Despite doubts aired by ADB and IMF over Bangladesh achieving 7 percent GDP growth this fiscal year, Finance Minister AMA Muhith is upbeat on the target.

“I believe GDP growth will be close to 7 percent and I still stick to that,” he told reporters after a pre-budget meeting with government secretaries at the NEC.

The Asian Development Bank (ADB) and the International Monetary Fund and the World Bank have their own projections, and there is nothing to argue with them over their projections, Muhith said.

Muhith claimed that the government understands better the country's economy than these development partners.

The ADB has recently projected 6.2 percent growth for Bangladesh in the current fiscal year. The IMF forecast economic growth in Bangladesh will slow to 5.5 percent in fiscal 2012, down from 6.7 percent in 2011.

Replying to a question on district budget, he said it would not be possible in the upcoming budget. “But I would like to see its start before the tenure of the present government ends.”

In response to another question on formulating a permanent pay commission for the government officials and employees in the next budget, Muhith replied in the negative and said a separate pay-scale for the state-owned banking sector is likely to be finalised this fiscal year.

He said the government might set up another commission or committee on how to get out the education sector from the normal pay scale.

On the power and energy sector, he said confusions are there about information on the power generation and demand.

He said the government would prepare a statement before the budget on power and energy that will feature what was the power and energy situation in 2009 and in between 2009-2012, how many work orders have been given to whom to what production level.

The informative statement will also feature how much work has been implemented with what quantity of additional power as well as what is the actual power demand and generation and the source of fuel resources.

The finance minister said the meeting also discussed widening the income tax net, mobilising more non-tax revenues, ensuring more aid utilisation, following the medium term budgetary framework (MTBF), the present situation of the Multi Modal Transport, progress in land digitisation, skill development, harmonising the planning process and ensuring the completion of works by contractors in time.

Citing that the progress towards land digitisation is slow, he said that there might have a programme from next year for five to 10 districts.

Mentioning that there are some 21,000 kilometres of national highways in the country, he said: “There's no need for further highways, rather the future plan should have to be on its repair and improvement.”

Muhith hoped that the public expenditure programme of the country would reach close to 20 percent might be 19 percent by the end of the tenure of the present government.

By 2050, Bangladesh will be one of the first 20 countries of the world as its people are creative, he said. “But for this the necessary preparations should have to be taken.”

The Daily Star/Bangladesh/ 16th April 2012

Every cell-phone holder may not have personal computer (PC) but every PC holder has a mobile phone. This reality is putting the mobile banking, ahead of any other type of distribution channels in banking industry. We have a number of infrastructural problems hindering development of our business sector. Considering this reality, banks should opt for branch-less banking, because setting up a branch in the remote areas is expensive. In rural areas, costly banking services will not be welcomed by the target customers. To bring unbanked people under the banking umbrella, the so-called branch expansion will not be wise in the long run. The prudent bank management has already realised this fact and started taking appropriate steps. Let us think about the people of remote areas where running a new branch is costly enough but mobile banking can be there at affordable costs for both the banker and clients. Mobile banking has already proved it wrong that banking is only for the rich.

The banking sector in Bangladesh is now experiencing a perfectly competitive market. With existing 47 plus three non-resident Bangladesh (NRB)-owned banks plus more six new private commercial banks (PCBs) -- the letter two types having already getting the letters of intent from the central bank, the banking sector will face all the more a competitive turf. Undoubtedly, the market is thus going to be tougher reminding everyone of the 21st century's slogan, 'survival of the fittest'. So, now it is time to capture the market. Any sort of dillydally will lead to losing a part of the market share in the end. So, other then going digital, the banks have few alternatives left for them.

In Bangladesh, 83% of the population live with an average income of less than $2.0 a day and access to finance can help in improving their economic situation. Less than 15% of the Bangladeshis are connected to the formal financial system whereas 44% of total population are having mobile phones. Providing financial services using this mobile-phone network can make the service more accessible and cost effective for the vast population of Bangladesh.

There are around 160 million people in Bangladesh, of whom only 13% have bank accounts. By using mBanking platform, a bank can now reach the rural and unbanked population, among whom 45% are mobile phone users. Every such cell phone-user needs banking services, whatever may be the volume of transaction. With capabilities to conduct local and international money remittance, the Bangladeshi expatriates will also be able to easily remit money to the mobile accounts of their families, who can then make their withdrawal of fund from the nearest retailer or cash point.

In the banking sector in to-day's world, mobile banking is a fast growing sector. This has come to improve the level of services rendered through banking system, making the whole affair a stress-free and convenient venture. This can be described as the provision of banking or financial services with the aid of a mobile telecommunication device. The area of services offered under this system of banking may include facilities to perform bank and stock market transactions, to run accounts and to verify customised information.

