Bangladesh Sangbad Sangstha . Dhaka

The banking sector has strongly been advised again to increase their credit flow to support small and medium enterprises, or SMEs, and women entrepreneurs, which have long been seen vital to economic growth. Inaugurating a workshop on ‘The Role of the Policy Makers and Central Banks in Promoting SMEs’ Access to Finance — The Case of Bangladesh’ in the capital city, Bangladesh Bank governor Atiur Rahman said banks should be more enthusiastic in promoting SMEs and women entrepreneurship. Bangladesh Institute of Bank Management in association with European Union and Bangladesh Inspired Project of Ministry of Industries organised the workshop at BIBM in Dhaka. BIBM director general Taufiq Ahmed Chowdhury chaired the inaugural session. ‘We (bankers) offer lot of things to bigger entrepreneurs. Let’s do something for small ones’, the governor said. He suggested providing SMEs and women entrepreneurs both financial and advisory assistance to ensure better use of loan and its timely recovery. Atiur said the present government had rightly identified SMEs as the priority sector for transforming Bangladesh into a middle-income country by 2021. In line with the government’s thrust, he said BB had been instrumental in designing and implementing SME sector development initiatives as part of its development financing agenda, with broadening financial access to cottage, micro and small enterprises and in particular women entrepreneurs. He said the BB had already become the role model in SME financing in the international arena within a span of only five years. Its initiatives are being studied by other central banks of the world, Atiur added. The governor said a number of soft credit schemes are available through BB for financial institutions for lending to SMEs at a capped interest rate. For women entrepreneurs, he said, policy intervention including earmarking of 15 per cent low-cost fund for women entrepreneurs, clean lending limits up to 25 lakh, priority in loan processing, engagement of women business chambers and associations in client sourcing, mentoring and capacity building support are being encouraged. The governor, however, said that there was still a long way to go before financial inclusion could be characterised as fully satisfactory. ‘In many cases, SME lending by banks is not profitable due to the lack of appropriate processes and low technological level. If the lending is not profitable, the banks will not proactively increase portfolio in the micro and small and medium entrepreneurs segment’, Atiur said. The governor suggested that banks should revisit their MSME banking model to identify pitfalls and undertake business process reengineering to make MSME banking profitable, less risky, and more consumers’ friendly.

News:New Age/12-Apr-2015

BB takes the move to tighten security

A client uses ATM of a private commercial bank in Dhaka last week. Bangladesh Bank is going to replace existing four-digit security PIN code used to settle transactions through automated teller machines with fingerprint with a target to strengthen financial security

Bangladesh Bank is going to replace existing four-digit security PIN code used to settle transactions through automated teller machines with fingerprint with a target to strengthen financial security. A BB official told New Age on Wednesday that the central bank had taken the initiative to strengthen financial security as well as to popularise the country’s card-based payment system among the rural people. Such type of security measures is globally known as biometric solution and a number of developed countries have already introduced the system, he said. The biometric solution will also decrease the existing fraudulent acts through hacking the passwords, the official said. The BB issued a letter to managing directors and chief executive officers of all banks on February 18, 2015 asking them to send their opinion regarding the fingerprint introduction. The banks in their replies said that they would require one or two years to introduce the system as they would have to prepare fingerprint database of the clients and set up scanners at ATM booths. Besides, the banks will have to appoint vendor to set up the biometric solution, according to the banks’ letter. The BB will issue another letter to the banks shortly to take preparation in this regard, the official said. When a customer inserts or swipes his or her card in a biometric-enabled ATM, he or she is prompted to set his finger in the fingerprint scanner. The fingerprints of the clients are scanned into a special computer with the ATM booths after which the scanned fingerprints are stored in a central server of the banks. A transaction along with a customer’s biometric information is passed on to the switch, which verifies the fingerprint with the server, and if successful, requests the banking application to authorise the transaction. Based on the result, the switch instructs the ATM to complete the transaction. According to the central bank data, the banks issued 72,85,805 debit cards and 5,77,864 credit cards and 1,02,787 prepaid cards as of September 30, 2014 while they set up 6,035 ATM booths and 26,140 POS terminals. The BB official said that the marginal people of the rural area were now reluctant to use the ATMs due to their incapability of using the PIN code accurately. The central bank has recently taken a number initiative to popularise the country’s card-based transaction through the ATMs and POS machines. As part of the move, the BB is going to give permission the private companies to set up ATM booth in rural areas and to put a cap on annual fee of debit cards offered by the banks. The card-based payment system will get tempo when the marginal people of the rural areas will not be required to use PIN code, the BB official said.

