Food inflation is likely to come down to below 10 per cent during the first quarter of the current fiscal year, a top Bangladesh Bank (BB) official said on Thursday. Referring to the BB statistics, the official said that on a point-to-point basis, inflation declined to 10.20 per cent in May from 10.67 per cent in April, and 10.49 per cent in March 2011 as a result of a slight drop in the prices of rice and vegetables. The downtrend in food inflation is likely to continue in June too, he said.
The BB official further noted that the recent conference of the central banks, which was organised by the Bank for International Settlements (BIS) in Switzerland, called upon the US and UK central banks to adopt tight monetary policies to help contain the high global inflation.
BB governor Dr Atiur Rahman attended the two-day conference beginning June 28.
The BB official said aid the central banks of China and India had been executing a tight monetary policy since last fiscal year as a precautionary measure to check inflation.
“Execution of the BIS call by the US and UK central bank, would help contain inflation globally and Bangladesh, too, would benefit from it,” said the official.
The prices of rice have gone down in the international market for the last couple of months following improved supply, the Centre for Policy Dialogue (CPD) executive director, Prof (Dr) Mostafizur Rahman, told The Independent.
“Yes, present international market indicators clearly signal that point-to-point inflation is set for a slight decline globally in the coming months. However, it would vary on movement of fuel prices,” he said.
The budgetary allocation for agriculture would increase productivity, which may ease inflationary pressure to some extent unless there is a natural disaster affecting production of crops, he added.
Rahman warned that all efforts and estimates might go awry if there is no coordination between monetary and fiscal policies like in last fiscal year. “It is very important to maintain good coordination between fiscal and monetary policies to achieve the target of bringing down inflation,” he pointed out.
The CPD executive director said growth in credit and broad money had overshot targets. This resulted in the highest-ever 28 per cent credit growth in the private sector and fuelled inflation.
Rahman welcomed the BB target to bring down credit and broad money growth to 18 and 15 per cent, respectively, this fiscal year.

News: The Independent/ Bangladesh/ July-02-2011

Sajjadur Rahman

Banks now have to maintain a higher capital -- at 10 percent of their risk-weighted assets -- from July 1 in line with a directive that came as a Basel II requirement.

Risk-weighted capital asset ratio (RWCAR), which is an important cushion to protect depositors or other lenders against unexpected shocks, was 9 percent till June 30 this year.

“The deadline for minimum capital adequacy ratio requirements is September 30 though banks will start maintaining the new capital standard from July 1,” said Jahangir Alam, executive director, banking regulations and policy department of the central bank.

The Bangladesh Bank (BB) analyses the banks' capital position on a quarterly basis and accordingly, it will assess the RWCAR at the end of September, said Alam.

In line with Basel II framework, the banks are required to hold capital for different classes of assets, based on a credit risk criterion.

The RWCAR or capital adequacy ratio determines the capacity of a bank in terms of meeting the time liabilities and other risks, such as credit risks and operational risks. Banking regulators in most countries define and monitor the ratio to maintain confidence in the banking system.

Inquiries, however, show that some banks, particularly state-owned and third generation private ones, are not strong enough to meet their capital adequacy requirements in their present situation.

According to BB officials, three state-owned commercial banks, five private commercial banks (PCBs) and two specialised banks owned by the government ran short of capital to meet the target of 9 percent set by the central bank.

“These banks will face difficulties in meeting the new capital requirement,” said another BB official, requesting not to be named.

However, no foreign banks have any such shortfall, he said.

The BB officials said many banks at the time of profit distribution did not take the risk factor into consideration. On the other hand, some banks distributed more dividends to their shareholders than the profit they made. As a result, they could not preserve the required amount of capital.

According to BB decision, the banks that will fail to maintain the minimum capital requirement will face regulatory actions including a downgrade in their ratings.

Even, the noncompliant banks will not be able to open any branch or exchange house abroad and also face restrictions in opening new branches at home.

The state banks' shortfall in maintaining the minimum capital may be addressed by issuing bonds by the government.

Bangladesh entered the Basel II regime, the latest version of risk-based capital standards set for banks worldwide, on January 1 2010.

News: The Daily Star/ Bangladesh/ July-02-2011

MA Halim Chowdhury has recently been appointed additional managing director of Pubali Bank on contract basis, the bank said in a statement yesterday.

Prior to this appointment, Chowdhury was the deputy managing director of the bank. He joined the bank in 1988 as principal officer.

A science postgraduate from Chittagong University, he was promoted as general manager of the bank in 2006.

News: The Daily Star/ Bangladesh/ July-02-2011

National Credit and Commerce (NCC) Bank Ltd opened two ATM booths in the city’s Pragati Sarani area and Narayangonj town on Wednesday to provide enhanced banking services to its customers.

At the ATM booths, the bank’s customers will get various banking services including 24-hour cash withdrawal, balance inquiry, utility bill payment, mini statement and pin change facilities from the booths with free of charge, said a press release.

Md Nurun Newaz, chairman of the bank, formally inaugurated the booths as chief guest.

The bank’s Managing Director and CEO Mohammed Nurul Amin, Deputy Managing Director TM Faruque Chowdhury, Executive Vice President Md Omar Faruque Bhuiyan, Senior Vice President Fakhrul Islam Chowdhury, among others, were present on the occasion.

News: Daily Sun/ Bangladesh/ July-02-2011

Bangladesh Bank has directed public banks to immediately open accounts for people enjoying benefits under social security programmes run by the social welfare directorate.

In a directive yesterday, the central bank said people enjoying such benefits, including the elderly persons' pension and allowances for insolvent disabled and widows, can open bank accounts in their names by depositing Tk 10 against their national identity cards and pension payment orders.

Such bank accounts are aimed at making the distribution of allowance easier and hassle-free and ensuring transparency, the central bank said.

There will be no obligation for maintaining a minimum balance in these accounts, and no charge or fees could be charged, according to the central bank.

In cases where cheque books are inadequate, the transactions into these accounts can be done through voucher instead of cheque books.

News: The Daily star/ Bangladesh/ Jun-20-2011