The Bangladesh Bank Wednesday issued a circular asking merchant banks and brokers to comply with margin-loan directives of the Securities and Exchange Commission in providing credit facilities to share investors.

The circular said all financial institutions and its subsidiary companies are directed to follow the SEC directives on margin loans issued on September 30, 2012.

The market regulator in the issued directives set the highest margin loan ratio for stock exchange members and merchant bankers.

According to the new margin loans ratio, the merchant bankers and the stock broker will be allowed to provide loans at 1:2 ratios till June 30, 2013. It means an investor will get loan of Tk 200 against his or her holding of securities worth Tk 100.

From July 1 to December 31, 2013, the margin loan ratio would be 1:1.5 and from January 1 to June 30 2014 it would be 1:1. The last limit that would start from July 1, 2014 would continue until further notice is 1:0.5.

News: The Daily Sun/Bangladesh/22-Nov-12

The government is likely to seek over Tk 39.16 billion Export Credit Agency (ECA) loans from two multinational banks for setting up two gas-fired power plats to generate 675MW of electricity by early 2015.

The Power Division Sunday placed a proposal to the hard-term loan committee seeking government approval to mobilise the said amount to implement the 450MW Asuganj (south) combined-cycle power project and another 225MW Asuganj combined-cycle power project.

Two projects will be implemented by Asuganj Power Station Company Limited (APSCL) in 2015, APSCL Managing Director Md Nurul Alam told daily sun.

The APSCL will seek over Tk 25.18 billion loans from HSBC with an interest rate of 4.67 percent (all in cost) for implementing Asuganj project, he said.

It will also mobilise over Tk 13.97 billion from the Standard Chartered Bank (SCB) at interest rate of 4.22 percent (all in cost) to set up Asuganj combine cycle power plant to generate 225MW of electricity, he added.

The Power Division now waits for mobilising fund for the two power projects, another official of Power Division said. “We will open Letter of Credit (LC’s) for imports of machinery within 15 days after signing the loan contracts,” he said.

In October, 2012, the APSCL, an enterprise of BPDB signed an agreement with Korean companies Hyundai Engineering Company Limited and Daewoo International Corporation to install the plant under ECA backed financing. The plant will be installed within 25 months.

In May, 2012, APSCL signed an agreement with a joint-venture formed by Inelectra International AB of Sweden and TSK Electronica Y Electricidad SA of Spain, to install the 450MW combined-cycle power plant run by natural gas at Ashuganj power station premises.

Under the contract, the Swedish and Spanish joint venture company would install the power plant in 27 months.

Ashuganj Power Company at present operates nine power plants with generation capacity of 777MW and de-rated capacity of 650MW of electricity.

News: The Daily Sun/Bangladesh/22-Nov-12

Businesses on Tuesday urged the government to cut bank interest rates to minimise the operational costs of companies.

The business people also demanded a direct voting system in the election of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) to ensure more transparency and accountability.

The country got very little investment last year due to the high bank interest rates, said Nazrul Islam Mazumder, president of Bangladesh Association of Banks.

“The bank borrowers only enhanced their old bank loans.”

Mazumder spoke at a programme to introduce the panel of Kazi Akramuddin Ahmed, leader of the panel, for the FBCCI polls for 2012-14 to be held on Saturday, at Ruposhi Bangla Hotel in the capital.

If Ahmed got elected, his first assignment will be to have discussions with the government on how to lower the bank interest rates to 12 percent from the existing 16 to 18 percent, he said.

He also asked Ahmed to work to lower the bank deposit rate to 10 percent for healthy competition in the banking sector.

At the function, Selima Ahmed, managing director of Nitol-Niloy Group, urged the government to reduce traffic congestion, harassment of police and prevent smuggling of different goods so that domestic manufacturers can be more competitive.

She also stressed the need for ensuring more business facilitation to women entrepreneurs.

“But you have to ensure transparency and accountability in the FBCCI and I want direct election in this apex trade body.”

A strong research cell should be set up for the trade body, said Jashimuddin, FBCCI vice-president.

He blamed last year's poor foreign investment in Bangladesh on weak infrastructure and lack of gas and electricity.

Laos saw a foreign direct investment (FDI) of a total of $18 billion last year when Indonesia received $24 billion, he said. But Bangladesh could hardly attract $5 billion FDI a year at a time, he said.

The bank interest rate could not be reduced for tighter monetary policy of the central bank, said AK Azad, FBCCI president.

Bangladesh Bank uncapped bank interest rate from 12.5 percent a few years ago as per the recommendations of the International Monetary Fund, said Azad.

The central bank uncapped the interest rate justifying that if the bank interest rate is not increased, the flow of money will increase in the local market, and there will have a big inflationary pressure on the economy, he said.

Later, Ahmed introduced his panel for 30 directorial posts (15 from chamber group and 15 from association group).

News: The Daily Star/Bangladesh/22-Nov-12

The central bank is reviewing the Securities and Exchange Commission's proposal to allow foreign brokerage houses to take share-trading commission for the investors they bring to Bangladesh.

The SEC's reasoning behind the proposal is that many brokerage houses are interested in bringing in foreign investors to Bangladesh -- but only in return for commission.

But the current rules do not permit the local brokers who act as agents for foreign brokerage houses to share commission with them.

The SEC sent a proposal to the Bangladesh Bank a year ago -- but it is yet to be approved. The SEC raised the issue at yesterday's meeting with BB Governor Atiur Rahman, representatives of Insurance Development and Regulatory Authority (IDRA) and other regulatory bodies.

Rahman right away called in the officials of the related departments and directed them to make a decision after a quick assessment, an official present at the meeting told The Daily Star.

Salehuddin Ahmed, the then BB governor when the proposal was made, said the permission for commission for brokerage houses abroad would be given but with strings attached so that “capital flight do not occur in the guise of commission”.

The conditions were: foreign brokerage houses must maintain full-fledged offices in Bangladesh, their commission cannot be more than the local brokerage houses and they cannot repatriate the full commission amount.

Also discussed at yesterday's meeting was the impending BB circular which stipulates all banks and non-bank institutions to forward reports on suspicious transactions to the central bank's financial intelligence unit.

News: The Daily Star/Bangladesh/22-Nov-12

HSBC Bangladesh executed its first Renminbi (RMB) denominated cross-border export settlement for Avant Garde Fashion Ltd, a company based in the Dhaka Export Processing Zone.

The transaction -- said to reduce transaction costs and hedge foreign exchange risk -- comes at a time when Bangladesh's exports to China are expected to grow, according to HSBC's Global Connections report, by 15 percent a year between 2013 and 2015.

A survey recently conducted by HSBC in China found Chinese companies were willing to offer better pricing or terms in return for using the yuan to settle trade.

“Bangladeshi businesses doing international trade with China are starting to realise the significant monetary benefits of settling their trade in RMB. HSBC Bangladesh has achieved a significant milestone,” said Noel Quinn, HSBC's Asia-Pacific head of commercial banking.

HSBC's Global Connections report expects Chinese merchandise exports to grow most rapidly with other Asian economies: 15 percent annually from 2013 to 2015, compared to 12 percent globally in the same period.

Andrew Tilke, chief executive officer of HSBC Bangladesh, foresees trade between Bangladesh and other Asian countries, especially China, growing significantly.

"HSBC sees the future of intra regional trade growing and China is going to be one of the major drivers, with its currency RMB playing a significant role," said Md Mahbub-ur-Rahman, head of HSBC Bangladesh's commercial banking.

News: The Daily Star/Bangladesh/22-Nov-12