Bangladesh Bank (BB) has directed all the dealer banks to remain alert against transfer of funds abroad by the owners of Jubo Karmasangsthan Society (Jubok) by selling Jubok assets.

The Foreign Currency Policy Department of BB, through a circular recently, advised the relevant banks to undertake utmost cautionary measures in this regard.

Activities of the controversial NGO, which owes a staggering Tk 23 billion to its clients, were suspended in 2006 on charges of illegal banking practices.

Rafiqul Islam, chairman of a commission formed to facilitate return money to the persons who invested in Jubok, recently said they have been failing to prevent some owners and associates of Jubok from selling properties of the now-defunct company.

The commission currently has no power to stop them, he said, adding that they will be empowered soon to stop such activities and take the assets under commission’s possession.

We are apprehending that the main bank accounts of Jubok are yet to be freezed and the company also has some deposits outside the banking system, Rafiqul said.

He, however, admitted that the commission has not make any remarkable headway in returning the dues of the depositors due to bureaucratic complications, lack of timely cooperation from Bangladesh Bank and manpower shortage.

The Daily Sun/ Bangladesh/ 19th May 2012

Thirteen out of 29 non-bank financial institutions (NBFIs) have increased their minimum paid-up capital to Tk 1 billion each from Tk 500 million following a central bank directive.

Bangladesh Bank (BB), earlier in July last year, asked the NBFIs to double their minimum paid-up capital or the portion of the authorised stock to Tk 1 billion by June 2012.

The rest of the NBFIs have been working to raise their paid-up capital and meet the target by the 30 June deadline, insiders said.

Only three NBFIs had paid-up capital of Tk 1 billion each in September 2011 while the number was nine at the end of 2011, according to BB data.

The central bank in its directive further asked the NBFIs to issue rights and bonus shares to raise their paid-up capital within the stipulated timeframe.

Asad Khan, chairman of Bangladesh Leasing and Finance Companies Association (BLFCA), told daily sun that most of the firms have already raised their paid-up capital and the country’s non-banking sector would be able to stand on a strong financial footing soon.

Khan, managing director of Prime Finance and Investment Limited, also described the directive to double paid-up capital of NBFIs as a positive approach by the central bank.

The non-bank financial institutions have been increasing their paid-up capital in recent times and currently they have over Tk 24 billion for long-term investment, he said.

The amount can be and needs to be bigger, he added.

BLFCA sources said 16 out of 22 listed NBFIs are yet to fulfill certain conditions to maintain optimum business standards while seven others are considered to be compliant.

Companies who are yet to fulfill the conditions are – Bangladesh Industrial Finance Company Ltd (BIFC), Bangladesh Finance and Investment Company Ltd (BFIC), FAS Finance and Investment Ltd, First Lease Finance and Investment Ltd, GSP Finance Company (Bangladesh) Limited, Islamic Finance and Investment, Midas Financing Ltd, National Housing Finance and Investment Ltd, Phoenix Finance and Investment, Uttara Finance and Investment Ltd, Hajj Finance Company Ltd, Industrial and Infrastructure Development Finance Company (IIDFC), IDCOL Ltd, National Finance, Reliance Finance, Saudi-Bangladesh Industrial and Agricultural Investment Company (SABINCO) and UAE-Bangladesh Investment Company Ltd (UBICO).

Some executives of those firms said they have an option to appeal to the central bank to extend the deadline for raise the paid-up capital to Tk 1 billion.

Hajj Finance Company Ltd has already sought more time from the central bank, BLFCA officials said.

They also expressed the hope that the firms would be able to fulfill the paid-up capital requirement soon since the country’s economic situation is currently considered favourable for the NBFIs.

Prime Finance and Investment Ltd, which currently maintains a paid-up capital of Tk 2.27 billion, has emerged as the biggest capital holder among the private sector NBFIs.

State-run Investment Corporation of Bangladesh (ICB) has Tk 3.38 billion in paid-up capital.

Industrial Promotion and Development Company of Bangladesh Limited (IPDC), IDLC Finance Ltd, Delta Brac Housing Finance Corporation Ltd (DBH), Bay Leasing and Investment Ltd, Premier Leasing and Finance Ltd, Union Capital Ltd, United Leasing Company Ltd, Far-East Finance and Investment Ltd, Lanka Bangla Finance and International Leasing and Financial Services Ltd (ILFSL) have already increased their paid-up capital to Tk 1 billion each.

The Daily Sun/ Bangladesh/ 19th May 2012

Syed Rezwanul Kabir, Managing Director of SMEF, and MIDAS Managing Director Shafiqul Azam, seen signing a loan agreement at SME Foundation office in Dhaka.

