The Ministry of Finance (MoF) has decided to issue Special Treasury Bond worth Tk 57.32 billion to three state-owned commercial banks (SCBs) -- Sonali, Janata and Agrani -- to clear off the outstanding amount of loans of Bangladesh Petroleum Corporation (BPC) that it owes to the SCBs for importing oil.

Finance Minister AMA Muhith last week approved the issuance of bond in favour of three SCBs, a senior official in the ministry said.

Of Tk 57.32 billion, bond worth Tk 22.14 billion will be issued in favour of Sonali Bank Ltd and Tk 18.13 billion to Janata Bank Ltd. The rest of the amount -- Tk 17.04 billion -- will be issued in favour of Agrani Bank Ltd.

"We are going to issue Special Treasury Bond worth Tk 57.32 billion to three SCBs as the banks opened Letters of Credit (L/Cs) in favour of BPC to import petroleum oil," a top MoF official told the FE on Wednesday.

"The aggregate amount of outstanding liabilities of the BPC to three SCBs stood at Tk 57.32 billion as of June 30 this year," he added.

Chairman of BPC Abubakr Siddique said the large liabilities of the BPC to SCBs have mainly been due to sale of petroleum products by the corporation to the domestic market at prices less than their procurement cost.

"After issuance of bond, the banks will have no problems in opening L/Cs for the BPC," Siddique told the FE on Wednesday.

He said the BPC now incurs loss to the tune of Tk 17.38 for selling per litre of diesel and furnace oil in the local market.

According to the BPC, the corporation will incur an aggregate loss, amounting to Tk 132 billion in the current fiscal year, if the prices of diesel and furnace oil are not increased further.

The bond bears 7.0 per cent rate of interest and can be used by them for meeting their statutory liquidity requirement (SLR) by the BB, said the MoF official.

Officials in the MoF said the decision of issuing bond came after Sonali, Janata and Agrani had repeatedly been seeking fund from the government to address their severe liquidity problems.

Earlier in September last, the MoF issued similar bond in favour of Agrani for an amount of Tk 8.0 billion for the same purpose.

High officials in the SCBs said the BPC has been importing a large quantity of petroleum in recent months, creating fresh pressure on the SCBs to open letters of credit (LCs) with their own resources.

"We have to open LCs for the BPC, but the corporation cannot repay the money as it sells the imported petroleum in the local market at prices lower than their imported cost," a banker said.

He said the banks opt for cash money, instead of bond.

However, officials said the government has dearth of cash flow at present. The government borrowed over Tk 100 billion high-powered money from the Bangladesh Bank through overdraft during the first four months of the current fiscal, they added.

The Special Treasury Bond worth Tk 57.32 billion will be issued in three phases. Of the total amount, bond worth Tk 19 billion will be issued to three banks concerned today (Thursday), a high official in the MoF said.

He said the liability of the BPC to three SCBs, against which bond will be issued, will be considered as part of the government's total subsidy bill.

Source: The Financial Express/ Bangladesh/ 15th Dec 2011

AB Bank Ltd. signed a Master Facility Agreement under 'Investment Promotion and Financing Facility (IPFF)' with Bangladesh Bank (BB) at Bangladesh Bank’s head office on Wednesday, says a press release.

AB Bank president and managing director Kaiser A Chowdhury and Bangladesh Bank executive director S K Sur Chowdhury signed the agreement.

M Fazlur Rahman, additional managing director, Mahmudul Alam, head of structured finance, Kazi Nasim Ahmed, vice-president of AB Bank and Husne Ara Shikha, joint director and deputy project director, Goutam Kumar Ghosh, deputy director, IPFF Cell, Bangladesh Bank and other officials of both the organisations were present.

Under the agreement, AB Bank will enjoy financing facility from the World Bank, administered by the Bangladesh Bank, for extending credit facilities to such infrastructure projects.

The government has taken the IPFF project to make available partial debt financing through private sector financial intermediaries for eligible, government-endorsed infrastructure projects, to be developed by the private sector. Projects developed solely by the private sector but identified by the government to be in the public interest will also be eligible to get financing under IPFF.

Source: The Independent/ Bangladesh/ 15th Dec 2011

Mutual Trust Bank Limited (MTB) on Wednesday launched a branch and an ATM (Automated Teller Machine) booth at Bashundhara Residential Area in the city.

