Bangladesh Bank governor Dr. Atiur Rahman, now in Washington, said that Diaspora bond is a promising fund mobilisation option both for the government and the private sector in order to fulfill the requirement of higher investment in the country. “Bangladesh’s growth aspirations and the recent sharp pick up in her real sector investments require higher investment levels than can be mobilized from domestic savings; and the Diaspora bond issue is a promising fund mobilization option,” he said.
The central bank governor was addressing a seminar on ‘Diaspora Bonds: Operational and Implementation Challenges’ held in the World Bank Headquarter in Washington DC on Thursday, according to a message received here on Friday.
Bangladesh Bank governor Dr. Atiur Rahman and Central Bank of Kenya governor Prof. Njuguna Ndung’u spoke at the seminar about the prospects of Diaspora bonds in Bangladesh and Kenya. The seminar was chaired by World Bank managing director Mahmoud Mohieldin.
World Bank’s Lead Economist Dilip Ratha presented case studies of the Philippines, Ethiopia, Nepal and India, while Otaviano Canuto, Vice President and Head of Network, Poverty Reduction and Economic Management, gave an overview of the World Bank’s role in promoting Diaspora bonds throughout the world.
Speaking about the prospects of Diaspora bonds in Bangladesh, Dr Atiur said that bond issuance abroad is among the options under consideration for financing the government’s infrastructure investment projects (including those in PPPs) in power generation, toll bridges, toll roads that will generate future income streams to pay off debts and other costs.
“Ring fencing of revenues for debt repayment should make these bonds attractive to the Diaspora and other non-residents, individual and institutions.”
He said that while dealing with license applications for new banks, Bangladesh Bank will consider prioritizing applications proposing external fund raising by issuance of Diaspora bonds for long term financing of local private sector investment projects.
Given Bangladesh’s current sovereign rating (BB-) with stable outlook, the BB governor said: “We expect borrowing costs in external bond issues to be bearable, not far from costs of sovereign borrowing.”
He also welcomed any help that the World Bank group might offer in issuance of Diaspora bonds.
Dr Atiur said that Bangladesh has emerged as one of the promising avenues for promoting Diaspora bonds with steady, resilient economic growth over the past few decades.
Bangladesh has two US Dollar bonds (‘USD Premium and Investment bonds’) in issue, mainly targeting the Bangladeshi Diaspora abroad but open also for investment by any non-resident individual or institution regardless of nationality.
Available on tap through banks in Bangladesh authorised to deal in foreign exchange or their branches and correspondents abroad, the 3-year Premium and Investment Bonds fetch interest in US Dollar respectively at 7.5 and 6.5 per cent annual rate at maturity. The interest on Premium Bond is payable only in equivalent Bangladesh Taka.
Premature redemptions are permissible, at interest rate lowered by 0.5 per cent for each year short of maturity.
Total outstanding balance of the two bonds stood at US$ 149.2 million as of end August 2011. The sale volume remains modest in absence of aggressive marketing, another likely reason being that the bonds are not freely tradable, though useable as collaterals.
Sales restrictions on such foreign bonds in the US and other advanced Western countries hosting the better off segments of Bangladeshi Diaspora may also be among the reasons.

News:The Independent/ BAngladesh/ Sep-24-2011

State-owned Agrani Bank Ltd has allegedly breached its commitment to provide agriculture loans to about 700 poor women, after taking deposits worth Tk. 3,200 from each of them. All these poor women from Kutir Bazar area, under Shibpur upazila in Narsingdi district, who borrowed the money from microcredit implementing agencies and deposited it in Agrani Bank, are now under pressure to repay their loans.
Selina Jahan, executive chief of the platform for poor rural women, who is also a victim of the Agrani Bank misdeed, has fired off a letter of complaint to the central bank governor. In the letter, she has also asked the governor to help in quick disbursement of loans and refund of deposits.
Selina said officials of Agrani Bank, including its general manager (rural credit and SME division) Abdul Hamid, had visited her village in January this year and promised them loans. The bank officials advised Selina and other members of the women association of the area to take training on producing composed fertilizers, and to deposit Tk. 3,200 each at the local Radhaganj branch of Agrani Bank.
“We have done everything they (bank officials) asked us to do. They were disbursing the loans in phases. Suddenly, before Eid-ul-Fitr, the local Agrani Bank manager told us that processing of loans had been stopped by the upper management. However, the bank continued to provide loans to members of the other women association, Durjoy Samabay Samity,” Selina said.
Selina alleged that an official, identified as Mobarak Hossain, deputy general manager (rural credit and SME division) of the bank, had tried to take undue advantage from the members of her association.
“He (the official) might be behind the formation of another association in the same area, overnight, and providing loans to members of that association depriving us of our due rights,” she said.
Selina is now under tremendous pressure from her association members who demand either disbursement of loans or refund of their deposits.
A top official at the Agrani Bank headquarters said the bank management had taken the issue seriously and a team of officials would be sent to the area next week to investigate the matter.
Meanwhile, sources at the secretariat of the central bank governor said the governor had ordered a probe into the allegation and stern action against those responsible for humiliating the poor women.

News: The Independent/ BAngladesh/ Sep-24-2011

Transactions at the government and private commercial banks in Dhaka were thin on Thursday due to daylong strike, enforced by the main opposition BNP.

