L-R: Muhammad Abul Bashar, Syed Abdullah Mohammed Saleh and Md Habibur Rahman Bhuiyan

Islami Bank Bangladesh Ltd (IBBL) has recently promoted its three officials to deputy managing director, the bank said in a statement yesterday.

The three officials are: Muhammad Abul Bashar, head of information communication and technology division; Syed Abdullah Mohammed Saleh, head of corporate investment division-1, and Md Habibur Rahman Bhuiyan, head of financial administration division.

A BSc engineer of Chittagong Engineering College, Bashar joined the bank in 1983 as principal officer. He also served the bank as head for Dhaka South and central zone.

Saleh started his banking career with Janata Bank as probationary officer in 1979. A master in economics from Chittagong University, he joined IBBL in 1983 as senior officer. He also served the bank as manager of Feni, Comilla, Anderkilla, Khatunganj, Nawabpur Road branches.

Bhuiyan is a chartered accountant and he joined the bank in 1984 as probationary officer. He was a member of Real Estate Committee, Review Committee of Published Accounts and Report and Project Development and Implementation Committee of the Institute of Chartered Accountants of Bangladesh.

News:  The Daily Star/ Bangladesh/ 21-Apr-2011

Md Fazlur Rahman

Non-resident Bangladeshis (NRB) should be the majority shareholders of the planned NRB Bank to attract more investment into the country, said an NRB living in the United Kingdom.

Labour London Assembly Member Murad Qureshi said: “It goes without saying that if in practice it is to be an NRB Bank, then a majority of sponsor shareholding must be by NRBs, by a clear figure as well.”

The government has decided to set up a new bank that is owned equally by non-resident Bangladeshis and locals. The NRBs will provide Tk 400 crore in paid-up capital, while the rest will be raised through a public offering.

The central bank has also published a set of criteria to evaluate the application forms.

Qureshi welcomes the government initiative taken for the NRBs. “We now need details. The details need to be sorted out.”

“It is very important to appropriately set up the NRB bank so that the NRBs can continue to assist in the development of the Bangladesh economy,” said Qureshi, whose parents are from Sylhet.

“For it to be a proper NRB bank, the NRBs have to make up of majority shareholding. The nature of the bank demands it as most of its customers live abroad, not here. It needs more than 50 percent ownership from people living abroad. It could be 60 percent or possibly 80 percent.”

An avid cricket fan, Qureshi lives in Central London and was recently in Dhaka to watch the World Cup matches.

He said the minimum shareholding stake of Tk 100 million is far too high for any sponsor living abroad, particularly in the UK.

“Some people in Bangladesh may have Tk 100 million, but NRBs do not have that amount of money. NRBs living abroad are doing well, but they have probably about a million taka to invest.”

“If you go any higher than a million pounds or dollars, you will get fewer shareholders from the NRB community living in the US, Europe or the Middle East,” he told The Daily Star in an interview.

He said the investment threshold should be lowered. “I think realistically. Many NRBs will not have a 100 million taka. What is more realistic is one million taka. This figure can attract people living in London and other parts of the world.”

The Bangladesh Bank circular says sponsors' contribution to the share capital of the proposed bank will be required to be out of net worth declared to the concerned tax authorities, contribution out of borrowings shall not be acceptable. It also says tax returns and certificates have to be submitted. He said these clauses would be unnecessarily prohibitive.

“The documentation process will be difficult for many to arrange, as the deadline for submitting their applications is by the end of May,” said the 45-year-old.

He said tackling these governance issues now would, in the long run, make sure that NRB remittance inflow is usefully targeted into productive investment, like roads and highways and the energy sector, via the bank rather then domestic consumption.

“With these improvements, I am sure many NRBs around the world will apply and happily work with the government of Bangladesh to improve their ancestral homes.”

Qureshi said the condition of NRBs in the Middle East is a matter of concern to every one. “I think they should be assisted by every means possible,” he said, referring to thousands of Bangladeshi migrant workers, who were forced to flee Arab countries, such as Egypt and Libya, following mass uprising.

He said billions of pounds and dollars flow into Bangladesh. “It is useful for the government and it is important for us to use the funds economically.”

More than 70 lakh Bangladeshis live abroad. Remittance added up to nearly $11 billion last fiscal year.

Qureshi said much of the remittance is spent on consumption. “The NRBs must develop a habit of investing on major infrastructure. This kind of a thing is critical. It will help Bangladesh achieve 10 percent GDP growth from 6-7 percent growth, if we can make sure the money enters productive sectors, such as energy, transport, and roads and highways.”

“There is a huge inflow of remittance into Bangladesh. You need to better use the money,” said Qureshi, who holds an MSc degree in Environmental Economics from University College London.

