Finance Minister AMA Muhith yesterday condemned the activities of the merchant banks in the share market and said that they have no moral rights to go for forced selling.

“The country presently has no law to restrict them for doing so, although, I dislike forced selling by the merchant banks the most,” the minister said adding: “They have no moral rights for such activities.”

He was speaking to the reporters after a meeting with the communication and bridge division at the Finance Division conference room yesterday.

Muhith said he will sit with the merchant banks on Friday to discuss the issue. He also said the concept of the merchant bank is new for us and we are learning from this new kind of banking. “I think their equity must be increased and I will also make a guideline for them,” he added.

He also said greed sometimes goes beyond limit when it comes to profit making. ‘The regulatory bodies are there to control this kinds of greed,” he added.

Commenting on recent price correction in the share market, Muhith said it has experienced enough corrections, and it is going to be stable. The crazy upward trend is also not right, he opined adding: “Increase in share price index by 500 points in a day is also an act of craziness”.

The Finance Minister said that decision on offloading shares of the state-owned enterprises (SoEs) will be taken in March this year. Offloading of shares of two companies –Meghna Petroleum and Jamuna Oil Company-scheduled for February 22 will remain suspended, he added.

Replying to a query, Muhith said he has temporarily suspended the offloading of shares of the SoEs because of the media report and the comments by so-called experts.

“I have suspended the decision of offloading the shares, but not cancelled the move ... it is only stopped for the moment,” he said. As soon as I think stability returns in the market I will do it”, he added.

On Monday, the SEC announced the suspension of the decision on offloading shares of 21 SoEs considering the latest market situation.

Muhith informed that they would enact a law in parliament to bring the institutional investors under obligations so that they properly act in the share market. “We could only request them, but many of them do not follow our requests absence of law,” he added.

In reply to another query, he said the government has taken initiatives to force the investors, who made profits in share business to re-invest funds in the market.” We can only pursue, but don’t have the authority to force them, he said. “I hope I will have it in a few months time,” the minister expected.

In a query on whether the Investment Corporation of Bangladesh (ICB) is using taxpayers money to buy shares, Muhith replied in the negative.

As part of its initiatives to improve the share market situation, the government has provided Tk 2 billion to ICB for buying shares.

News: daily Sun/ Bangladesh/ Feb-16-2011

Bangladesh Bank (BB) Governor Dr Atiur Rahman said SME sector can play a vital role in reducing income discrimination bet-ween urban and rural people as well as establishing a gender-balanced society.

While inaugurating a two-day SME Financing Fair here in the port city on Tuesday the BB governor also emphasised on women empowerment through SME sector to accelerate economic growth and overall development of the country.

In this regard the BB governor said under Refinance Scheme introduced to help flourish SME sector, the Bangladesh Bank has been providing small and medium entrepreneurs (SMEs) with SME loan at low interest rate (10 percent) and women entrepreneurs are allocated 15 percent of the SME fund of the scheme.

SME Foundation in association with Bangladesh Bank (BB) organised the SME financing fair at Institution of Engineers Bangladesh (IEB), Chittagong premises.

Thirty-two banks and non-banking financial organi-sations are participating at the fair organised to help remove the “financing problem” considered as the main impediment to development and flourishing of SME sector.

The fair is the first of a series of seven such events SME Foundation is organising in all the seven divisional towns in the country this year.

BB Governor Atiur in his speech further informed that following BB order for region based cluster development depending on raw materials available in a locality the banks and non-banking financial organisations are providing SME Loans in Jamalpur, Moulovibazar and Jassor for handicrafts, in Khagrachari and Rangamati for Boutique and in Serajgang for handloom.

SME Foundation Managing Director and Chief Executive Officer Sayed Rezwanul Kabir made a welcome address at the inaugural ceremony presided over by SME Foundation Chairperson Aftab-ul-Islam.