A huge amount of liquidity remained stored at every branch of commercial banks, posing high risks in operating banking activities during hartal, bankers said.

However, as part of regulatory compliance, the banks have to remain open, senior bank officials said while talking to daily sun on Thursday.

Syed Abdul Hamid, Managing Director and CEO of Agrani Bank Ltd, said there are risks both in cash movement and cash transaction during hartal.

Safety of the bank officials also a concern as there has every scope to get trapped in violence on roads. Shortage of transportation also causes trouble to the bank officials to reach office.

Managing Director of Islami Bank Bangladesh Ltd., M Abdul Mannan, said it is known to all that hartal causes economic loss. There may have political gain in hartal but it certainly causes loss to business and economy.

Sonali Bank Shilpa Bhaban Corporate Branch, Matijheel transacted more near Tk 1 billion in terms of debit and credit while nearly 700 customers visited the branch in the day.

Fanindra Tribedi, Deputy General Manager and Manager of the branch, told daily sun though the transaction at his branch was satisfactory amid hartal, it was not like other normal trading days.

“Matijheel is a vital place where picketing takes places every now and then that is an issue of concern for us. This is why we also have to maintain tight security measures at the branch remain aware for every moment”, Tribedi added.

The MTB branch of Bank Asia at city’s Dilkusha area transacted more than Tk 5 billion while the bank usually transacts about Tk 10 billion on an average.

Manager of the branch, M Sajjad Hossain, said hartal bars easy movement of customers while handling and carrying cash. That’s why many customers don’t want to transact money on a hartal day.

The nature of hartal has changed over the years and it is no more like that of 1995, when hartal could spread panic and bar people from going out of their home, said Mijanur Rahman Khan, a customer at the Malibag branch of Prime Bank ltd.

The effect of hartal is reducing gradually, and time has come to think of political programmes that can replace hartal, he added.

News: Daily Sun/ BAngladesh/ Sep-24-2011

Bangladesh Bank’s (BB) selection of Infotech Global Pte Ltd, a Pakistani origin company, for a sensitive project, linked to the electronic payment system of the central bank, has drawn sharp criticism from one of the advisers of the Prime Minister, and information technology industry insiders. The ongoing procurement process, for "National Payment Switch Applications (NPSA)", under the "Central Bank Strengthening Project", is being carried out with International Development Association credit, worth USD 5 million (around Tk. 37 crore). Critics said that procuring software, hardware, and support services, for the important national institution, from a Pakistani origin company, might pose a threat for online transactions in future.
Commenting on this, Prime Minister's finance adviser, Dr Mashiur Rahman, said security issue must be given top priority. "I don't know much about the procurement process. But, in my view, the tender evaluation process must cover the security aspects judiciously, considering national interest," he said.
Meanwhile, local information technology industry insiders have criticised the move by the central bank, saying that the NPSA of the central bank is a sensitive project, and awarding the work to a company of Pakistani origin, might pose a major threat to national security.
"A national institute, such as Bangladesh Bank, must ensure that all protective measures are taken, regarding internal and external security," said Enamul H Chowdhury (Khasru), managing director, Energypac Engineering Ltd.
The head of the central bank's procurement committee for the project claimed that everything was done, as per standard rules and procedures.
"I don't know about the origin of the company. But the selected company is based in Singapore, and has qualified in all evaluation procedures," he added. Speaking on the latest status of the procurement, he, however, admitted that he has sent the committee's evaluation report to the World Bank (WB), for further review and approval.
Meanwhile, BB sources said that after completing the evaluation on September 11, the head of the six-member procurement committee, and one of the deputy governors of the central bank, sent the report to WB on the next day, ranking Infotech Global Pte Ltd as the lowest bidder. The source said that the selected company, which had showed its Singapore address, is originally a subsidiary of Pakistan-based Infotech Group.
"The real identity of the company was not discovered during the evaluation process, because its location is shown as Singapore," said the source.
"But, in Bangladesh, the incumbent government is strictly rearing anti-Pakistan sentiment, and some bigwigs of the government have requested the head of the procurement committee to block the participation of the Pakistani company," added the source.
The previous tender for the same work was suspended early this year, by the central bank governor, as another Pakistani company had been selected as the lowest bidder. "The reason, taken into consideration, was the anti-Pakistan sentiment in Bangladesh," said the source.
Besides, owing to the selection of a foreign company, the government of Bangladesh would lose around Tk. 1.50 crore in tax revenue from the cost of procurement, as both Singapore and Pakistan have agreements with Bangladesh, regarding avoidance of double taxation, according to the source. A total of 11 companies, one foreign and 10 local, had participated in the bidding process.

News: Daily Sun/ Bangladesh/ 22-Sep-11

Bangladesh Krishi Bank (BKB) achieved over hundred per cent growth in disbursing agri loan in the fiscal 2010-11 compared with the previous year due mainly for introducing hassle-free system and strong monitoring at the field level. Besides, the bank also marked a positive trend in realizing loan from recipients during the previous fiscal.
The BKB disbursed Taka 5,901 crore agri loan across the country in the previous fiscal (2010-11) against Taka 4,819 crore in the fiscal 2009-10 marking a record 105 per cent growth.

News: Daily Sun/ Bangladesh/ 20-Sep-11