Rejaul Karim Byron

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Bangladesh Bank yesterday withdrew the 13 percent lending cap except on agricultural and industrial term loans.

The International Monetary Fund (IMF) and the owners of private banks had long been putting pressure on the government to lift the cap.

However, central bank officials said the BB took the decision on its own, not due to any pressure.

Salehuddin Ahmed, the immediate past governor of the central bank, said the move may give a rise to the costs of business. The BB could have taken the decision later, he added.

A BB circular yesterday said the decision to lift the lending cap was taken after reviewing the overall situation. However, the 13 percent lending cap would remain in force for the agricultural sector and industrial term loans.

The circular said all other types of export credit interest rate will be 7 percent; and the interest rate on import finance for rice, lentil, edible oil, gram, onion, date and sugar would remain at 12 percent.

It also said, under the financial sector reform programme, the policy of flexible interest rate was introduced in 1989 which allowed the banks to determine their rate of interest.

In the backdrop of the world economic situation, the central bank set the lending cap on some sectors, said the circular.

In April 2009, the lending cap was put in force.

The IMF last year tagged 10 conditions with its $1 billion credit which include withdrawal of the lending cap by March this year. The IMF said the conditions were aimed at strengthening the monetary transmission mechanism and improving the financial sector performances.

The government and the IMF are continuing talks on the conditions. An IMF mission has already started final discussion with the government from Tuesday and is scheduled to continue until March 18.

On the other hand, the owners of the private banks on March 2 put forward a 14-point recommendation to the prime minister, demanding withdrawal of the lending cap to help overcome financial crisis of the banks.

On March 3 they placed the recommendations to the central bank. The BB is now reviewing those.

The former BB governor said, due to liquidity crisis the banks have already hiked their deposit rates. To cut down costs of fund they have now recommended withdrawal of the lending cap.

Besides, there is a pressure from the IMF, Ahmed said.

In another circular, the BB issued reminder to the banks to hang the interest rates of deposit and credit and all other service charges at their head offices and all branch offices.

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

Citibank has recently promoted Rashed Maqsood to managing director and Citi country officer for Bangladesh, the bank said in a statement yesterday.

Prior to the promotion, he assumed the position of country business manager of the bank in December 2010. He was the head of global transaction services for Citi in Indonesia for three years before he took up his latest assignment in Bangladesh.

As the Citi country officer, Maqsood will lead the Citi franchise in Bangladesh, and will be responsible for the safety and soundness of the franchise by ensuring strong governance.

Maqsood, who has over 18 years of banking experience, started with Citi in 1995 as a relationship manager and assumed the role of head of financial institutions group in Citi, Bangladesh, in 2001. Before joining Citi, Maqsood had worked in corporate banking at American Express Bank.

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

The central bank has sought applications from interested NRB entrepreneurs for setting up the country’s first NRB bank, officials said Tuesday. May 31 has been set as the deadline for submitting applications from eligible and qualified non-resident Bangladeshis (NRBs).
The proposal by the NRB entrepreneurs mentioned that NRBs are interested to invest here and their demand for establishing banks owned by them was raised many times in different forums.
Considering the huge remittances sent by the NRBs, formation of such a bank to create a handsome foreign exchange reserve has opened up a positive side, the proposal said.
The central bank has invited applications from eligible and qualified NRB entrepreneurs and May has been set as deadline for submitting application, said a circular issued by Bangladesh Bank (BB).
The BB has already made a set of criteria for evaluating the application forms.
Under the guideline for setting up NRB Bank, the paid-up capital of the NRB bank will be Tk 4 billion. The NRBs will provide half of the paid-up capital and the rest will be raised through a public offering.
An entrepreneur can hold a minimum of Tk 100 million in shares or a maximum of 10 per cent of the total shares. No share of the entrepreneur can be transferred within three years without the central bank's permission.
A non-refundable amount of $15,000 has to be deposited with the application.
There are about 47 local and foreign commercial banks operating in the country, of which 30 are private. The approval for any new bank had been on hold from 2001, following the presence of more-than-required banks, and criticisms from various quarters.
In September 2010, Prime Minister Sheikh Hasina on her scheduled visit to the US gave an assurance to the NRBs residing in the US about the establishment a NRB bank.

News: The Independent/  Bangladesh/Mar-09-2011

The state-owned banks have so far achieved 46.54 percent target of disbursing special agriculture credit at 2 per cent interest rate in the current fiscal year, although only four months to go.

Up to the month of February this year, total disbursement of agriculture loan under a Bangladesh Bank programme reached Tk 408.07 million while the target is set at Tk 960.5 million for the fiscal, showed the data released by Bangladesh Bank.

The data also showed that the special agriculture loan disbursed in first three days of March this year was Tk 38.98 million, totaling to Tk 447.04 million.

The loans are being disbursed to the farmers for producing pulse, oil seeds, spices and maize, while the spice producers remain the highest loan taker during the period. The loans taken by the spice producers stood at Tk 348.46 million till March 3 of the fiscal year.

The disbursing banks include Sonali, Janata, Agrani, Bangladesh Krishi Bank (BKB), Rajshahi Krishi Unnayan Bank (RAKUB) and Rupali Bank Ltd.

Sonali Bank Ltd achieved 31.20 per cent, Janata 50.53 per cent, Agrani 50.35 per cent, BKB 57.13 per cent, RAKUB 58.81 per cent and Rupali Bank Ltd 14.51 per cent of the targets set for them individually.

A Bangladesh Bank official said the impact of the special agriculture credit has already started to fall in market prices of those agricultural products on which loans are being disbursed.

News: Daily Sun/  Bangladesh/Mar-09-2011

The Ministry of Finance on Monday issued a circular to all commercial banks for preparing the bank statements of all candidates participating at the next union parishad elections starting from March 29 next.

The banks have been asked to send the bank statements of the individuals to restrict loan defaulters taking part at the upcoming UP elections, sources said.

According to the circular, the branches of the commercial banks will submit the bank statements to the returning officers in the respective areas.

The Election Commi-ssion last month ann-ounced the schedule of UP elections in 596 UPs between March 29 and April 3 this year.

News: Daily Sun/  Bangladesh/Mar-09-2011