The global lender cuts growth projection to 5.6pc from 6.6pc

World Bank country director for Bangladesh, Bhutan and Nepal Johannes Zutt speaks at a briefing in Dhaka on Sunday while presenting Bangladesh Development Update-2015. WB lead economist Zahid Hussain is also seen.

The country lost one per cent or Tk 17,150 crore of its gross domestic product due to the political unrest and violence during January to mid-March that dampened the economic growth potential in the current fiscal year, the World Bank said in its report Bangladesh Development Update-2015 published on Sunday. The World Bank also downsized the country’s economic growth projection to 5.6 per cent for the current fiscal year due to the impact of political turmoil from that of 6.1 per cent in last year. ‘Direct production losses inflicted by the turmoil could be around one per cent of the GDP or $2.2 billion (Tk 17,150 crore),’ the report said. Bangladesh’s economic growth could have been 6.6 per cent in absence of such turmoil, it said adding that political turmoil in particular was taking a heavy toll on the economy. The World Bank revealed the findings at a press briefing held at its Dhaka office on the day. The WB also said that the GDP growth might recover to 6.3 per cent in the next fiscal year and 6.7 per cent in the FY17 on political stability coupled with sound fiscal and monetary management. ‘Economic losses this time are likely to be more severe than earlier period of turmoil in 2013 because of the timing, duration and the depth of uncertainty,’ WB lead economist Zahid Hussain said at the briefing. Earlier, the WB estimated that Bangladesh suffered a financial loss of around Tk 11,000 crore due to the 2013 political unrest centring national elections. Zahid said that this year the intensity of violence was severe as violence occurred in dry season, a season for construction works, tourism, retail sales and peak time for production. He said that the services sector including trade and transport sub-sectors were affected most followed by the manufacturing sector and agriculture due to the political unrest. Of the Tk 17,150 crore economic losses, the services sector incurred the highest 68 per cent or Tk 11,662 crore loss while the agriculture sector lost the lowest 7 per cent or Tk 1,200 crore, according to WB estimation. The manufacturing sector suffered an economic loss of Tk 4,288 crore or 25 per cent during the unrest, Zahid said. Earlier on April 5, country’s leading independent think-tank Centre for Policy Dialogue said that the country lost 0.55 per cent or Tk 4,900 crore of the gross domestic product due to the recent political unrest. ‘Bangladesh economy is moving forward with resilient growth and macroeconomic stability despite political turmoil, structural constraints and global volatility,’ the WB said. According to the WB report, continued polarisation between the government and the opposition alliance is the main source of uncertainty in the country. The country will need to restore political stability and implement faster structural reforms to capitalise the projected recovery in global growth particularly in the United States and the eurozone, and continued softness in the international commodity prices. It, however, said that political instability was not the only challenge for the country for economic growth at higher rate. Bangladesh needs to increase investment by at least 5 percentage points to the GDP from the current 28.7 per cent and improve the female labour force participation rate from the existing 33.7 per cent to get out of the 6 per cent growth trap, it said. ‘Economy will experience 1.8 per cent additional growth a year if Bangladesh can increase female labour force participation to 82 per cent, equivalent to male labour force participation in the next 10 years,’ Zahid said. The reasons for the trap are stagnation in productivity growth and female labour force participation in formal economic activities, it said. This requires faster progress on easing barriers to women’s participation in economic activities, establishing special economic zones, adequate attention to the private sector regulatory environment, better functioning of land markets to ensure the availability of land for manufacturing enterprises and addressing the transport problem for ensuring growth. Zahid said that the economic losses due to the political stalemate might not be reflected at the end of the year due to limitations in the GDP calculation methods used by the Bangladesh Bureau of Statistics. The methods used by the BBS, like most other developing countries, to estimate production and expenditures work well in a normal year but fail to capture the impact of disruptions in an abnormal year, he said. In reply to a question regarding the probable size of the next national budget, he said that the budget at Tk 3 lakh crore might be an ambitious one but it could not create any problem in management as the government usually revised the major projections including the annual development programme and revenue mobilisation. WB country director for Bangladesh, Bhutan and Nepal Johannes Zutt spoke, among others, at the briefing.

Mohammad Feroz Hossain has been promoted to deputy managing director of Exim Bank, the bank said in a statement yesterday.

He was working as a senior executive vice president of the bank prior to this promotion and has also served as head of several departments during his 15-year career with Exim Bank.

Hossain was also the recipient of the bank's 'best manager award' for three consecutive years. 

Standard Chartered Bangladesh will continue to support sectors that have driven the country's economic growth for decades and will also identify new areas that can take the economy to newer heights, its chief executive said.

Abrar A Anwar, the new CEO for the Bangladesh operations of the London-based bank, said the company has been in the country for over 110 years, so its understanding of the market and the fabric of the economy is probably better than any other institution.

