'local businesses and trade might face hurdles in getting commercial bank loans over the next four months because of extra government borrowing of around Tk15,000 crore' 

Concerns have been raised within the finance ministry that government bank borrowing might exceed Tk40,000 crore in the current fiscal year because of a shortfall of revenue earning and an increase in the revised ADP.

The country fought all odds and prolonged political unrest to maintain a sound macro and fiscal economic situation during the last couple of years, but the strong position of the country might be lost, said a senior official of the finance ministry.

Seeking anonymity, the official also said local businesses and trade might face hurdles in getting commercial bank loans over the next four months because of extra government borrowing of around Tk15,000 crore.

The release of three tranches of Extended Credit Facility (ECF) of International Monetary Fund might also be halted unless the government complied with a condition of bank borrowing limit for the next nine months, sources said.

As per the IMF condition of ECF bank borrowing limit,  the government will be able to borrow Tk24,000 crore until June 30, 2014, while an additional Tk10,000 crore may be borrowed from the banking system until December.

Sources said finance ministry officials tried to convince a visiting ECF review mission last week that the government would reduce the bank  borrowing target to Tk24,000 crore from the Tk25,993 crore target set under the budget. 

On Thursday, a meeting of the National Economic Council (NEC) set the revised Annual Development Programme (ADP) amount at Tk60,000 crore from the original ADP of Tk65,870 crore. Earlier, the finance minister and planning minister took confronting stances after the Finance Division directed the Planning Commission that the revised ADP outlay should not exceed Tk55,000 crore.

Officials present at the meeting quoted Finance Minister AMA Muhith as saying that revenue collection would see a deficit of Tk11,000 crore this year, while the ADP implementation was also slow.

Muhith also criticised the ministries that demanded additional fund without considering the reality. The ministries were less interested in spending foreign funds and keener on spending from government funds, he claimed.

The revised ADP should be Tk55,000 crore, Muhith said, adding that if more allocation was made, the extra amount would have to be borrowed from the banking system.

A finance ministry official said the revised budget had fixed revenue target at Tk125,000 crore, which was unlikely to be met and the shortfall would be Tk10,000 crore to Tk11,000 crore . The overall credit-deposit ratio in the banking sector decreased to 70.8% in December 2013 from 71.91% in November 2013. The credit-deposit ratio was 76.59% in December 2012 and 80.33% in June 2012.

If the slow revenue growth and the rising expenditure continued through to the second half, bank borrowing might cross the budgetary target of Tk25,993 crore, an National Board of Revenue official said.

Between July 1 last year and January 6 this year, bank borrowing stood at Tk5,931 crore, compared to Tk7,213 crore from the same period a year ago, according to central bank statistics.

In the first six months of the 2013-14 fiscal, the government received Tk3,857 crore from net sale of national savings certificate, which was only Tk177 crore in the same period of fiscal 2012-13

Former adviser to caretaker government AB Mirza Azizul Islam said the increase of revised ADP was a political decision, adding that the private sector credit crowding out would definitely hamper the country’s growth target and the investment situation.

The issue should therefore be properly examined before going for borrowing from the banking system, he added.

Abdus Salam Murshedy, director of Premier Bank Limited, told the Dhaka Tribune that the idle money of banking sector should be used properly so that it was not difficult to supply funds through bank borrowing.

However, the government policy measures and the existing investment situation in the country were still not in favour of the investors, he also said. 

Analysts say asset quality of state banks undermines industry

Sajjadur Rahman

A steady rate of economic growth -- on average 6.24 percent a year for the past one decade -- has helped Bangladesh raise its banking sector's assets faster than any other South Asian nations, bankers and analysts The total banking sector assets as a share of the country's gross domestic product (GDP) have also seen a dramatic rise -- from 50 percent in 2001 to 80 percent “Much of the credit for this goes to our entrepreneurs who have invested wisely in new mills, factories and also in the services sector,” Anis A Khan, managing director of Mutual Trust Bank, said.

Khan said banks and financial institutions have also expanded in terms of numbers, network, products and services, reaching huge swathes of the population.

London-based research firm Business Monitor International (BMI) found that total banking assets in Bangladesh witnessed a 19.1 percent compound average growth in the past five years followed by 18 percent in Sri Lanka, 17.2 percent in Pakistan and 16.7 percent in India.

At the end of 2013, assets of banks in Bangladesh stood at $107.1 billion compared to $88.8 billion in the previous year.

Bank assets are everything an individual bank owns -- loans and investments in stocks, bonds and treasury bills from which future paybacks are expected to occur. Loan quality and asset quality are the two terms with the same meaning.

Only the Indian banking assets as a share of its GDP are more (85 percent) than those in Bangladesh in the region, according to a recent report of the BMI.

