Bangladesh Bank has directed the scheduled banks and financial institutes to follow the credit margin of ratio of 70:30 for all housing loans under the consumer financing service.

The Banking Rules and Policy Department (BRPD) of the central bank made the directive yesterday through a circular.

The circular also mentioned that the credit margin ration of all other consumer financing including car loan would be of 30:70.

The directives will come into effect soon.

The Daily Sun/Bangladesh/ 23th Jan 2012

The opportunity for opening letter of credits (LCs) for the businessmen of both Bangladesh and Myanmar has ushered in a new chapter in strengthening of trade relations between the two neighbouring countries, experts said.

Although businesses had been taking place between the two countries since long through General Trade Agreement and Border Trade Agreement, signed in 1973 and 1994 respectively, traders had to face severe troubles as there was no scope of opening LCs.

The hurdle has been removed after a long effort through an initiative of Sonali Bank.

While talking to the daily sun, Md Humayun Kabir, managing director of Sonali Bank, said it was a great success of Sonali Bank for being able to remove the long-standing hurdle that will act as the opening of the doors of new possibilities for a stronger trade ties between the two nations.

He also hoped that through this initiative, new avenues of opportunities would be opened for the traders and more banks would be able to go for providing the same facility.

The border trade agreement between Bangladesh and Myanmar was signed on May 18, 1994 and to run banking activities under the deal, another agreement was signed between Sonali Bank and Myanmar Investment and Commercial Bank on May 7 in 1995.

A total of 16,698 import drafts worth $ 115,045,780 and 1648 export drafts of $ 9,064,131 were issued between the two countries during September 1995-2011 to September 2011 period.

Banking sources said such huge volume of trade activities is not possible through bank draft only.

Businessmen of both countries have already started export-import activities through LCs.

Bangladeshi traders have been advised to open LCs at Sonali Bank’s Dilkusha Corporate Branch in Dhaka, Agabad Corporate Barnch in Chittagong and Khulna Corporate Branch in Khulna.

The Myanmar Investment and Commercial Bank has already opened two LCs for importing medicine from Bangladesh.

The Daily Sun/Bangladesh/ 23th Jan 2012

Three state-run commercial banks opened letters of credit worth US$336 million for Bangladesh Petroleum Corporation for importing fuel oils as of January 22 this year, officials said yesterday.

A senior official of the central bank also said no banks have expressed unwillingness to open LCs for BPC, contradicting media reports.

Sonali Bank opened LCs worth $147 million for importing diesel, Janata Bank $113 million for crude, jet and furnace oil and Agrani Bank $76 million for diesel in the first three weeks of 2012.

The development will help the BPC breathe a sigh of relief as the state-run lone petroleum products importer has been desperately searching for funds to feed the country's appetite for fuel.

The official said Bangladesh Bank initiated the move to help cash-strapped BPC receive costlier American greenback to import petroleum products.

The central bank also assured the banks that they will be provided with required local currency in case of any liquidity crunch, he added.

This comes amid reports that the three state-run banks are refusing to open L/Cs for BPC as they face a serious dearth of liquidity both in dollars and taka.

The Daily Star/Bangladesh/ 23th Jan 2012

Bangladesh Bank yesterday tightened loans to buy cars and homes in an effort to rein in credit to the unproductive sector.

The BB has made car loans dearer by raising the buyer's portion to 70 percent from the previous 50 percent, according to a statement released yesterday. It means a would-be buyer will have to pay Tk 14 lakh out of his own wallet and can borrow a maximum of Tk 6 lakh from a bank for a Tk 20 lakh car.

A prospective home buyer can borrow 70 percent of his finance from a bank, down from 80 percent earlier, according to the statement.

“The move will slow down the flow of money to the unproductive sector and help curb inflation,” a senior BB official said.

The use of cars has been rising and successive governments could not rein in the trend by imposing high tariff on car imports. Importers have to pay more than 200 percent tax for a 1,500cc (engine power) car. Tariff rates go up depending on the engine capacity.

Lenders also hailed the move saying it would help curb inflation and the city's traffic congestion.

“It will help contain inflation,” said Anis A Khan, managing director of Mutual Trust Bank. On the home loans, Khan said it is not easy to get.

“One has to demonstrate a cash flow and meet conditions to take home loans,” he said.

The BB in a separate circular yesterday asked commercial banks to keep the spread, which is a gap between lending and deposit rates, within 5 percent.

But risky consumer credit such as credit cards and loans to small and medium enterprises has been kept out of the directive, the central bank said.

The BB took the decision following complaints from businesses against banks charging higher rates for loans. Many banks have increased lending rates by 4 percentage points, even for old loans.

The Daily Star/Bangladesh/ 23th Jan 2012

KS Tabrez, managing director of Dutch-Bangla Bank Limited, presides over Managers’ Conference-2012 in the city recently.

The 1st Managers’ Conference-2012 of Dutch-Bangla Bank Limited (DBBL) was held recently to review the Bank’s last year’s performance and discuss the business plan for the year 2012.

Branch managers from 111 branches attended the conference in the city recently with KS Tabrez, managing director of the Bank in the chair, said a press release.

Abul Kashem Md Shirin, Md Sayedul Hasan, Khan Tariqul Islam, Md Mosaddiqur Rahman, deputy managing directors and all divisional heads and senior executives of the Bank attended the conference.

All branch managers firmly committed to achieve the budgetary targets for the year 2012.

The Daily Sun/Bangladesh/ 22th Jan 2012