“For instance, we opened the country's first letter of credit,” Anwar told The Daily Star in an interview last week.

“We particularly cater to the growth drivers of the economy -- we see where the growth is coming from and what will sustain the momentum. We want to do more, as we strongly believe we can really play a major part in the growth of the country.”

Anwar, who took the reins from Jim McCabe in the first week of January, is the  second Bangladeshi to lead Standard Chartered Bangladesh.

SCB handles more than $3 billion a year in garment exports. It also finances backward linkage and textile sectors so that the apparel manufacturers can expand their reach.

The bank has also arranged financing for 30 percent of the country's more than 10,000 megawatts of installed capacity of electricity, which is crucial for the economy.   

The 46-year-old said it also wants to finance projects relating to power distribution and transmission.

SCB is also a major player in the telecoms sector financing. The sector, boosted by nearly 100 percent mobile phone network coverage across the country, has already become a key sector of the economy by way of digitalisation and rising popularity of e-commerce.

Anwar said the bank is also financing infrastructure-related industries such as steel and cement, apart from the commodity and agriculture sectors. It is also looking at growth potential in real estate sector.

“We will stay with the growth drivers of the economy.”

He also touched upon the ongoing political uncertainty, which has started to eat into the banking sector's profits.

“The bank was probably on the brink of getting affected in the first quarter because of the blockade. So far we have not faced any problems with our portfolio. We could have done better in terms of more investment. Still, our business has grown even during the tough times.”

He said the businesses across the country suffered mainly in January, and the situation has started to improve in February and March to a large extent.

Over the years, political uncertainties have not impacted the economy that much. However, new businesses have not come about in the way the country was expecting, he said.

“People and investors think Bangladesh is losing opportunities. Nevertheless, the country has been able to sustain because of the economy's resilience and entrepreneurship.”

Standard Chartered, despite being headquartered in the UK, is predominantly an emerging market bank, with almost 90 percent of its earnings coming from Asia, Africa and the Middle East.

Bangladesh is one of the top 10 markets of the bank among the 70 countries it operates in.

“So, our clients get access to the latest products, ideas and resources. This is one of the reasons we have become successful in this country,” Anwar said, adding that the bank's business typically grows at twice the rate as the country's gross domestic product.

“We are actually hopeful of growing further.” Anwar said the country has got good entrepreneurs who are committed to supporting banks even during ups and downs.

“It is very important that banks pick up the right clients. If not, wrong borrowers will come into the market and pose a risk for the entire banking sector.”

Foreign banks in many cases are the gateway for foreign investors to Bangladesh. And as the largest foreign bank in the country, SCB is also playing the role.

“Bangladesh has seen many ups and downs in its 44-year history. I would say things were much worse in the past. I tell investors that our door was not closed for a single day. We have grown every year. They can get an idea about Bangladesh just by looking at us.”

“I don't have to make up stories about Bangladesh. I can tell the potential about the country by just using facts and figures. We can say with credibility that this is the country to be in.”

Anwar said the country's macroeconomic fundamentals are good and very conservatively managed, and the country has never defaulted on its payment to the international lenders -- which should be enough to woo in foreign investors.

He said the country has been growing at 6 percent on average in the last one decade. “We definitely have the potential to grow faster.”

“Emerging markets often face the situation that Bangladesh does every now and then. At the same time, we will have to keep in mind that Bangladesh is growing despite all the challenges.”

SCB also organises road shows to tell outside investors about the potential of Bangladesh. The bank is also working with state-run Board of Investment to get the right kind of audience such that they bring in global investors to Bangladesh, he said.

“We want to do more as the country's biggest challenge now is to efficiently mobilise the capital it needs to power growth.”

A well-known corporate banker, Anwar started his banking career with ANZ Grindlays Bank in 1991. He joined Standard Chartered as the managing director of its wholesale banking arm in January 2011, after nine years in the country office of Citibank NA.

About his new role, he said a CEO has to lead by example. “You will have to give a viable vision to your employees so that they rally around you and work for a common objective and take the business to the next level in a responsible manner.”

He believes in sustainability, saying an organisation will only be sustainable if it is a responsible organisation, brings positive changes to the society, adds value and does not hanker after profit only.

“The role of the CEO is to add value to all groups of stakeholders. To me, it is an exciting role.”

He went to Saint Placid's High School, Chittagong College and Government College of Commerce in Chittagong before his MBA from Dhaka University's Institute of Business Administration, the country's most respected business school.

“If you are focused, sincere and stay on your course, you can achieve your goals. Learning everyday is also important and you can learn from anybody, even from the youngest person that you just met.”