The half-yearly review meeting of the general managers, regional managers and corporate branch managers of Bangladesh Krishi Bank was held at its training institute in the city on Sunday.

Md Mukter Hussain, managing director of the bank, delivered inaugural speech at the function, said a press release.

Deputy managing directors Md Joynal Abedin, Md Mainul Haque, all deputy general managers of bank’s head office and other high officials attended the meeting.

The meeting reviewed performances achieved during first half of the financial year and advised all concerned to make concerted efforts to achieving all business targets in the current financial year.

News: Daily Sun / Bangladesh/ Feb-01-2011

A three-week foundation course for Probationary Officers of IFIC Bank Ltd began in the Chamber Building at Motijheel, Dhaka, said a press release.

Mohammad Abdullah, managing director of IFIC Bank Ltd, on Sunday formally inaugurate the course and delivered his speech to the participants.

The main objective of the course is to impart different operational aspects of credit and foreign exchange to the participants.

A total number of 41 newly recruited probationary officers of the bank attended the course.

News: Daily Sun / Bangladesh/ Feb-01-2011

The central bank unveiled Sunday its half-yearly monetary policy that aims at keeping inflation rate at around 7.0 per cent by the end of this fiscal through discouraging credit flow to unproductive sectors.

Other major thrust of the policy will on achieving an inclusive economic growth by facilitating productive sectors while keeping inflationary pressure under control.

"Monetary policy stance in the second half (H2) of this fiscal will, as before, remain accommodative for productive economic activities; while also firmly discouraging diversion and undue expansion of bank credit for wasteful unproductive uses, to stem build-up of inflationary pressures," Bangladesh Bank (BB) Governor Atiur Rahman told reporters at the central bank while releasing the monetary policy for January-June period of the fiscal 2010-11 (FY11).

He also said climatic adversities disrupting output in many regions around the world are pushing up global prices of food commodities; strong growth performance in emerging and developing economies is propping up global prices of energy and non-food industrial commodities as well.

"Against this backdrop, decline in the 12-month average CPI inflation in Bangladesh in H2 FY11 may be slower than expected earlier, remaining above the 6.5 per cent level targeted in government's FY11 budget. A level around 7.00 per cent appears to be likelier for June 2011," the central bank chief added.

He also said the government could re-fix energy price in H2 of this fiscal that will impart some upward spurt on non-food CPI inflation.

"Food price inflation remained volatile in H1 FY11 both domestically and globally, at 9.80 per cent in November in Bangladesh against 10.88 percent of June 2010," Dr. Rahman added.

The country's inflation as measured by consumers' price index (CPI) moved slightly in the month of November last mainly because of increase in prices of food items.

The inflation rate moved up to 8.14 per cent in November from 8.12 per cent of the previous month on the annual average basis, according to the Bangladesh Bureau of Statistics (BBS) data.

On the other hand, the point-to-point inflation rate rose to 7.54 per cent in November from 6.86 per cent in October 2010 despite declining prices of non-food items.

Stubbornly high food price inflation in neighboring fast growing India, and prevailing high international prices of food commodities mean that no calming influence on food prices are to be expected from private sector imports, the reason why local rice prices are high and rising even after a good aman harvest, the BB said.

"Monetary policy actions will have little leverage on rising food prices in this situation, fiscal measures by way of subsidized food grain sales from public stock may need to be expanded to ease hardships faced by low income population segments," the monetary policy said.

It also said higher food grain prices for growers have important medium term upsides however; enabling the government to scale down input subsidies as growers get market prices adequately covering their costs and remunerating their efforts, and the price incentive eliciting higher output responses is eventually stabilising prices.

"Barring unforeseen new difficulties, the economy looks well poised to attain the 6.7 per cent real gross domestic product (GDP) growth targeted for FY11, as also to leap forward to growth performance well beyond seven percent in FY12," the BB governor noted.

The central bank has taken measures to reduce credit flow to the private sector through asking some banks to bring down their credit deposit ratio (CDR) at a rational level and imposing restriction on consumer financing.

"We've already imposed restriction on consumer financing so that banks are discouraged to lend to unproductive sectors," BB Senior Deputy Governor Nazrul Huda said while replying to a query.

Credit flow to the private sector recorded a growth of 27.77 per cent to Tk 658.938 billion in November 2010 on a year-on-year basis compared to 16.73 per cent or Tk 340.175 billion in the same period of the previous calendar year, according to the central bank statistics.

However, the BB had set the private sector credit growth target at 16 per cent by the end of June 2011.

The BB deputy governor also said the central bank has sat with the banks, which have higher credit growth than that of deposit, separately to discuss the issue.

"Actually, the private sector credit growth was high last year," Mr. Huda said, adding that the credit flow to the private sector will come down at reasonable level if the banks maintain the existing CDR norm.

At least six commercial banks have CDR ranging between 84 and 94 per cent, instead of the standard 81 per cent, the central bank officials confirmed.

