The introduction of e-tender at Bangladesh Bank enables bidders to take part in the bidding freely in a process that eliminated domination of muscle power and shortened the procurement cycle.

Since its introduction in May 2010, the banking regulator gave 350 contracts out of 400 to winning bidders for procurement of goods through e-tender, a central bank official said.

"With this online system, the entire tender process for procurement of goods and services starting from creation of a purchase requisition through to the award of contract is being done in a transparent and fair manner," said Nazneen Sultana, deputy governor of Bangladesh Bank.

She said e-tender minimises the use of paper, hassles in communication and administration and labour-intensive tasks of receipt, recording and distribution.

In fact, the e-tender tool transforms a rigid, process-driven environment into a flexible, result-driven landscape, Sultana said.

Some 100 tenders are waiting for evaluation and contracts are expected to be awarded soon, said Mohammed Ishaque Miah, senior systems analyst.

The BB developed the electronic tender system software with own expertise and resources for tender call, collection and evaluation to quicken its procurement process.

Now, the software became a model in the country's bidding process that often triggered unbridled corruption and snatching of tender box in the manual system, he added.

Ishaque said the Bridge Division, Rupali Bank, Security Printing Press and some other organisations will introduce e-bidding with the software.

The user-friendly software has been developed considering the country's socio-economic and literacy condition, said Kazi Nasir Ahmed, another IT expert of BB.

Users will have to sign up for the e-tender system with valid email addresses. A user can log into the system with an ID and password. Unregistered users who want to participate in the bidding have to click the link 'Register Now' of the tender site.

The Daily Star/Bangladesh/ 10th April 2012

A major global banking group said Monday that excessive spending cuts across the euro area are dragging the region's economy down and called for more spending by countries like Germany.

The Institute of International Finance, which played a central role in the restructuring of Greece's debt, also assailed a eurozone firewall -- designed to stop market contagion -- as still inadequate and called for it to be expanded as soon as possible.

"The emphasis so far on fiscal austerity, while to a degree necessary for the countries facing market funding difficulties, is excessive when carried out across the board," IIF chief Charles Dallara said in a letter addressed to the International Monetary Fund and the World Bank.

The tighter spending by eurozone governments "has already contributed to a steep contraction in domestic demand in the euro area as a whole," Dallara said.

"It is important to move beyond just fiscal discipline, shift the policy focus from nominal to structural budget balances," he said.

Instead, Dallara said, government fiscal policies should be differentiated between weaker eurozone members and those with surpluses and fiscal flexibility "so as to avoid the risk of an austerity overload."

Dallara's letter was addressed to the International Monetary and Financial Committee and the Development Committee of the IMF and World Bank ahead of their yearly Spring Meetings on April 20-22.

The IMF has pushed strongly for tough austerity programs in the weakest euro area countries like Greece and Spain, but has also warned that choking off spending across the eurozone could choke off growth.

The IIF, which represents some 450 major financial institutions worldwide, assailed the eurozone's fiscal compact, which sets tough budget standards for all governments, as "somewhat narrowly focused on promoting the implementation of rather inflexible fiscal consolidation objectives."

It also called the agreement by European finance ministers late last month on a 800 billion euro (US$1 trillion) emergency fund to protect against market panic as "disappointing", noting that 300 billion euros of it was already committed.

"The euro area needs to increase in the period immediately ahead the resources of its firewall and enhance the flexibility and timeliness of the deployment of these resources to make them effective in times of crises," Dallara said.

The Daily Star/Bangladesh/ 10th April 2012

Country's non-banking financial institutions (NBFIs) have put a thrust on streamlining the 'funding source' to cope with the rising competition in the deposit mobilization drive of the commercial banks and FIs.

"We have to activate the bond market and some of the banks and FIs have already opted for issuing convertible bonds and right shares to cope with the ongoing 'tough situation' in view of the government's increased bank borrowing target," chairman of Bangladesh Leasing and Finance Companies Association (BLFCA) Asad Khan told The FE in an interview recently.

The government has increased its bank borrowing target by more than 47 per cent to Tk 279 billion to finance the budget deficit of the current fiscal year ending June.