With the coming of internet services, mobile banking has been made a lot easier. This has created new institutions such as online brokers and wealth managers. This is meant to manage the insignificant aspect of this banking system.

The pace at which this system of banking is growing has witnessed a phenomeoral increase and is now being reckoned as one of the fastest growing areas in the world today. The number of mobile phone users is about to hit 6.0 billion or 87% people of the world. With this technology, banks can offer such services as making fund transfers, receiving online updates of stock prices and other information, or even performing stock trading at customers convenience, even when they are busy with other things. Currently, in places like India, China, Bangladesh, Indonesia and the Philippines, they are known to make full use of the capabilities of their mobile phones in banking. And, in the European countries, the rate is much higher, attracting more and more people.

This type of banking can offer a wide variety of services, ranging from account information, which has to do with alerting the customers on the updates and transactions on their account through their mobile phones. It is no longer a new thing for the people to receive short messages on their phones, informing them of their immediate transactions through their bank accounts. Also, all such services help in making payments, deposits, withdrawals and transfers. In this aspect, one can easily recharge his or her mobile phone through respective bank account and transfer funds through mobile phone to the bank accounts of friends, relatives or siblings. This can also involve transferring to one's own bank account abroad or to a different bank account. The payment of bills can be easily done from the buttons of one's mobile phone.

Mobile banking has an edge over internet banking. In case of online banking, you must have a computer with internet connection. This is a problem in a developing country like that of ours. However, with mobile banking, connectivity is not a problem. You can find mobile connectivity even in the remotest places where having an internet connection is a problem. The number of netizens in Bangladesh is only 8.0 million (80 lakh) which is much less than cell phone users. The number of cell phone subscribers is about 80 million (8.0 crore) in our country. Though number of internet users is increasing as the number of mobile-phone users is going up, it can be easily said that the number of net users can not surpass the number of mobile phone-users. From security aspects also, this is safer than internet banking.

This is simply 'any time any where' banking. You can make transactions or pay bills anytime. It saves a lot of time -- the most invaluable thing in this world. In this age of globalization, people are getting busier day by day. They need to do banking by adopting any easier way that is available. They are busy enough to keep pace with trends of this 21st century. Truly speaking, the existing facilities provided by modern science and technology are making us more inclined to welcome the quickest means of doing anything.

Mobile banking through a cell phone is user friendly and does not require one to be an expert cell phone-user. The interface is also very simple. Not only that, for doing banking over mobile highly configured mobile hand sets are not also necessary. You just need to follow the instructions to make the transaction. It also saves the record of any transactions made.

Banking through mobile reduces the risk of fraud. You will get an SMS whenever there is an activity in your account. This includes deposits, cash withdrawals, fund transfers etc. You will get a notice as soon as any amount is deducted from, or deposited in, your account.

With effective partnerships and technical choices (which affect customer uptake), it is believed that there is a strong market opportunity to reach the poor people with a broad range of financial services. There are some basic or core strategies that banks may have to follow to promote and protect growth. Mobile phones may support each strategy. Such strategies are reinforcing, but banks may need to prioritize them in order to be able to develop a coherent, focused strategy.

Mobile banking is one of the best means of increasing market penetration. The banks need to go for the underserved population segments, and to facilitate the growth of their total revenue pie. Mobile banking can serve primarily to reduce the cost of deploying customer touch-points into lower income or more remotely located population segments. Mobile-as-ATMs can enable merchants to become cash-in/cash-out points; mobile-as-POS can serve to substitute cash and electronically capture transactions at the store. Mobile-as-Internet-machine can allow customers to transact remotely (sending remittances or paying bills) without having to physically access a service point.

By this latest service distribution channel, the bankers can sell more services to their existing customers. This is very important in this competitive market. For thus, new products that target the unmet needs of the existing customers have to be developed. These new services can help exploit the new functionality available through a mobile phone.

Mobile banking can be the best alternative for those intelligent bankers who prefer retention of most valuable customers to induction of new ones. The interests of roughly 20 per cent of customers who bring roughly 80 per cent of the value can be protected by offering them a quality and breadth of service that will make them less vulnerable to churn. Individual services are rarely unique to a bank, because they are easily replicable. Rather, the important thing is to embed the non-unique services within a unique customer experience. Having an informational and transactional capability in customers' pockets (the mobile-as-Internet-machine), banks may be able to propose new services to their customers in a much more targeted way. Banks also can fully exploit the immediacy of the mobile environment to extend the benefits of control and choice, and hence convenience, across their entire product range.

