Experts at a seminar on Tuesday underscored the need for linking the 50 per cent bottom segment of population of the country to the banking services by ensuring reasonable cost.

They also spoke in favour of adequate credit availability to the private sector to help expansion of industrial production in order to reduce poverty by creating employment for hundreds of thousands of unemployed people.     

Meanwhile, lauding the Grameen Bank (GB) model in development approach, they said the GB has developed a mechanism in its micro credit programmes that create scope for the small depositors to become owner of the institution. 

"Bottom segment of population, which is mostly 50 per cent of the country's total human resources, must be covered under appropriate financial services by linking them to the banking services," said Prof Rehman Sobhan, chairman of the board of trustees of the Centre for Policy Dialogue, at a seminar on "Role of Central Banks in Financial Inclusion" at a city hotel.

He said the idea of the linkage is the broad segment of population must get financial services at reasonable cost for income generation. "One such example of that is Andhra Prodesh, where the build-up of linkage between micro borrowers and banks took places through self-help groups of the borrowers."

Former finance minister M Syeduzzaman said the central bank should ensure adequate credit to the private sector, especially to the small and medium enterprises, while the government should provide right context on financial inclusion and macro economy.

"The central bank must carry out the challenge of ensuring credit to small and medium enterprises and rural farmers," Syeduzzaman said.

Speaking as chair, governor of the Bangladesh Bank (BB), Dr Atiur Rahman said the BB's financial inclusion drive has substituted directed lending with Corporate Social Responsibility (CSR) driven financing of productive undertakings of the underserved population segments, supporting inclusive socio-economic growth equitably opening up advancement opportunities for all.

"While promoting financial inclusion with appropriately designed initiatives, the banks and the supervision authorities will of course need to keep eye on proper risk management in the newer areas of lending expansion; to protect financial stability by preserving the desired standards of asset quality," said the governor.

The Daily Independent/Bangladesh/ 21th Dec 2011

Expatriate Welfare Bank will open branches in six divisional headquarters in January to help people get jobs overseas and increase remittance inflow to the country.

“The bank will open its branches in Chittagong, Khulna, Sylhet, Barisal, Rajshahi and Rangpur in January next year,” managing director of the bank CM Koyes Sami told BSS.

He said the bank would also open three booths at Dhaka, Chittagong and Sylhet airports and exchange houses in different countries so expatriate Bangladeshis can get necessary banking services at their convenient.

Established in April this year with a paid-up capital of Tk 100 crore, the bank offers aspirant migrant easy loan at only 9 percent interest to cover their cost for going overseas.

The bank in the last eight months provided 175 people with around Tk 2 crore loans, who eventually migrated to different countries including Singapore, Bahrain, Jordan, UAE, Italy and Mauritius.

The Daily Independent/Bangladesh/ 21th Dec 2011

Overall macroeconomic performance of the country is reeling under a 'temporary pressure' and will regain strength in a month or two as both government borrowings and cost of imports are on the decline, the central bank has observed.

Bangladesh Bank (BB) officials have said that the 'temporary pressure' was a result of large import cost against low export income, slow growth in remittances and foreign aid inflows that, together, resulted in acute liquidity crisis and volatility in the prices of foreign currencies in the local market.

However, they also said that the opening of LCs (letters of credit) for food grains and capital machinery had declined by 69.25 per cent and 33.89 per cent in July-October period of the current financial year (FY 2011-12), compared to the previous FY. Meanwhile, the government borrowings also came down to Tk. 18,000 crore in November from Tk. 21,00 crore  the previous month.

"Economy will gain strength again in a month or two, as we see a declining trend in import cost and borrowings by the government," said SK Sur Chowdhury, executive director of the central bank.

He said the challenges in the first half of the current FY were high import costs, huge borrowings by the government, underperformance in mobilising foreign aid, a sharp decline in remittance inflow and low export earnings.

