Dhaka, Mar 10: The United Commercial Bank (UCB), a leading private commercial bank in Bangladesh, has firmed up plans to float a Tk. 10-billion infrastructure fund. The bank will send the proposal to the regulator, Securities and Exchange Commission (SEC), for approval within a month, said an official.

UCBL Infrastructure Fund, where UCB will invest Tk. 1 billion as sponsor, will be the third in the race after Prime Bank and IFIC bank’s infrastructure funds.

Fifty per cent of the fund will be invested in the secondary market and the rest will find its way into power projects, initial public offerings and bonds, the official said.

Alif Asset Management Company is the fund manager. Such funds are managed by specialist fund managers who make the investment decisions on behalf of the fund. They can diversify into infrastructure assets and ensure an income stream from essential services.

Meanwhile, proposals for a Tk. 10-billion IFIC Infrastructure Fund and a Tk. 5-billion Prime Bank Infrastructure Fund are still awaiting the SEC approval.

“Infrastructure fund has already emerged as an effective stock market tool for financing large projects in the emerging markets worldwide, including India.

So, in case of Bangladesh, this is obviously a welcome move,” said Salahuddin Ahmed Khan, professor of finance at Dhaka University. The government, too, floated the Bangladesh Infrastructure Finance Fund (BIFF) in 2010. The BIFF is in the process of issuing bonds and debt instruments to local and foreign investors in a bid to raise funds for financing projects, including those of power and infrastructure.

There are 33 closed-end mutual funds in the country making up only 3.51 per cent of the total market capitalization.

Source: The Independent-Bangladesh/March 11, 2011

Bangladesh Bank (BB) yesterday increased repo and reverse repo rates by 0.5 percentage points to slow credit growth in a bid to contain inflation.

The new move came a day after the central bank lifted the lending cap. Executives of commercial banks and a former governor of the central bank have backed the move.

The central bank increased the interest rate on repo to 6 percent, which was 5.5 percent earlier.

The repo rate is the interest rate at which the central bank lends money to commercial banks. The reverse repo rate is the return banks earn on excess funds parked with the central bank.

The rate of interest on reverse repo was hiked by 0.5 percentage points to 4 percent. A central bank circular said the new rates of interest will come into effect from Sunday.

On Sunday the BB withdrew 13 percent lending cap on the rate of interest on credit.

The bankers said the moves will make credit costlier. In January the BB in its Monetary Policy Statement (MPS) indicated repeatedly that it will hike the policy interest rate to contain inflation.

The MPS said: "All central banks in our immediate neighbours and in the fast growing emerging economies of the East Asia are acting decisively to curb inflationary pressure from excessive monetary expansion, with repeated rounds of hikes in both policy interest rates and Cash Reserve Requirement (CRR)".

The MPS also said the recent rates of growth in the credit to the private sector are high and well out of line with likely growth trend in nominal GDP (gross domestic products).

It said, getting to a firmer grip on monetary expansion is an unavoidable necessity.

In the recent times, inflation is rising in almost every month. In January, alongside food inflation, non-food inflation started going up, ringing an alarm bell in the BB.

In July last year, in the first MPS of the current fiscal year, the BB set a target of cutting down private sector credit growth to 16 percent by June next from 24 percent in June. But instead of coming down, the credit flow went up every month and in December the private sector credit growth stood at 27.58 percent.

Earlier the BB increased repo rate in September last year, and in December it hiked CRR to bring down the rate of credit growth.

Association of Banks, Bangladesh President K Mahmud Sattar said, after the central bank gave a contractionary signal in the market, the repo rate had to be increased. He said the withdrawal of the lending rate cap is a good decision on the part of the central bank.

Former BB governor Salehuddin Ahmed said the BB will have to remain alert so that the banks after borrowing through repo do not use the money in unproductive sector.

