The cash outflow from banks has sharply increased in August from July this year as the withdrawal of funds went up by Tk 89.79 billion in the month.

The country’s banks witnessed a rising cash withdrawal as the people required huge funds to maintain their livelihood because inflation went up to hit a double digit figure in the recent months.

The people might have interests in investing somewhere else rather than depositing in the commercial banks, experts and economist said.

They said that it was abnormal situation and the government will have to identify the reasons why depositors withdraw from banks systems by the people.

They pointed out that the people might have felt comfortable by keeping their money in their hands rather than depositing in the commercial banks as they are not confident over the commercial banks.

The Bangladesh Bank’s (BB) monthly economic trend revealed that the currency outside the banks has increased by Tk 89.79 billion to Tk 642.54 billion in August while in July it was Tk 552.75 billion.

The outflow of cash during eight months of the year (January to August) increased by Tk 121.70 billion, while it increased by Tk 103.89 billion during last 12 months (January 2010 to January 2011).

The cash outflow from banks in August this year, however, was Tk 144.34 billion more compared to that in August last year. The banking sector insider said that five big commercial banks held Tk 200 billion cash at present while other banks are in the shortage of funds.

According to the Bangladesh Bank data, the liquidity of banking sector stood at Tk 330 billion as on October 27.
Besides, private sector credit marked a 21.18 percent growth while the rise in deposit with commercial banks was 12 percent to 14 percent.

In the current year's budget, the inflation was set at 7.5 percent on an average. Inflation crossed the budgetary target several months before and reached 11.42 percent in October this year, compared to 11.97 per cent a month before, according to Bangladesh Bureau of Statistics.

Food inflation declined in October mainly due to a drop in the prices of some commodities such as rice, edible oil, lentil, sugar and onion as winter vegetable was available in the market. But, still the inflation is 13-year high. Food inflation fell by about 0.93 percentage point in October and stood at 12.82 percent.

Jahangir Alam, Executive director of the BB, while talking to daily sun made a different opinion on higher cash outflow from banks. “It is not true that people are not confident over the activities of commercial banks,” he asserted.
“Since the deposit growth of the commercial banks is still good, how it can be said that people lost their confidence over the banks,” he questioned. But, he could not tell the reason why people withdraw more money from commercial banks.

Alam, however, said one of the reasons can be requirement of more cash to meet increased living costs for higher inflation owing to price hike of essential commodities in the kitchen markets.

Former governor of BB Salahuddin Ahmed said: “The central bank authority should examine the reason behind withdrawal of huge money from the banks.”
He also said the people are not pouring their money into shares as the stock market is not doing well for last eight months. People may invest their capital in buying lands as the price of land is increasing outside the capital, he added.

Salahuddin also held rising inflation rate for more cash outflow to maintain their livelihoods amid the price hike of essential commodities.

Source: The Daily Sun/ Bangladesh/ 24th Nov 2011

IFC, a member of the World Bank Group, and Bangladesh Bank yesterday launched the country's first ever database on small and medium enterprises (SMEs) to help both lenders and borrowers take financing decisions efficiently.

The database will provide quarterly reports with up to date information on SMEs lending activities, including information on region, sector, loan type, ownership format and locations of the enterprises. Banks will have the access to the report through Bangladesh Bank.

"The SME database is a great effort. It'll help bridge the gap between small enterprises and the banking sector," Atiur Rahman, central bank governor, told at the launching progra-mme at Ruposhi Bangla Hotel in the capital.

"By providing accurate and current information, sectoral and geographical knowledge limitations will no longer hamper access to finance and the growth of SMEs in Bangladesh," Rahman said.

This is an initiative by the South Asia Enterprise Development Facility, managed by IFC in partnership with the UK Department for International Development and the Norwegian Agency for Development Cooperation.
According to the IFC, the database will help financial institutions to streamline appraisal and prioritisation of SMEs and more efficiently identify lending potential by region.

It would also help mapping and design of lending products based on sector requirements.

Lenders can also determine financial viability of SMEs through benchmarking against the sector and develop market strategies and underline funding requirements for each market segment.

"The ability of financial institutions to conduct transactions is highly dependent on information and data they can access about the businesses they deal with," said Tarek Kamal, programme manager for IFC's Access to Finance unit.

"With the help of this database we expect to see increased access to finance in remote areas as well," said Kamal.

The database will include and supply information from 64 districts and collect information on cottage, micro-, small- and medium-scale enterprises as defined by the Bangladesh Bank.

Source: The Daily Star/ Bangladesh/ 24th Nov 2011

Salman F Rahman, chairman of IFIC Bank, presides over an extraordinary general meeting of the Bank at Officers' Club in Dhaka yesterday. The Bank reduced the face value of its shares from Tk 100 to Tk 10. Mohammad Abdullah, managing director, was also present. 

Source: The Daily Star/ Bangladesh/ 24th Nov 2011

National Bank has recently organised a daylong training workshop on "Prevention of money laundering and combating finance of terrorism" in Moulvibazar.

AKM Fazlul Haque, deputy director of Bangladesh Bank for the Sylhet branch, was the resource person of the workshop.

Md Abdul Wahab, vice president and chief of Anti Money Laundering Compliance Unit of National Bank; Shafiqullah Khan, senior vice president and Sylhet region head; and Motahar Hussain, assistant vice president, were also present.

Fifty-seven branch managers and officers of the Bank from eight branches under Sylhet region took part in the event.

Source: The Daily Star/ Bangladesh/ 24th Nov 2011

Social Islamic Bank Limited (SIBL) marked the highest operating profit among the private commercial banks in the first six months of 2011, revealed a report at a press conference on Monday.

Mohammad Ali, managing director, SIBL, told the briefing that the bank has achieved point to point capital growth of 111.08 per cent, deposit growth of 62.37 per cent, investment growth of 55.68 per cent, import growth of 84.59 per cent, export growth of 80.52 per cent and remittance growth of 107.67 per cent. 

Ali said, “The current operating profit of the bank is 216.78 crore whose point to point growth is 84.95 per cent and capital adequacy ratio is 12.83 per cent.”Terming these growths a success story for the bank, he said SIBL is in a constant thrive for improving its banking service. “We are now trying to improve our service delivery and as a part of that we have launched a three month campaign titled ‘Journey towards Service Excellence’”, he said.“Recently, on our 16th anniversary we took ‘continuous perfection’ as our theme slogan”, he added.Ali informed the bank will soon incorporate its customer’s database under its core banking software through the mobile phone.“With this initiative, our customers can complete all sorts of banking activities including balance transfer, balance checking, availing the bill payment of various utility services at their end with the help of mobile phones”, he said.MD of SIBL said the bank is also in the process of giving the concept of social banking its true embodiment. “We have also started ‘SIBL young star account’”, he said.Kamal Uddin Ahmed, chairman of the board of directors of the SIBL, was present at the press conference. He told the briefing that to celebrate the 16th anniversary of the bank; SIBL is going to honour eight different persons in its anniversary program for their contributions towards the country.“A competent panel had selected these eight persons and they are National Professor Nurul Islam for medicine, Professor Abdullah Abu Sayed for education, M Azizul Haque for Islamic banking, Sheikh Siraj for journalism, Mahbub-uz-Zaman for creative business, Nilima Akhter Chowdhury for women entrepreneurship, Haripad Kapali for agriculture and Barrister Rafiq-ul-Haque for lifetime achievement”, he said.

Source: The Independent/ Bangladesh/ 23th Nov 2011