Chairman of the Bashundhara Group Ahmed Akbar Sobhan inaugurated the bank’s 74th branch and 57th ATM booth as chief guest.

The new branch and ATM are located at B-block, Road- 2.

Three directors of MTB MA Rauf, Wakil Ahmed and Mahboob Morshed Hasan, managing director Anis A Khan and manager for new branch Mustafizur Rahman were also present at the inaugural function.

Anis A Khan said the bank is expected to open two more branches this month- one at Uttara in the city and another in Brahmanbaria.

He said MTB launched two subsidiary companies- MTB Securities Limited and MTB Capital Limited this year.

The bank also opened a branch in London which is also doing well, MD added.

Anis Khan said: “Like other MTB branches, the new branch in Bashundhara is also committed to serve its best to the customers.”

Source: The Daily Sun/ Bangladesh/ 15th Dec 2011

Bangladesh Bank has been suffering from acute shortage of manpower which is assumed to hamper the central bank’s monitoring and supervision on the large number of financial institutions of the country, experts said.

Concerned sources said a total of 387 posts of assistant directors and more than 1000 posts of class II officers are currently vacant at Bangladesh Bank.

Sources at the Human Resources Department (HRD) of the central bank said the recruitment of 100 assistant directors is currently under process, but staffing in class II positions remained closed since 2003.

Highly placed source at the HR department informed that the recruitment of class II officers remained closed since the World Bank suggested the central bank authorities to recruit more class I officers instead of class II employees.

AKM Mohiuddin Azad, acting general manager of the human resources department of Bangladesh Bank, said as per the bank’s requirement, many posts have been created in various departments several times, but filling up the vacant positions has become very hard due to various constraints.

Moreover, on an average 150 officers at different levels go on retirement every year, creating new vacuum at the bank, he added.

Arif Hossain Khan, joint director at the BB’s recruitment wing, told daily sun that the workload at the central bank has increased four to five times over the years but the manpower has not increased accordingly.

Experts feel that the quantity of job positions in different departments of Bangladesh Bank was created long back when there were only 13 to 15 banks in the country, but currently the context has totally changed. The number of scheduled banks and non-banking financial institutes has increased manifold and supervision of all the financial institutions has become so hard for Bangladesh Bank.

On an average, the commercial banks open more than 100 branches each year, so time has come to reassess the numbers of posts in the important departments in the central bank, keeping the existing banking scenario actively in consideration, experts opined.

Sources at the central bank’s recruitment wing said the recruitment process of 100 assistant directors (general) six officers in research wing, 13 assistant directors (statistics), 13 officers in computer program and maintenance department, seven medical officers, and some other officials in cash department are underway.

The central bank will publish another job advertisement next week to appoint more assistant directors (general side), sources said.

Source: The Daily Sun/ Bangladesh/ 15th Dec 2011

The government’s bank borrowing last week came down significantly from its peak as a big amount of fund was added to the national exchequer from the telecom sector.

Public borrowing from banks, especially from the central bank, declined to nearly Tk 168.48 billion on Monday, from its peak of Tk 198.05 billion at the end of November this year, a recent BB data showed.

The telecom sector added Tk 32 billion to the state coffer on December 8, from which public expenditure and bank dues repayments were made.

The situation may improve further when some donor-pledged funds, including that of the World Bank, are disbursed, officials say.

In the first five months of the current fiscal year, the government surpassed its yearly borrowing target of Tk 189.57 billion because of a major mismatch between its income and huge expenditure.

The huge public borrowing left the banking sector in a huge liquidity crunch, also shooting up inter-bank call money rate.

In the same period a year earlier, the government borrowed Tk 21.72 billion only.

Public expenditure skyrocketed in the recent months because of increased import of capital machinery and fuel oil for supplying to rental power plants. The government’s revenue decreased due to sluggish remittance inflow, delay in fund disbursement from donors and lower sale of saving certificates, officials said.

However, in the first week of this month, the government did not borrow any money from banks.

Earlier, economic analysts feared that the government might not be able to keep its bank borrowing limit within the 5 percent of GDP as projected in this year’s budget. They also warned of an inflationary pressure due to heavy bank borrowing.

Source: The Daily Sun/ Bangladesh/ 15th Dec 2011