“When I went to Sylhet to my grandparent's home by car, I remember that the road from Dhaka to Sylhet was very dangerous.”

“Not only should the Dhaka-Sylhet highway be developed, but also other highways in the country. This is something, which I think, a lot of people living abroad would be happy to invest in. I think this is where the NRB bank would be very, very useful.”

The application fee of $15,000 is also a hurdle, he said. “I however will accept that as the money will be used to conduct appropriate verification of the applications.”

He said the bank should focus on clientele, who will have different needs from others, as most live abroad. “The bank's clientele have to be dealt with differently. The task will be to help them invest in Bangladesh.”

Qureshi, a board member of BRAC UK, an international non-governmental organisation that is a part of the Bangladesh-based BRAC family, said he would be talking to other NRBs to find ways to invest in Bangladesh. “If we can get the details right, it will make a big difference.”

“We will be able to tell you clearly what is needed for the Bangladeshi communities in Rome, London, New York, Paris, California and Washington, if we have major shareholding by NRBs,” he said.

“This could a very good example to show to the rest of the world.”

fazlur.rahman@thedailystar.net                                                                               News: The Daily Star/ Bangladesh/ 20-Apr-2011

Lending rates by banks are expected to come down by June-July once the import of capital goods and food grains cools down, said Bangladesh Bank Governor Atiur Rahman in New Delhi yesterday.

Talking to a group of journalists, Dr Rahman made it clear that the banking regulator would not allow a hike in lending rates to affect economic growth adversely.

Replying to a question, he said after a lull, the import of capital goods and food grains has gone up but they should cool down in another two months.

Rahman, who is in the Indian capital to attend an international seminar on fiscal deficit, was responding to questions on worries among Bangladesh industries and business about the rising lending rate.

He said taming the inflation is a priority of the Bangladesh Bank and pointed out that while food inflation is 10 per cent, the non-food inflation is 3 and half per cent. The Bangladesh Bank is "morally asking the banks not to raise the lending rate beyond 14 per cent" because the rate in Bangladesh is market-driven, he added.

"I have requested the banks to lower the interest rates to make it comfortable for the industry,” the governor said. Rahman ruled out considering removing the cap on lending rates for sectors other than the existing two introduced by his predecessor governor.

Replying to a query on microfinance and the Grameen Bank headed by Dr Muhammad Yunus, Rahman said the Bangladesh Bank "does not have any bad feelings about the microfinance sector".

"We want microfinance to be humane and not an exploitative machinery as it is in several other countries.”

Rahman said the microfinance sector in Bangladesh is being regulated in a transparent and well-laid out manner and "the flat rate of interest is coming down, giving a lot of relief to the poorest of the poor people".

Asked if the Bangladesh government is willing to reach a compromise with Grameen Bank founder Yunus, Rahman said the question should be directed to the Bangladesh government.

Rahman said Bangladesh plans to float infrastructure bonds to rope in investment to develop the currently laggard infrastructure which, along with energy shortage, has been among the major challenges for the government to fuel the economic growth.

"If we can solve the infrastructure and energy problems, we can get a lot of foreign direct investments which are going to China and India because Bangladesh has cheaper labour and has more cost-competitive advantage compared to India and China," he said, adding, labour cost in Bangladesh, especially in apparel, ceramic and shipbuilding sectors, is one-third of that in China and half of that in India.

"I don't think anybody can beat us in this in a decade," said Rahman. As he said, Bangladesh Bank wanted an "inclusive monetary policy as financial inclusion is our top priority".