In conformity with the monetary policy stance and the financial inclusion initiative, the BB's credit policies in H2 FY11 will seek to redirect credit flows for unproductive wasteful uses into productive, employment and income generating uses.

"Supervisory vigil on lending and loan administration discipline in banks will remain stricter, lapses and laxities in lending banks will be dealt with sternly, eschewing forbearance," the BB said.

The central bank has kept broad money supply target unchanged at 15.2 per cent for FY11, which is higher considering the country's inflation and GDP growth, Deputy Governor of the BB Ziaul Hassan Siddiqui said.

"It's an accommodative monetary policy," Mr. Siddiqui said while mentioning the definitions between concretionary and neutral monetary polices.

Regarding energy prices revision, the BB deputy governor said the government will take decision on rising prices of fuel oils considering the country's macroeconomic stability. "It's not our basic task," he noted.

The first-ever monetary policy statement was formally published in January 2006 and the central bank of Bangladesh declared that it would publish it on a half-yearly basis along with a half-yearly policy review.

News: The Financialexpress / Bangladesh/ jan-31-2011

The Asian Development Bank (ADB) is funding a yearlong awareness campaign on credit enhancement products in Bangladesh, India, Nepal and the Philippines, which will help the countries mobilize more funds for development projects. Asia needs to invest an estimated $8 trillion in infrastructure between 2010 and 2020, said an ADB release. Governments and development agencies can fund only a portion of this, with the balance left to the private sector to cover. Many ADB developing member countries continue to experience enormous liquidity but face constraints in mobilizing it because of uncertainties about lending to sovereign and non-sovereign borrowers in emerging markets. Credit enhancement products such as guarantees can offset some of these concerns but are rarely used in the region because there is little understanding of how they work.
“Credit enhancement products can attract private capital to spur trade and investment, including through public-private partnerships,” said Tadashi Kondo, Head of ADB’s Office of Cofinancing Operations.

News: The Independent / Bangladesh/ jan-31-2011

Bangladesh Bank (BB) yesterday played down links between stockmarket troubles and curbs on money market liquidity.

The central bank also defended its monetary policy and explained controls on the money flow as an “unavoidable necessity”.

"Some quarters incorrectly attributed the sharp price movements on the capital market to the liquidity situation of the money market, following the mid-December CRR (cash reserve ratio) increase," the central bank said in its second monetary policy statement (MPS) for the current fiscal year.

"Selling pressures that forced the price movements had little if anything to do with the money market liquidity," it said.

In its monetary policy announced yesterday, the central bank said, having a firmer grip on monetary expansion is an unavoidable necessity. All central banks in the neighbouring countries repeatedly hike both policy interest rates and CRR to curb inflationary pressure.

It said the investors offloading part of their existing stockholdings to raise cash for three upcoming initial public offering (IPO) subscriptions were apparently the proximate factors behind the selling pressure that triggered the price correction.

"In just one of the three IPOs, subscriptions worth Tk 2,640 crore were received against issue offer for Tk 610 crore. The few banks with capital market asset holdings beyond permissible limits were allowed extended periods to scale down [their exposure] to permitted levels gradually, and had no reason to cause abrupt selling pressure."

The BB said stability in the domestic markets is important to take the economy on a high growth path.

The policy statement said it would be important to have properly priced capital and real estate markets to avoid instability and jitters. "Overheated and overpriced markets typically collapse in crashes hurtful for all; the crashes are more painful the longer the price corrections are delayed."

"Soft landings, always hoped for, are seldom achieved. The price correction is required to be steadied and stabilised carefully."

It said while all possible support measures from all quarters are defensible in handling a crisis situation, the post-crisis capital market should move ahead on a self-sustaining path with realistic and sensible valuations.

The central bank also called upon the regulatory regime to provide sufficient safeguards against creating bubbles by unscrupulous market players.

The BB also expressed concern about the country's booming real estate market. It said: "Appropriate cooling off interventions have assumed urgency also in the overheated real estate markets, to avoid eventual painful crash."

The BB admitted challenges like slowdown in manpower exports and slow recovery in exports to traditional Western markets. It, however, said there are opportunities to take advantage of the newer markets in the fast-growing economies in Asia and elsewhere.

The statement also said the private sector has acted quickly in exploiting these opportunities, as was seen in the recent increases in exports to newer markets, and diversifying the export basket.

"Guiding hands of appropriate government policies will facilitate the initiatives of the private sector," it said.

The central bank attributed the slowdown in workers' remittance inflows to a decline in manpower exports and savings transfers by expatriates.

"During the uncertainties of the global financial crisis, workers abroad tended to send home their savings (alongside usual subsistence money for families at home). After restoration of the stability, the savings are being retained partly or wholly outside Bangladesh."

To attract these overseas savings, the government may consider revisiting the current features of Wage Earners Development Bond, and effectively promote sales of the USD Premium and Investment bonds, the central bank said.

News: The Daily Star / Bangladesh/ jan-31-2011