SME Foundation has pumped more funds for single-digit financing to small entrepreneurs under its credit wholesaling programme.

Serving the potential SMEs outside the coverage of conventional banking, especially the women, with collateral-free loan at single-digit interest rate is the main focus of the programme, officials said.

The Foundation on Thursday signed a deal with a non-banking financial institution – MIDAS, through which Tk 50 million will be disbursed to potential entrepreneurs.

SMEF managing director Syed Rezwanul Kabir and MIDAS managing director Shafiqul Azam signed the loan agreement on behalf of their respective sides.

Under the agreement, MIDAS will provide SME entrepreneurs with credits at only 9 percent rate, while it gets the money from the SMEF only at four percent rate, officials added.

Earlier, MIDAS received a total of Tk 20 million from SMEF, which was disbursed among 60 beneficiaries in light engineering cluster of Bogra.

Two commercial banks and MIDAS have so far disbursed such loans totaling Tk 67.5 million. The number of total beneficiaries was 161.

“Financing support from conventional banking is not enough for intended growth of SME sector,” Industries Minister Dilip Barua, the chief guest of the event, said.

“SME Foundation is playing a very significant role in providing financing to such risky investments,” the Minister, also the Chairman of SMEF, added.

“We want to put more emphasis on entrepreneurship and discourage trading,” he commented.

“So, we’re trying to identify new SME clusters across the country to support them with single-digit lending,” he added.

Speaking on the occasion, MIDAS chairperson Rokia A Rahman said the loan will be disbursed in agro clusters in Jessore and light engineering clusters of Bogra.

The Daily Sun/ Bangladesh/ 19th May 2012

Rejaul Karim Byron

The amount of default loans increased by Tk 2,645 crore or 11.68 percent in public, private and foreign commercial banks in the first quarter of 2012.

Officials said a sluggish trend in business was the main reason behind the rise in such loans.

According to Bangladesh Bank (BB) statistics, banks had default loans worth Tk 25,298 crore or 6.57 percent of their outstanding loans on March 30, up from Tk 22,644 crore or 6.12 percent on December 31, 2011.

Of the total default loans, the amount in four state-owned commercial banks went up by Tk 950 crore or 10.35 percent.

Such loans in 30 private banks increased by Tk 1,576 crore or 21.88 percent during the period.

Nine foreign banks registered a rise of Tk 88 crore or 14.05 percent in their default loans.

Though the default loans of foreign banks rose in percentage, the amount was low -- Tk 717 crore -- at the end of March, which was Tk 626 crore at the end of December.

Default loans of five specialised banks increased by 0.53 percent or Tk 30 crore.

A central bank official said, usually the amount of default loans marks a rise in the first quarter.

The official said the banks take a big move in December to recover default loans but the efforts slow down after the year-end. As a result, the amount of default loans goes up in the first quarter of a fiscal year, he added.

A high official of National Credit and Commerce Bank Ltd agreed with the observation of the BB official and said businesses, especially the export sector, have been going through a sluggish period.

As a result, the recovery rate is low,

he said.

Bangladesh Bank Governor Dr Atiur Rahman has advised the banks and financial institutions of ACU (Asian Clearing Union) member countries to be more active in each other’s territories for boosting regional trade and investment.

Central banks of Bangladesh, Bhutan, India, Iran, Maldives, Myanmar, Nepal, Pakistan and Sri Lanka are the members of the ACU, which facilitates payments among the member countries for eligible transactions against export and import.

Addressing the 41st meeting of the ACU in Kathmandu, Nepal today, Bangladesh Bank governor said the central banks under the ACU umbrella could act concertedly towards expanding presence and engagement of banks and financial institutions of ACU member countries to shore up their trade and investment.

To this effect, he spelt out some specific recommendations, which was made available to media from the central bank. The recommendations include broadening and up scaling of ACU swap arrangement similar to the bilateral swap arrangements between central banks in the ASEAN+3 Chiang Mai initiative, and reintroduction of settlement of intra union trade transactions in member country currencies.

Referring to India’s initiative to adopt an intra states trade settlement with Brazil, Russia China and Singapore, Atiur said ACU would observe the outcome of this initiative for drawing the ACU strategy to manage the risk of such settlement.

He said the global community is increasingly looking up to this region as a key growth driver in the global economy when the central banks need to prepare the ACU to play its role with optimal use of its potentials.

According to ACU Secretariat Newsletters data, export receipt and import payment of Bangladesh with other ACU members increased 99.6 and 23.1 percent respectively in 2011 compared to 2010, although total ACU intra-union imports and exports registered a 29.5 percent decline. January-February 2012 transaction volumes were also on declining trend, both for Bangladesh and Union wide totals

News: Daily Sun/ Bangladesh/ 18-May-2012