Source: The Daily Star/March 11, 2011

Md Mainul Haque joined Sonali Bank Ltd as a deputy managing director (DMD) Thursday. Earlier he was a DMD of Bangladesh Krishi Bank. Mr Haque started his career as a senior officer of the then Bangladesh Shilpa Bank in 1981. He passed BSc in Engineering from BUET in 1980 and later obtained a degree in MBA. He was also employed in the Roads and Highways Department after qualifying the BCS Engineering.

Source: The Financial Express/March 11, 2011

Mashiur Rahaman

---

Bangladeshi exporters earned more than US$14 billion in the first-eight months of the current fiscal year, fuelled by growing demand for competitively priced manufactured products in a post-recession global economy. With a net 40 per cent growth recorded at the end of July-February period against the corresponding period of the previous fiscal year, the country’s earnings from international trade is likely to exceed targets well before the year-end.
According to monthly export data released by the state-run Export Promotion Bureau (EPB), the country’s export earnings during the first eight months was 20 per cent higher than its target of $11.8 billion.
“It is just above $4 billion short of export targets of $18.5 billion,” EPB official said, before expressing confidence about reaching the target within the next two months.
The month of February alone recorded export earnings of $1.9 billion, a growth of 43 per cent against February 2010. The month’s export target was $1.5 billion, EPB data revealed.
Leading the country’s export, the knitwear garments export sector earned $5.8 billion during the period -- which was 44 per cent higher than the $4 billion earned during the corresponding period of the previous fiscal year.
Earnings from knitwear exports during this period was 28 per cent higher than the target of $4.5 billion.
Woven garment exports also enjoyed significant growth during the July-February period, reaching a 38 per cent increase with earnings of $5.1 billion.
Earnings from woven products was 22 per cent higher than the period’s target of $4.2 billion.
Jute and frozen food have also enjoyed impressive growth and are the nation’s third and fourth highest growing export items.
According to the latest EPB data, jute and jute goods earned $734 million from exports during July-February period.
The leading agro-product has become the country’s top-third export item, fuelled by surging demand of natural fibre across the world. Jute and jute goods at the end of first eight months of the fiscal year grew by 51 per cent from the corresponding period of FY 2009-10.
Harnessing benefit of restriction withdrawal in the European market, the country’s frozen food exporters recorded a rocking growth, earned $431 million during the period of current fiscal year. It was 59 per cent up than the corresponding period of FY 2009-10, according to EPB data.
Export of raw leather, which was on down trend in the recession-hit global market, also posted the growth of 34 per cent, and earned $176 million. EPB Vice Chairman Jalal Ahmed attributed the growth to the recovering global economy.

News: The Independent/ Bangladesh/ Mar-10-2011

The Bangladesh Bank has directed the commercial banks to display information on their credit services at visible places of head offices or branches to make the credit information available to their clients, officials said on Wednesday.

“We have taken the latest move aiming to provide more financial facilitates to the potential entrepreneurs,” a senior official of the BB told daily sun, adding that the central bank is closely monitoring the activities of different banks.

The central bank on Wednesday issued a circular in this connection and asked the chief executives and managing directors of all scheduled banks to follow the instruction properly.

The BB fresh move came against the backdrop of non-compliance of the existing guideline to help credit information available to the entrepreneurs.

The central bank took the move following a decision taken at an inter-ministries meeting during last February.

As per the circular, the commercial banks should display all necessary information in their websites. Commercial bank information to be displayed are annual financial reports, amount of deposits, and interest of different credit schemes and schedule of bank charges.

Top businessmen of the country welcomed the BB’s move, saying that it will help them choose suitable credit scheme.

“The central bank has taken the right step by directing banks to display their credit information in visible points at the bank premises. It should be strictly monitor whether the instruction is followed or not,” director of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Md Helal Uddin said.

He, however, said that the commercial banks during last 15 days were not sanctioning any new loan for opening Letter of Credits (LCs).

News: Daily Sun/ Bangladesh/ Mar-10-2011