Bangladeshi businessmen can hardly enjoy the benefits of hedging on import of basic commodities as the commercial banks are not allowed to provide this modern financial service widely.

Hedging is a risk management strategy used in limiting or offsetting the probability of loss from fluctuations in the prices of commodities, currencies or securities.

In effect, hedging is a transfer of risk without buying insurance policies.

In case of hedging, importers need to pay a certain amount of money in advance to the exporters, which is not permitted under existing foreign exchange rules.

Hedging, if widely used for imports of commodities, will help save millions of dollars as importers will be protected against adverse price movements.

At present, if any bank wants to offer hedging facilities it will have to take prior permission from the central bank, said Md Ahsan Ullah, executive director of Bangladesh Bank.

A separate guideline for hedging is not needed as there are international rules for this particular instrument, he added.

Recently, with the significant fall of petroleum products worldwide, many airline companies hedged to take advantage of the lower prices of the products to save the operating cost significantly.

Some airlines have already stepped up hedging, especially after the benchmark Brent crude slipped below $50 a barrel in December last year.

But the Bangladeshi businessmen have been importing the goods at the current higher prices from the international markets, although it was possible to bring the goods at much lower prices through using the hedging instrument.

As a result, the local consumers sometimes have to pay exorbitant prices for the commodities, as the purchasing prices are also higher.

For instance, in 2010-11, the local cotton importers had to count an additional $500 million as losses due to abnormal price volatility of the item in the international market.

The hedging instrument can be used on import of a wide range of commodities like cotton, edible oil, petroleum products, sugar, wheat, rice and metals.

The central bank is still doing its preliminary work for preparing the rules.

Bangladesh Textile Mills Association, the spinners' and weavers' platform, held a meeting with the higher-ups of Bangladesh Bank on hedging last month.

“We need to formulate the hedging rules as soon as possible,” said Farah Diba, a research associate at BTMA.

Bangladesh annually imports goods worth more than $45 billion, which the experts are saying will cross $60 billion soon for higher economic performance.

Ahsan H Mansur, executive director of Policy Research Institute, said Bangladesh Bank has the scope to show a liberal attitude by allowing hedging by commercial banks as the country's overseas trade volume has been increasing every year.

“The hedging will minimise the risk and cost and uncertainty in trade. Definitely, Bangladesh can save millions of dollars from the hedging instrument.”

Dhaka Bank celebrated 20 years of its operation in Bangladesh through a slew of festive and charitable activities.

The bank also launched a personal social responsibility office and a reconciler office under its corporate social responsibility programme at an event to mark the occasion at Radisson Blu hotel in Dhaka yesterday.

Atiur Rahman, governor of Bangladesh Bank, attended the programme as the chief guest, Dhaka Bank said in a statement.

Among the initiatives, financial grants were given to Khulna University, Rotary Community District Hospital, SEID Trust, Dhaka Ahsania Mission Hospital and the Centre for Women and Child Care, the bank said.

Bangladesh Fire Service and Civil Defense received a rescue boat and financial aid was handed to the families of 10 employees of the institution who died while doing duty.

The bank also launched a special deposit scheme—Joma—for garments workers, according to the statement.

Reshadur Rahman, chairman of Dhaka Bank, and Niaz Habib, managing director, were also present.

The World Bank has removed a critical portion from a recently released report on China's economy, saying the section had not been adequately reviewed.

On Wednesday, the Washington-based institution released its China Economic Update report in Beijing, which included a section urging the country to accelerate reform of its state-dominated financial sector.

In blunt language, the World Bank warned that failure to address the issue could end "three decades of stellar performance" for the world's second-largest economy.

"Wasteful investment, overindebtedness, and a weakly regulated shadow-banking system," had to be addressed for China's broader reform agenda to succeed, it said.

The organisation, however, said in an update to the report posted on its website on Friday that the section had been removed.

"Section 3 on the financial sector that was previously included in this report was removed because it had not gone through the World Bank's usual internal review and clearance procedures," it said.

World Bank officials in Beijing could not immediately be reached for comment on Sunday.

The section had also noted that the Chinese state exerts strong control over a majority of commercial bank assets, "making it an outlier by international standards".

In some cases, it added, authorities were simultaneously owners, regulators and customers of banks.

"Financial reform will only prove effective if it removes the distorted incentives and poor governance structures that have affected how financial resources are mobilised and allocated," it said.