Import cost crossed over US$13 billion during July-November of FY 2011-12, a 23.15 per cent growth over the actual import cost of the same period a year ago,  which was slightly above $10 billion, BB data showed.

In the same period in FY 12, export income registered $ 9.7 billion, a meagre 17.33 per cent growth (12 month average) over the previous FY, which was $8.2 billion. According to BB, the average growth in export income downturned to 17 per cent in FY 2011-12, with only 2.40 per cent growth in November, while the growth was over 40 per cent in the same period last year.

Till November, the net foreign aid mobilisation was only $4.57 million. The total foreign loans and grants the country received was $ 413.88 million. But the government paid off $409. 31 million as interest and principal credit return. In the same period last year, the net foreign aid and grants was $140.62 million.

Remittances declined to $915 million in November, compared to the actual inflow of $998 million in the same month a year earlier, said the official.

These issues were touched upon in the latest meeting of the Executive Management Team (EMT) of the central bank, held last week, with Governor Dr Atiur Rahman in the chair, said another top official of the central bank.

All four deputy governors and all executive directors were present as member of the team. Sources said it was observed at the meeting that the liquidity status in banks turned out to be an apparent deficiency as the rate of overnight borrowing (call money rate) was still at 20 per cent average, as banks had become desperate to mobilise foreign currency to meet the import cost against committed LCs.

The standard rate of overnight borrowing was relatively equal to the rate of inflation, when the financial sector was steady.
However, top central bank executives expressed concern over the country's poor macroeconomic performance in the last five months but observed that it was a 'temporary' phase and would go away by the end of January or February, he added.

"Such situation will be no more as a large number of manpower moved to overseas jobs and stock of food grains is adequate," said the source.

Sources said the central bank had been expecting the government to refrain from spending large volumes of foreign currency by importing wheat untimely, when stock of food grains was sufficient.

"But the execution of such an unwise wheat procurement plan may put additional pressure on the economy when the country has needed a strong reserve of foreign currency," he said, adding that "the government's recent move to import wheat from the Ukraine is not timely when majority of the export earnings and remittances are being spent to pay off the petroleum and industrial raw material import costs."

The Daily Independent/Bangladesh/ 21th Dec 2011

The Bank of Japan said Wednesday that the country's economic recovery "has paused" because of the slowing global economy, leaving its key rate unchanged at between zero and 0.1 percent.

"The pick-up in Japan's economic activity has paused, mainly due to the effects of a slowdown in overseas economies and of the appreciation of the yen," the central bank said after a two-day policy meeting.

"Improvement in business sentiment has slowed on the whole despite steady improvement in domestic demand-oriented sectors," the bank said in a statement.

Many analysts expect the BoJ to take further easing steps -- such as expanding its asset-buying facility -- over coming months amid increasing global economic strife, especially in Europe.

Reflecting the global uncertainty and persistent strength of the yen, the bank's quarterly Tankan survey of sentiment in major Japanese manufacturers plunged in December to "minus four" from positive "two" in September.

In October, the BoJ said it would boost its asset buying fund to 55 trillion yen ($707 billion) from 50 trillion yen to help pour more liquidity into the market, with the extra amount earmarked for the purchase of Japanese government bonds.

The Daily Independent/Bangladesh/ 21th Dec 2011

Directors of Southeast Bank Limited Azim Uddin Ahmed and Duluma Ahmed, are seen inaugurating a branch at Hemayetpur, Savar recently.

Southeast Bank Limited opened 80th branch at Hemayetpur in Savar recently.

Directors of the Bank Azim Uddin Ahmed and Duluma Ahmed formally inaugurated the branch, said a press release.

Managing director Mahbubul Alam, deputy managing director Shahid Hossain, senior executive vice president S M Mainuddin Chowdhury, assistant vice president Donald Rossette, senior principal officer Md Noor Alam and manager of new branch, among others, were also present.

The Daily Sun/Bangladesh/ 21th Dec 2011