transmission channels, curb non-essential imports, stabilise external reserves and lead to an equilibrium in exchange rate," said the governor at a press briefing at his office in Dhaka.

First, the central bank said there is scope for increasing private sector credit growth for productive investments beyond the programmed level if there is a reduction in growth in credit to the public sector.

The BB also said it plans to reduce the demand for consumer loans to increase the share of lending going towards growth-enhancing investment purposes.

"We will discourage investment in risky sectors. We, however, do not mean investment in stockmarket as risky," Allah Malik Kazemi, a senior consultant of the central bank, told journalists after the briefing.

"There are many loans in the SME (small and medium enterprise) sector that are risky."
Second, the BB will ensure liquidity support for banks, so that productive credit growth is not crowded out. In future, the government's borrowing calendar will need to be modified to allow for a higher percentage of debt auctions in Treasury bills, as the long dated Treasury bonds lack liquidity in the absence of an active secondary market.

Third, while the interest rate regime will remain liberalised, the central bank will focus more on monitoring interest rate spreads so that they remain below 5 percent except for SME lending (as the costs of SME operations are higher) and consumer lending.

Fourth, the central bank said, in order to reach the new external sector equilibrium, overall import demand needs to be rationalised. Opening of letters of credits for non-essential and luxury items will be discouraged, while those for essentials such as petroleum will be unhindered.

The BB said a new coordination committee would aim to ensure that taka liquidity is provided ahead of time so that banks can purchase the needed foreign exchange on the inter-bank market on a regular basis.
As a result, lumpy Bangladesh Petroleum Corporation payments can be met instead of approaching the BB for foreign exchange.

Fifth, the central bank will take further steps to improve the stability and outreach of its financial system.
The BB also said the monetary growth targets for fiscal 2012 are on track that established the credibility of the stance taken in the previous MPS.

In November 2011, reserve money growth and broad money growth were 15.4 percent and 17.7 percent respectively, well below the 16 percent and 18.5 percent targets set out in the July MPS.

"This stance was achieved through open market operations, raising the repo rates by 100 basis points in FY 2012 and lifting caps on lending interest rates other than for agricultural and pre-shipment export credit," said the MPS.

While weighted average lending rates have gone up on average by 1.6 percentage points in 2011, the BB said it is closely monitoring spreads so that they remain in low single digits for all sectors, except SME and consumer credit.

"This stance, along with pro-active liquidity management still ensured adequate year on year private sector credit growth -- more than sufficient to sustain economic growth targets, in line with earlier years and above that of India."

The BB said the extent of crowding out is limited as the weight of government borrowing in total domestic credit remains around 20 percent, which will free up more room for private sector credit growth.

It also said cross-country experiences from around the region illustrate the importance in Bangladesh of using monetary policy to act preemptively to mitigate risks from domestic and external imbalances.

The Daily Star/Bangladesh/ 27th Jan 2012

Md. Atharul Islam, Secretary, Ministry of Civil Aviation & Tourism formally inaugurated the MTB booth at the departure lounge of Hazrat Shahjalal International Airport (HSIA) Dhaka, as the Chief Guest. Chairman of the Civil Aviation Authority of Bangladesh, Air Commodore Mahmud Hussain ndc, psc, MTB Chairman Dr. Arif Dowla and Vice Chairman Rashed A Chowdhury, Mr. Kamaluddin Ahmed, FCA, FCMA, Director Finance, Biman Bangladesh Airlines attended the program as Special Guests. MTB Managing Director & CEO Anis A. Khan, Additional Managing Director Md Ahsan-uz Zaman, Head of MTB NRB Banking Division AKM Shameem, other senior Government and bank officials were also present at the event .

Source:http://www.facebook.com/Mutual.Trust.Bank

Janata Bank Ltd has distributed blankets among the cold-hit people in Jessore recently.

Md Nurul Amin and Omar Farooque, deputy managing directors of the Bank, distributed the blankets to the poor, said a press release.

Other high officials of the Bank’s Jessore area were also present on the occasion.

Janata Bank has taken an initiative to distribute around 7000 blankets among the distressed in Rangpur, Sirajgonj, Dinajpur, Gopalgonj, Rajbari, Comilla, Narsingdi, Mymensing, Laxmipur and Dhaka city.

The Daily Sun/Bangladesh/ 26th Jan 2012

The Asian Development Bank said yesterday it has approved a loan and political risk guarantee of up to $400 million for a project to build Uzbekistan's largest-ever petrochemical plant.

The ADB said the Surgil Natural Gas Chemicals Project would produce gas for commercial use and for conversion into chemical intermediates used in the plastics and textiles industries.

The Daily Sun/Bangladesh/ 26th Jan 2012

Alhaj Abdus Samad, chairman of the Executive Committee of Al-Arafah Islami Bank Ltd, presides over the executive committee meeting of the bank yesterday.

The 333rd meeting of the executive committee (EC) of Al-Arafah Islami Bank Ltd was held at its head office in the city yesterday. Al-haj Abdus Samad, chairman of the executive committee of the Bank, presided over the meeting, said a press release.

Vice-Chairman of the committee Alhajj Abdul Malek Mollah, Mem-bers-- Alhajj Md Harun-Ar Rashid Khan, Alhajj Nazmul Ahsan Khaled, Alhajj Hafej and Md Enayetullah, Alhajj A N M Yeahea, General Manager of Bangladesh Bank Ahmed Ehtes-hamul Haidar, Mana-ging Director of the Bank Ekramul Hoque, Deputy Managing Directors-- Md Rafiqul Islam, Khondoker Nayeemul Kabir and Company Secretary and Deputy Managing Director Md. Mofazzal Hossain were also present at the meeting.

The Daily Sun/Bangladesh/ 26th Jan 2012