For Pakistan and Sri Lanka, there was no change in their total banking assets relative to GDP, with both countries sitting at roughly 50 percent.

India is the leader in South Asian banking sector in terms of assets with more than $1,500 billion at the end of 2013, while Pakistan holds the second spot with $107.4 billion, up by only $300 million than that of Bangladesh. Banks in no other South Asian countries have even $40 billion worth of assets.

The BMI report forecast the total assets of Bangladeshi banks will surpass Pakistan by $3.5 billion to more than $125 billion at the end of this year.

Bankers and analysts attributed the asset growth to the steady economic growth of the country, expansion of financial institutions and entrepreneurs who have driven the demand for bank credit.

“Expansion of economic activities, from industries to SMEs, has helped us raise bank assets,” said Helal Ahmed Chowdhury, managing director of Pubali Bank that has around $2.5 billion worth of assets.

Shafiqul Alam, managing director of Jamuna Bank, said robust and consistent economic growth at more than 6 percent for the past one decade has pushed up the demand for credit in the country.

Muklesur Rahman, managing director of NRB Bank, credited the private sector for this growth in bank assets.
Rahman said garments, textile, spinning and services are Bangladesh's key trade and manufacturing sectors that are growing despite political hazards.

Monzur Hossain, a research fellow at Bangladesh Institute of Development Studies, said the rise in bank assets is consistent with the steady economic “It's a good sign for the economy. The private sector that drives the demand for credit has fared very well,” Hossain said.

Bankers also praised the central bank, particularly its governor, for its efforts to deepen financial inclusion, especially through agriculture, small and medium enterprises, women entrepreneurship and green banking that have acted as a fillip to the growth in bank assets.

On the quality of the assets, bankers and analysts have agreed that the condition of assets in state-owned banks is not good. They said many of their loans will not return and will become bad assets.

“It (asset) is a bit camouflaged and doesn't reflect the actual position of the banks,” Alam of Jamuna Bank, said about the overall banking industry's assets.

But Khan of Mutual Trust Bank said one has to remember that Bangladesh is constantly ravaged by challenges, some natural and some manmade, which both the entrepreneurs and the workforce have to face and “This had a resultant effect on repayments of loans and other obligations to banks,” he said.

 South Bangla Agriculture and Commerce Bank organised the 1st Annual General Meeting (AGM) at the bank’s head office in Dhaka on Sunday.

SM Amzad Hossain, Chairman, South Bangla Agriculture and Commerce Limited was present as chief guest, said a press release.

Md. Rafiqul Islam, Managing Director and CEO of the bank delivered welcome speech at the function.

 The 4th Annual General Meeting (AGM) of Janata Capital and Investment Limited (JCIL), a subsidiary of Janata Bank Limited, was held at the bank’s board room in Dhaka on Thursday.

Dr. RM Debnath, Chairman of the company, presided over the meeting, said a press The shareholders discussed the performance of the company in 2013 and praised the management of the company for playing active role since the inception of the company in 2013.

The company did well in issue management activities and brought two companies in the market through The company made operating profit of Tk 19.08 crore and net profit of Tk. 12.82 crore which were higher than those of the previous The shareholders approved the accounts of the company for the year ended on December 31, The retiring directors were also re-elected unanimously at the Annual General Meeting.

The shareholders appreciated the performance of the working team and hoped that the company will play a vital role in the capital market in 2014 as well.

The chairman of the company acknowledged the supportive role and patronisation of the board of directors of JCIL as well as Chairman and members of the Board of JBL, the holding The members of the Board of Directors and shareholders including representative of Janata Bank Limited attended. 

Managing Director & CEO of National Bank Limited A K M Shafiqur Rahman with the participants of the‘Foundation Course for Junior Officers (Gen) (15th Batch)’.The foundation course has been held recently atthebank’s training institute where a total number of 32 junior officers attended. Syed Mohammad Bariqullah,

Deputy Managing Director of the bank was present in the ceremony as special guest. Md Majibur RahmanPrincipal, Hari Narayan Das and Zahir Uddin Mohd. Babar Senior Faculties of the Bank’s Institutes werepresent in the function among others.Efforts for expansion of our activities at home and abroad by adding

new dimensions to our banking services are being continued unabatedAlongsi, we are also putting highestpriority in ensuring transparencyaccount ablility,improved clientele service as well as to our commitment to serve the society through which we want to get closer and closer to the people of all strata. Winning aneverlasting seat in the hearts of the people as a caring companion in thenationaleconomic through continuous upgradation and diversification of our clientele services in line with national international requirements is the desired goal we want to Ensuring highest standard of clientele services through best application of latest information making due contribution to the national economy and establishing home abroad as front ranking bank of the country are our cherished vision.