Cell-phone banking is cost effective. Various banks provide this facility at a lower cost as compared to banking by self. The primary emphasis here has to be put on bottom-line over top-line, growth. Cutting costs is not only about margin: seeking low(est) cost position in the market also should deter competitors from engaging in value-destroying price wars, thereby protecting the revenue base. This is fundamentally about replacing more expensive channels and devices with the cheaper mobile solution.

Running a small business often means travelling to meet clients, participating in industry events and looking for new business. While such kinds of activities can be the key to your business success, they can make it difficult to keep up with your banking - especially if you don't have immediate access to a branch or bank machine. With mobile banking, you can make important financial decisions to manage your cash flow even when you're away from the office. Mobile banking allows you to bank securely, 24/7.

Mobile banking puts you in charge of your finances, allowing you to securely bank from anywhere, anytime. The less time you have to spend doing banking in a branch or in front of a desktop computer, the more time you can devote to building your business and getting in front of clients and prospects. We must not forget that time is money.

In sum, mobile banking has come to stay, providing its customers with an expedient way of banking. This is not, however, without challenges, but they are minimal and can be handled without much stress. The shortcomings in mobile banking can be overcome if the respective regulatory bodies pay due attention to address them properly. Till to date, our central bank is striving whole-heartedly for realising the mobile banking goals and objectives in our country. After all, this type of banking is one of the components of making a digital Bangladesh.

The Bangladesh Bank approved 17 banks for operating mobile banking operation; out of them, eight banks have already launched the service; the central bank has also issued operating rules for the banks in order to build a 'regulatory framework' to provide financial services to the people through mobile banking. Thanks to the central bank for its timely action. Time has come to think about inter-bank transactions through internet banking and mobile banking. For implementing this big job, Bangladesh Bank should coordinate its actives with the Bangladesh Telecom Regulatory Commission (BTRC) as early as possible. Another barrier to mobile banking is that its services are limited within the country's boundary. The concerned authority should ponder over the matter how to address it.

Those days are not far away when even the beggars will take alms and rickshaw pullers will take the fare through mobile banking in lieu of cash notes. What is wrong if that comes true? We should not forget technology is for us and we are not for it. The Almighty has created the whole universe for our benefits only. We just need to enjoy that rationally.

Financial Express/Bangladesh/ 15th April 2012

Finance Minister Abul Maal Abdul Muhith, among others, seen at the gala night to celebrate the 30th anniversary of AB Bank in the city Thursday.

AB Bank, the first private commercial bank in Bangladesh, organised a 'gala night' to celebrate its 30th anniversary in the city Thursday. Finance Minister Abul Maal Abdul Muhith was present as the chief guest while Social Welfare Minister Enamul Haque Mustafa Shahid attended the function.

Twenty six national award winning customers of AB Bank were honoured in the gala night. As part of AB Bank CSR initiative, finance minister handed over a cheque to Bangabondhu Lalita Kola Academy as the first CSR activity of the 31st year of AB.

Sponsor chairman M Morshed Khan, former chairman Faisal Morshed Khan, current chairman M Wahidul Haque, president and managing director M Fazlur Rahman along with senior management team and employees of AB Bank were present on the occasion.High government and non-government officials , regulatory bodies, corporate bodies, banks, renowned lawyers, editors of different media houses and customers of AB Bank also attended the function.

Financial Express/Bangladesh/ 15th April 2012

The central bank has initiated a step to identify the clandestine income and expenditure related to export and import trade aiming to have a correct picture of the balance of payments (BoP) situation of the country.

The Bangladesh Bank (BB) took the step following suggestions in this regard made by International Monetary Fund (IMF), which said the country's BoP is not being measured correctly.

According to an observation of the IMF, the country's import expenditure is not measured correctly as the letters of credit (LCs) don't mention the freight charges of imports.

"If the freight charges and other hidden charges are correctly mentioned in the LC documents, the BoP of the country will come under further strain," the IMF observation said.

The country's BoP deficit reached US$ 516 million in the July-February period of the current fiscal 2011-12, which IMF and the central bank have predicted to be increasing further if the actual import costs are mentioned.

The BoP deficit was $813 million in the July-January period of the current fiscal, while the deficit was only $222 million during the same period in 2010-11 fiscal.

But the BoP is set to be in a positive direction soon after the IMF approved a three-year $987 million loan for Bangladesh, with $141 million of the loan set to be disbursed immediately.

Besides, the central bank has started collecting monthly statements of export and import costs and of income from authorised dealer-banks to get the actual BoP picture.