Market operators expressed their deep concern over the increased bank borrowing target saying that it might hit the liquidity position of commercial banks, particularly the primary dealers (PDs), besides affecting investment in the private sector.

Under the revised target, the government is set to borrow Tk 279 billion from the country's banking system against the original budgetary target of Tk 189.57 billion.

The PDs earlier urged the government to review the debt management strategy, particularly that concerning the ratio of T-bills and bonds, to minimise their fund mismatch.

The government borrowing from banking system increased by more than three times until March 25 this year compared to the corresponding period of the last year.

The government's net borrowing from banking system shot up to Tk 169.67 billion during the period under review as against Tk 48.92 billion in the same period the previous year, according to Bangladesh Bank statistics.

During the period, the government borrowed Tk 113.77 billion from the scheduled banks through issuing T-bills and bonds during the period, while Tk 55.90 billion was borrowed from the central bank to finance the budget deficit.

Market players, however, expressed their worries over the increased bank borrowing target of the government, saying that it might have impact on the liquidity position of the country's commercial banks, particularly the PDs.

The BLFCA chairman has also reiterated the demand to allow them keep the 'government fund' in their deposit basket.

"We urgently need the support from the government to keep our business alive as our fund source from commercial banks remains almost restricted in recent years," Mr Asad Khan said.

He said government should consider their demand in view of the NBFIs' growing contribution in the country's industrialisation.

Financial Express/Bangladesh/ 9th April 2012

Cellphone operators, banks and multinational companies imported software worth Tk 25 billion (Tk 2500 crore) in the last three years, putting further pressure on balance of payment, while undermining local firms' capacity.

Local software exporters smell a rat behind the rising growth of software imports by multinationals and banks, but the customs authority has linked the rise to lower taxes.

In an internal assessment last month, Dhaka Customs House found that the country's biggest mobile telephony firm Grameenphone alone purchased overseas software of Tk 6.51 billion (Tk 651.85 crore) during the period. The imports by five other mobile phone operators amounted to Tk 5.34 billion.

Other than mobile companies, both government and private commercial and specialized banks imported software worth Tk 4.64 billion (Tk 464 crore).

Dhaka Customs House last week wrote a letter to Bangladesh Bank requesting to look into the rising growth of software import trends. It said the low import duty-- 6.71 per cent may be one of the reasons the multinationals are importing software instead of locally manufactured ones.

Leading ICT personality Mostafa Jabbar told the FE that importing foreign software by passing capable local companies is a crime. "We have been discussing with the government since long to impose higher duty on imported software but the government did not respond to our demand.

Jabbar said the multinational companies might have other reasons including transfer of profit in the name of software import. He suggested for an investigation into the massive import.

Mostafa Jabbar said bank directors sometimes influence bank management to import software so that they can earn additional money from foreign companies behind the scene.

Habibullah N Karim, a software exporter and ICT expert said the local companies can produce all types of software other than some switching software for mobile companies.

"There is no rationale to import such huge amount of software. The cost will be ten times less if those are manufactured locally," Habibullah N Karim said.

Echoing with Jabbar he said the companies might have other motive behind the practice.

He expressed dissatisfaction over import of banking software by government banks. He said Sonali Bank, Bangladesh Commerce Bank and Rajshahi Krishi Unnayan Bank (RAKUB) formed a consortium and appointed Indian company Polarish to install automation system.

"It is absolutely a bull sheet that the government banks are recruiting Indian firms for automation when local companies can do it by ensuring the same quality and security," Habibullah N Karim added.

He said Janata Bank and Agrani Bank also asked Indian companies to install their core banking software.

He suggested an increased rate of duty on software like -ERP, application, core banking and billing software.

Eexpressing his utter dissatisfaction Jabbar said through import of software by government and private banks directors get benefit from foreign companies.

Bangladesh Association of Software and Information Services (BASIS) President Mahbub Jaman said local companies cannot develop some of the switching software for mobile companies but about 70 per cent of other software can be produced locally.

He said the government should introduce some rules and regulations so that banks and mobile companies give priority to local companies in installing software.

Meanwhile, software exports from Bangladesh have nearly doubled in the first five months of the current fiscal year, compared to the same period of the last fiscal.

The country exported information technology and IT enabled services (ITES) worth $29.05 million in July-November, up from $14.82 million in the same period a year ago, according to data from Bangladesh Association of Software and Information Services (BASIS).