Bangladesh Bank, Chitta-gong General Manager Mohammad Naushad Ali Chowdhury, SME and BB Special Program Department Director Sukamol Shingha Chowdhury, BRAC Bank Limited Managing Director Sayed Mahabubur Rahaman and Channel I Managing Director of Channel Shaeikh Seraz attended the inaugural ceremony among others.

Later, loan sanction letters and dummy cheques for Tk 41.9 million of SME loan were handed over to the SME entrepreneurs by the chief guest on behalf of participating banks and financial institutions.

News: daily Sun/ Bangladesh/ Feb-16-2011

Bangladesh Bank (BB) and all scheduled banks will remain closed on February 16 on the occasion of holy Eid-e-Miladunnabi and February 21 on the occasion of Shaheed Day and International Mother Language Day, a press release said here on Monday.

News: The Independent /Bangladesh/15 Feb 2011

Bangladesh Bank has instructed the scheduled banks to charge 12 percent interest rate on credit for importing edible oil, sugar, pulse, spice, onion, date, fruits, chick pea and pea. The circular comes following reports of violation by some banks of the central bank order, in May last year instructed the banks to charge 12 percent rates on importing the essential commodities.
Bangladesh Bank in another circular has allowed rice millers to adjust their revolving cash credit or overdraft against ‘pledge’ or hypothecation’ within 45 days of obtaining the credit. Earlier, the adjustment period was 30 days.

News: The Independent /Bangladesh/15 Feb 2011

Rejaul Karim Byron

Default rates declined compared to outstanding loans last year, but showed a slight rise in volume, as some banks could not rein in their bad loans.

According to Bangladesh Bank statistics, state banks succeeded in cutting their loan default rates, but private, foreign and specialised banks saw their bad loans shoot up.

In the overall banking sector, the defaulted loan situation has improved because of continuous monitoring by the central bank, said a BB official. However, in some banks, defaulted loans went up, resulting in a little increase in volume.

On December 31, 2010, the defaulted loans of the banks were Tk 22,709 crore or 7.27 percent of the outstanding loans. A year ago, it was Tk 22,482 crore or 9.21 percent of the outstanding loans.

The volume of total defaulted loans increased by Tk 227 crore or 1 percent last year compared to the previous year.

The central bank evaluates the loan default situation on a quarterly basis. The situation improved substantially on December 31, 2010 over the third quarter.

In the third quarter, the defaulted loans reached Tk 24,088 crore but the banks brought down the figure by around Tk 2,000 crore at the end of the year. The amount of bad loans in the banking sector is still huge if the loans being written off are taken into account.

According to the statistics updated until June last year, the banks wrote off bad loans worth about Tk 17,400 crore since June 2004. Of the amount, Tk 2,100 crore was written off in the last fiscal year. Following a central bank guideline, the banks for the first time introduced a system of writing off loans in 2003.

A BB official said the central bank is going to take various reform programmes in the banks which will further improve the default loan scenario.

The bank company act is going to be amended further to tighten monitoring of the commercial banks' activities, change the default loan definition, and further streamline the size and tenure of the banks' boards.

In the state banks, the percentage of the defaulted loans of their outstanding loans has come down to 15.66 percent on December 31, 2010, which was 21.38 percent a year ago. In amount, their defaulted loans decreased by about Tk 990 crore during the one year period.

An official of Sonali Bank said the government has formed a committee headed by Chairman of the bank Kazi Baharul Islam. The official said the four state banks have functioned on the basis of a common approach which had a positive impact on their performances.

In the private commercial banks, the defaulted loans came down to 3.15 percent of their outstanding loans in December 2010, which was 3.92 percent a year ago, but the volume of their defaulted loans increased by Tk 254 crore in the same year.

In volume, the defaulted loans of the foreign banks increased by Tk 205 crore, and in the specialised banks, the amount went up by Tk 758 crore.

A BB official said the defaulted loans of most of the banks went down, but the total bad loans increased as the amount of such loans was high in some banks.

News: The Daily Star /Bangladesh/15 Feb 2011