The government has approved the proposal of borrowing $2 billion hard loan from Islamic Trade and Finance Cooperation (ITFC) for importing petroleum fuels, a senior official said.

The hard-term loan committee of the government on Sunday approved the BPC proposal to borrow the loan from ITFC, an autonomous entity of the Islamic Development Bank (IDB). Finance Minister AMA Muhith chaired the meeting.

Bangladesh Petroleum Corporation (BPC) chairman Md Abu Bakar Siddique on Sunday said the BPC has no bar to borrow $2 billion loan from ITFC.

“We received $1.48 billion loan from the ITFC during last calendar year and increased the loan amount by $0.52 billion this year,” he said adding the government would require around $4.5 billion to procure about 6.8 million tonnes of petroleum fuel this year.

“IDB loan would help us a lot as the BPC faces complexity due to internal dollar crisis,” Bakar said.

He said the energy and mineral resources division has sought finance minister’s intervention to open letter of credit (LCs) to procure fuels in time.

“Banks are reluctant to open LCs by purchasing dollar at high prices,” the BPC top official said.

Another official of BPC said two state-owned commercial banks—Janata Bank Limited and Agrani Bank Limited—recently are delaying to open LCs causing hindrance to purchase of petroleum fuel from Kuwait Petroleum Corporation (KPC) on time.

It’s really impossible to meet local demand if dollar shortage continues,” he said.

He said the BPC is also counting huge loss for delay in opening LCs.

Recently, KPC has threatened BPC to stop supply of petroleum fuel due to delay in payment, concerned official said.

Last month the ITFC assured Bangladesh of providing $2 billion with interest rate of five percent, 0.30 percent lower than that in last calendar year.

The Daily Sun/Bangladesh/ 16th Jan 2012

Normal banking business of primary dealers (PDs) is being seriously hampered due mainly to immense underwriting obligation relating to the government securities.

"Our short-term and long-term business growth plans are being hampered seriously due to substantial growth of the government securities. This is also creating problems in our liquidity and cash flow forecast that, in turn, is also affecting our day-to-day operational and investment activities," a senior member of the Primary Dealers Bangladesh Limited (PDBL) told the FE Saturday.

He also said each of the PD banks has been suffering from liquidity shortfall, leading to their failure to maintain cash reserve requirement (CRR) with the Bangladesh Bank (BB).

"At least seven out of 12 PD banks could not comply with the CRR of the central bank Thursday last because of their liquidity shortfall," the PDBL member noted.

The central bank will sit with top leaders of the PDBL today (Sunday) to devise an effective mechanism to solve the existing problems, an executive director of the BB told the FE. 

"We've been informed about the latest situation of the PDs," the BB executive director said without elaborating.
Meanwhile, one more PD has already informed the central bank about their intention to surrender the primary dealership licence by discontinuing participation in auctions of both treasury bills and bonds. 

"The PD bank wants to continue its normal banking operations through surrendering the primary dealership licence," another PDBL member said while explaining their situation.

He also said the PD bank has not taken part in auctions of both treasury bills and bonds since November 24 last.
Two non-banking financial institutions (NBFIs) have also been refraining from participation in auctions of both treasury bills and bonds from April 2011 on the same ground. 

Excess holding of the government securities by 12 PD banks stood at Tk 188.33 billion after maintaining their statutory liquidity ratio (SLR) as on January 5 last which has created liquidity pressure on the commercial banks.
"We've been compelled to purchase low yielding government securities against our underwriting obligations in each primary auction with the fund collected from different sources including depositors at higher rate," the PDBL member said.

Under the existing provisions, only the PDs are allowed to submit the bid in the primary auction of government treasury bills and bonds.

The central bank introduced the system for the first time in Bangladesh for the April-June period of 2011 to boost the country's secondary securities market through strengthening the activities of the PDs.

Under the system, non-PD banks and financial institutions are allowed take part in the auction only through the PDs. 
The non-PD banks and financial institutions are not willing to invest their fund in the low-yielding government securities, the PDBL member said, adding that most PD banks are unable to meet their underwriting obligation.

"Since the yield of the government securities is lower than the prevailing interest rate in the money market, the institutional investors as well as the individuals are not interested to buy the government securities," he noted. 
He also said there is no significant initiative to create an active secondary securities market as found in India, Sri Lanka and Pakistan. 

The central bank earlier selected 15 PDs -- 12 banks and three NBFIs -- to deal with the government-approved securities in the secondary market. 

The PDs will subscribe and underwrite primary issues and make secondary trading deals with two-way price quotations.

The Daily Financial Express/Bangladesh/ 15th Jan 2012

Md. Anisul Hoque, chairman of Social Islami Bank Limited Limited inaugurates annual business conference of the bank at Hotel The Cox Today in Cox’s Bazar on Friday.

The annual business conference-2012 of Social Islami Bank Limited (SIBL) was held at the hotel The Cox Today in Cox’s Bazar on Friday.

Md. Anisul Haque, chairman of SIBL was present as chief guest while managing director of the Bank Muhammad Ali presided over the conference, said a press release.

Among others, vice chairman Mohammad Azam, directors Alhaj Sultan Mahmood Chowdhury, Md. Nurul Amin, Major (retd) Dr. Md. Rezaul Haque, Dr. Lily Amin and alternate director Md. Golam Mostafa were present at the function.

The Daily Sun/Bangladesh/ 15th Jan 2012

Bangladesh Bank (BB) is working on introducing online Treasury Chalan Submission and Verification System in June this year.

A senior BB official told BSS that they are implementing a central bank strengthening project with assistance from the World Bank (WB), under which an e-payment gateway will also be introduced in six months time.

Finance Division of the Ministry of Finance and Access to Information (A2I) Programme of Prime Minister’s Office (PMO) are also working to implement the programme to solve the problem related to the existing manual procedure of submitting the Chalan.

“The e-payment gateway will facilitate all types of online payment including the payments through the Treasury Chalan,” BB Executive Director M Abdul Hamid said.

People require paying taxes or fees to the Treasury through Chalan (a prescribed form) for getting various services from the government. The current process of submitting the Chalan is seen cumbersome, time consuming and prone to malpractices.

The Daily Sun/Bangladesh/ 15th Jan 2012

Bangladesh Bank Governor Dr. Atiur Rahman on Saturday urged the high officials of the central bank to lead the economy for the betterment of the country.

He urged the senior officials of the central bank for attaining adequate communication skills so that they could disseminate complex economic information to the stakeholders.

The governor was addressing the closing session of a two-day Strategic Planning Workshop 2012.
The Strategic Planning Unit of Bangladesh Bank organised the workshop that started on Friday at BRAC CDM, Savar, Dhaka.

The workshop was organised to strengthen leadership quality of the officials of the BB. All BB officials in the rank of General Manager and above attended the workshop.

Deputy Governor Abul Qasem, executive director Md Ahsanullah, senior advisor to the governor Allah Malik Kazemi, Khandkar Ibrahim Khaled, Chairman, Bangladesh Krishi Bank, renowned cultural personality Aly Zaker, among others, addressed the workshop at different sessions.

Ibrahim Khaled led a session on leadership on the first day while Aly Zaker led a session on Communication Skill Development on the second day of the workshop.

The contemporary issues of core inflation (other than food and fuel), interest rate and exchange rate were discussed in the workshop. The workshop opined that these are inter-related and are highly influenced by the external events as well.

The workshop also finalised the future action plan in order to achieve the objectives of Strategic Plan 2010-2014.

The Daily Sun/Bangladesh/ 15th Jan 2012