Bangladesh exported software worth $45.31 million in fiscal 2010-11.

BASIS has 503 members who develop software in the country, said Tamzid Siddiq Spondon, joint secretary general of BASIS. There are some other companies as well, he said.

According to the Software and IT Service Catalogue 2011 by BASIS, there are over 800 registered software and ITES companies in Bangladesh.

In addition, there are a few hundred unregistered small and home-based software and IT ventures that are carrying out business for both local and international markets, according to the catalogue.

The total size of the industry is estimated to be around $250 million and it employs over 30,000 people.

Financial Express/Bangladesh/ 9th April 2012

The central bank has approved six more private commercial banks (PCBs), aiming to help strengthen the ongoing financial inclusion programmes through bringing unbanked people under the banking network, Bangladesh Bank (BB) officials said.

The decision came at a meeting of the BB's board of directors, held at its central office Sunday, with BB Governor Atiur Rahman in the chair.

The six approved PCBs are: Union Bank Limited, Modhumoti Bank Limited, the Farmers Bank Limited, Meghna Bank Limited, Midland Bank Limited and South Bangla Agriculture and Commerce Bank Limited.

"The board has approved the six PCBs after a thorough scrutiny of all 16 short-listed applications one by one," Deputy Governor of the BB SK Sur Chowdhury told reporters after the meeting.

He also said the board has also decided to issue letters of intent (LoI) to the approved six PCBs, giving them a period of six months to comply with the existing rules and regulations for setting up new commercial banks.

"We'll issue licenses to the PCBs after their proper compliance with all conditionalities," Mr. Sur said, adding that loan defaulters and tax evaders would not be allowed to be the directors of new banks.

The proposed chief executive officers (CEO) of the approved PCBs will have to present their business plan before the board, he said while explaining the conditionalities for the new banks.

The authorities concerned of the approved PCBs will have to deposit the amount of their paid-up capital worth Tk 4.0 billion with the central bank, before starting their operation, the BB deputy governor added.

"All the applicants are Bangladeshi citizens. The BB board has considered those who were found eligible, based on their qualifications," he said replying to a query if the approvals were given only to Awami League (AL)-affiliated people.

The proposed chairmen of newly-approved banks are: Union Bank Limited -- Shahidul Alam, Modhumoti Bank -- Humayun Kabir, Farmers Bank -- Dr Mohiuddin Khan Alamgir, Meghna Bank -- AHN Ashiqur Rahman MP, Midland Bank -- Moniruzzaman Khandker and South Bangla Agriculture and Commerce Bank -- SM Amjad Hossain.

"Since bank licences were last issued in 2000-01, there have been many significant developments in the Bangladesh economy," the central bank said in a statement, explaining the economic context and rationale behind issuing new bank licences.

The economy has grown and the banking system has become more competitive but there are still a large number of under-banked people in Bangladesh, the BB added.

Recent estimates from a survey conducted by the Institute of Microfinance found that only 45 per cent of the nearly 9000 households surveyed do have access to banks and micro-finance institutions (MFIs) for loans.

The population per branch (21065) and the ratio of loan accounts per 1000 adults (42) suggest that the outreach of the formal financial sector in Bangladesh is lower than that in India (14485 and 124 respectively) and Pakistan (20340 population per branch and 47 loan accounts per 1000), according to the statement.

"As such, the new banks will help increase the quality of banking services by increasing competition in the banking sector. They will also be able to meet the unfulfilled demand for credit by the private sector whose needs have grown in line with a fast expanding economy," it noted.

Moreover, for new banks the ratio of opening rural and urban branch will be 1:1 which will help increase bank branches in rural areas and improve financial inclusion, the central bank said.

Earlier, 37 applications were submitted to the central bank for setting up of new PCBs. Of them, 21 were rejected by a preliminary scrutiny committee mainly due to lack of necessary papers and documents.

Last Thursday, the central bank approved three new commercial banks sponsored by non-resident Bangladeshis (NRBs) to help boost the inflow of foreign exchange.

Currently, a total of 47 commercial banks are in operation in Bangladesh.

Financial Express/Bangladesh/ 9th April 2012