The BB has started conducting a survey of the banks concerned, customs offices and ports to measure the freight costs.

The central bank also formed a committee headed by Abdus Sattar Mian, general manager, Statistics Department of BB, to coordinate the survey.

Sources said the country had spent about US$ 5.0 billion as its annual freight charges on sea and air routes for the country's foreign trade worth $48 billion last fiscal.

The country's BoP has come under stress, due mainly to the low volume of foreign aid along with high growth in imports.

The IMF recently projected that the current account balance might witness a deficit of $849 million in the current fiscal year, while it was $995 million surplus last year.

The BB too in an observation it had made on BoP earlier to send it to the government said, if the expected progress in receiving foreign direct investment and mid- and long-term foreign assistance was not achieved, financial account of BoP would come under further pressure in the current fiscal.

A high official at the finance ministry said the situation had cropped up as desired progress in utilising foreign assistance could not be achieved.

According to Economic Relations Division (ERD), foreign aid has declined by 28 per cent to $246 million in the first three months of the current fiscal year. The amount was $315 million in the same period last year.

The row with the World Bank centring the Padma Bridge has also created an uncertainty in getting foreign aid.

Financial Express/Bangladesh/ 15th April 2012

The country's leading economists and bankers have suggested strengthening of supervisory and monitoring capacity of the Bangladesh Bank (BB) to run the banking sector smoothly.

The suggestion came at a Bankers Summit-2012 organised by the Financial Excellence Limited (FinExcel), a private advocacy organization, held at BRAC CDM Saver in Dhaka Friday.

They also said the BB has the responsibility to ensure integrity of the bankers.

"Banks will need to carry out stress testing exercises regularly to identify and address emerging institutional vulnerabilities against shocks of both internal and external origin," BB Governor Atiur Rahman said while speaking as chief guest at opening session of two-day summit with the theme '50 Year of Banking in Bangladesh -Vision 2021.'

The central bank chief also said the banking sector in Bangladesh has grown several-fold since independence in 1971, in tandem with the uninterrupted spell of steady, stable growth of the country's economy.

Just one indicator may be sufficient to demonstrate the spectacular magnitude of banking business growth, he said, adding that credit and investment assets of scheduled banks amounted in December 1972 to a minuscule Tk 7.07 billion. The figure rose 654-fold higher at Tk 4625.85 billion as of December 2011.

Amid growing unauthorised financial institutions, the central bank governor urged people to remain alert against illegal banking.

"The institutions that are doing business without approvals aren't banks…their transactions are illegal. People need to understand which institutions are banks and which aren't," he said in reply to a query from reporters.

"The central bank has to increase its efficiency," Former BB governor Salehuddin said, adding that the efficiency along with integrity are essential for the bankers.

He also said the commercial banks will have to improve their fund management for minimising assets-liabilities mismatch, which is still a challenge in the banking system.

The former central bank chief also sees that the newly approved six commercial banks might face problem to hire sill manpower particularly to manage their foreign exchange operations.

"The introduction of non-conventional pro-poor monetary policy in a country like Bangladesh will be a challenging task, not purely for scarcity of resources or lack of institutional capacity but most importantly for the lack of political will," he said while describing formulation of monetary policy.

He also said Bangladesh should go beyond the conventional nation and approach to monetary policy and adopt heterodox policy. It should be a country not a homogeneous one.

Former adviser of the caretaker government Akbar Ali Khan said the interest rate spread is still higher in Bangladesh compared to other South Asia and East Asian countries due mainly to the lack of perfect competition.

He suggested the authorities concerned to tag the interest rate spread of the banks with income tax measures.

Regarding new commercial banks, former BB governor Mohammad Farashuddin said they will mop up fresh liquidity from rural areas across the country. "NRB banks will help boost flow of inward remittances."

Former adviser to the caretaker government Mirza Azizul Islam does not think the banking system will collapse after coming more commercial banks. But it was unnecessary to give the new banks."

He viewed the size of financial market is not large enough.

"Time is changing very fast and as we believe the world is becoming more competitive everyday if not every hour. To survive this fierce competition we must update our knowledge and energies our skill to face the challenges of the days ahead. If we fail to comply with the need of the hour we are only losing the opportunities for our sustenance," said chairman of FinExcel Limited Syed Abu Naser Bukhtear Ahmed.

He also said FinExcel has already launched its website (www.finexcelbd.org) where one can find information about FinExcel, its services as well as other relevant information.

Director Data Edge Limited Noor-A-Alam Chowdhury and former Managing Director of the Prime Bank Limited M Ehsanul Haque also spoke at the function.

Financial Express/Bangladesh/ 15th April 2012