News: The Daily Star/ Bangladesh/ 19-Apr-2011

The widely talked about Expatriate Bank is set to launch its operation from Wednesday with Taka 100 crore as paid up capital in a mission to finance intending migrant workers of the country and ensure safe transaction of their remittances. Prime Minister Sheikh Hasina is expected to inaugurate the bank Expatriate Welfare Bhaban at Eskatan area in line with her 2008 election pledges to promote manpower export and benefit the migrant workers.
The specialized bank is being opened coinciding with the fourth Ministerial-level consultation meeting of the Colombo Process, a forum of 11 worker exporting Asian countries, in Dhaka. Officials said the formal launching of the specialized bank would be marked by offering loans to two women and a man, intending to go abroad for job.
“We expect the Expatriate Bank to benefit about 76 lakh Bangladeshi expatriate workers currently staying in some 100 foreign countries around the globe,” Expatriates Welfare and Overseas Employment Secretary Dr Zafar Ahmed Khan told BSS.
He said the bank was being established initially with a paid up capital of Taka 100 crore, of which Taka 95 crore came from Expatriate Welfare Fund and rest Taka five crore from the government exchequer.
There is a provision to increase the fund of the bank up to Taka 600 crore as the paid up capital not adequate considering expatriates’ contribution in the national economy as well as the huge size of overseas workers, he added. The expatriate welfare secretary, who is also the chairman of board of directors of the bank, said they would open branches of the bank at all major Bangladesh manpower recipient countries within next six months. “We will open more than one branch in the countries like Saudi Arabia, UAE and Malaysia where large number of Bangladeshi labours are working,” he said.
The bank, marked as one of the major success of the present government in ensuring welfare of the expatriates, will provide loans to the intending overseas workers on the basis of mortgage against job. After starting function of the bank, none would need to sell or mortgage their homes, lands and assets to go abroad for jobs, Dr Zafar said.
Besides, the expatriate bank will provide various facilities to the Bangladeshis, presently employed in the foreign lands, in a package including loans.
“They would be brought under a safety circle through this bank so that none of them are deceived abroad,” he said, adding, “The bank will help channeling remittance in a single but safe way to stop all possible means of deceiving the expatriate workers.”
Moreover, ex-expatriate workers could take loan from the bank to start their new business in the country after coming back from overseas, which will help sustaining the economic solvency of the expatriate workers.
On May 24 last year, the government in a cabinet meeting approved the draft of the Expatriate Welfare Bank Act-2010 with an objective to provide financial assistance for the people intending to go abroad for jobs. Later on February 7 this year, Dr Jafar Ahmed Khan was appointed as chairman of the board of directors of Expatriate Welfare Bank.

News: The Independent/ Bangladesh/ 19-Apr-2011

Sajjadur Rahman

Funds have become costlier as banks have hiked their lending rates overnight in the wake of a significant rise in deposit rates and the central bank's lifting of the lending rate cap on some sectors.

Businessmen said a sudden hike in lending rates will have a negative impact on their businesses. They said an increase in costs will limit the small and medium enterprises' (SMEs) profitability and ability to grow.

Bankers said they have no option but to hike the lending rates as the deposit rates and cost of fund have gone up since December 2010. They, however, said higher borrowing costs will help contain the rising inflation.

“Personal, SME and trading loans have become costlier,” said Helal Ahmed Chowdhury, managing director of Pubali Bank.

Chowdhury said: “SMEs need higher supervision that involves costs. We can't fund SMEs at the present rates of 14-15 percent.”

Muhammad A (Rumee) Ali, chairman of BRAC Bank and a former deputy governor of the central bank, has backed the recent hike in lending rates, saying it would help check inflation.

“Cheap money helps fuel inflation and the interest rate is a major tool to tame it,” Ali said, adding that money was made cheaper while setting a cap on major areas two years back.

The central bank in April 2009, capped the ceiling on lending rates in five specific areas -- agriculture, term loan and working capital to large and medium-scale industries, housing and trade financing -- at 13 percent to help the economy mitigate the impact of the then global financial crisis.

Banks' costs of fund have gone up significantly in the past few months. Some banks offer 13 percent plus interest for deposits and, still many bank managers look desperate to collect deposits.

Meanwhile, the BB also lifted the lending rate cap in all sectors except two -- agriculture and industrial term-loans.

To take the chance, all the private commercial banks and major foreign banks have hiked their lending rates by 1-3 percentage points since the beginning of this month.

A borrower, who took a loan from a private bank at 14.50 percent interest rate in November, was informed by his bank on April 3 that he has to pay 18 percent interest for the loan.

“I want the Bangladesh Bank to look into the mater,” said the grieved businessman.

“If the pressure on deposits continues, there will be no way but to raise the lending rates even for the SME loans,” said the BRAC Bank chairman. The bank has already increased the lending rates for corporate loans.

The Federation of Bangladesh Chambers of Commerce and Industry pleaded the central bank to re-impose the lending rate cap for the sake of the industrial expansion. The apex trade body fears that higher borrowing costs will add woes to entrepreneurs.

But the central bank rejected the plea, saying it does not want to re-impose the cap at this moment. Nazrul Huda, deputy governor of the central bank, said banks will now feel encouraged to invest their funds in real sectors such as industries and services, instead of stockmarket.

Nasreen Awal Mintoo, president of Women Entrepreneurs Association of Bangladesh, said they get increasing complaints of charging higher interests rates by banks recently.

Despite the lifting of the cap, credits at a reduced rate of interest, 7 percent, are being provided to all areas of export credit operations since January 2004.

Besides, the lending rate on import financing for eight essential food items -- edible oil, gram, pulses, peas, onion, date, fruits and sugar -- remains unchanged at 12 percent.

sajjad@thedailystar.net

News: The Daily Star/ Bangladesh/ 18-Apr-2011