In an effort to reduce dependence on borrowing from the banking sector, the government plans to increase interest rates on savings instruments again amid a fall in sales of such instruments.

The rates of interest on three-year and five-year savings instruments are likely to be hiked by around 1 percentage point to 11.50 percent and 12.50 percent respectively.

The present rates of interest that came into being in July are 10.78 percent for the three-year instrument and 11.55 percent for the five-year one.

An official of the Internal Resource Division said a proposal in this regard may be sent to the government soon.

The official also said, as the sales of savings instruments fell drastically, the Directorate of National Savings (DNS) earlier sent similar proposals several times but the government adopted a go-slow policy. But now the government is actively considering a rise in the rates of interest to reduce pressure of borrowing on the central bank.

However, a finance ministry official said, if the government borrows more through savings instruments, its expenditure on payment of interest will go up in future. But now the government's main concern is soaring inflation, said the official.

As the sales of savings instruments fell last fiscal year, the rate of interest on all types of instruments were increased by about 1 percentage point on July 1.

A DNS official said, alongside a fall in the sales of fresh savings instruments in recent times, the savers are encashing their savings instruments and depositing the money with banks as they offer higher interest.

According to DNS statistics, in the first four months of the current fiscal year the sales of the savings instruments fell by 10 percent compared to the same period last year.

The principal amount repayment in the same period rose by around 16 percent.

In the current fiscal year's budget, the government set a target of borrowing Tk 6,000 crore from the sales of savings instruments.

But in the first four months of the current fiscal year, net sales or borrowing through the savings instruments fell by around 77 percent over the last year, and the borrowing stood at only Tk 592 crore.

In the same period last year, the government's net borrowing was at Tk 2,604 crore.

The finance ministry official said the situation has become such that the government is now compelled to borrow from the banking system to pay the principal amount and interest accrued on the savings instruments bought earlier.

In case of borrowing from banks, the situation is opposite.

In the first five months of the current fiscal year, the amount of government's borrowing from banks reached Tk 19,805 crore, which was around Tk 1,000 crore more than its borrowing target for the entire year.

The ministry official said the pressure of expenditure has fuelled the government's bank borrowing every week.

Normally such borrowing rises at the end of the fiscal year when expenditure on annual development programme goes up.

But in the current fiscal year, the amount of borrowing, especially from the central bank, has been on the rise from the beginning of the year, leading a hike in inflation.

However, bank borrowing fell slightly in December, at a time when a mission of International Monetary Fund was staying in Dhaka to talk with the government about a loan.

The visiting IMF mission expressed concern about the heavy bank borrowing and advised the government to bring the amount down.

On December 12, the amount of government's borrowing was Tk 16,848 crore of which Tk 10,365 crore was from the central bank.

The DNS official said the banks, especially the private ones, have increased their deposit rate much in recent times -- up to 12 percent,

On October 6, the overall deposit growth in all the banks was 13.86 percent compared to December 31 last year. Of the growth, the private banks' deposit rose by 16 percent and that of foreign banks by 19 percent.

Deposit growth in many of the private and foreign banks was 22-36 percent during the period.

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

Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and Dutch-Bangla Bank Ltd (DBBL) Monday signed a Memorandum of Understanding (MoU) under which the Bank will work as the key sponsor at the upcoming 6th Knit Exposition 2012 in Japan, said a press release.

BKMEA president AKM Selim Osman and Dutch-Bangla Bank managing director KS Tabrej signed the agreement on behalf of their respective organsations at the Bank's head office in the city. BKMEA vice-president (Finance) AH Aslam Sani and other officials of the bank were present.

The release said the association has decided to organise the fair in Tokyo, Japan, scheduled to be held from January 25 to January 27 next for the first time aiming to reduce over dependence on European Union (EU) countries, US and Canada as the prime export market of knitwear items and to diversify the market. The previous five expositions were held in Bangladesh.

Japan imports knitwear products from Bangladesh worth $ 27 billion every year. Besides, Japan has relaxed the rules of origin from three stages to two stages of knitwear items to avail of Japanese GSP facilities. It has created an immense potential to export Bangladeshi knit products to the country, the release added.

The association board of directors and the members will take part in the exhibition where booking of 32 stalls have already been made. Many participants from across the world will participate at the exposition.

Both BKMEA and BGMEA leaders in recent years took an intensified move to diversify the traditional export market of apparel, the country’s lifeline of economy.

“Being the third largest economy of the world, Japan is a very good destination for Bangladeshi products provided we can maintain the quality and shipment time,” one industry source told the FE.

Source: The Financial Express/ Bangladesh/ 14th Dec 2011

Rajshahi Krishi Unnayan Bank (RAKUB) has taken up a project to introduce Foreign Employment Loan Programme.

The decision was taken at the 372th meeting of RAKUB) Board of Directors on Tuesday noon.

Presided over by professor Dr M Shah Nawaz Ali, chairman of RAKUB), the meeting was attended, among others by Pradip Kumar Dutta, managing director, Abdul Mannan, Khandker Jahangir Kabir Rana, Professor Dr Rustom Ali Ahmed, Saidur Rahman, directors, Mosharraf Hossain Chowdhury, deputy managing director, Nishith Kumar Saha, general manager (operation), Habibur Rahman, general manager, audit and inspection and Abdul Khaleque Khan, general manager of Rajshahi divisional office.

Source: The Independent/ Bangladesh/ 14th Dec 2011

Prime Bank Limited has opened its 117th branch at Ashuganj in Brahmanbaria recently.

Md Shirajul Islam Mollah, chairman of the Bank, inaugurated the branch as chief guest, said a press release.

M Reazul Karim, deputy managing director, Farhad Uddin, executive vice president of the bank, Golam Hossain Ifty, president of Ashuganj Chamber of Commerce, Haji Md Anisur Rahman, chairman of Ashuganj upazila and Abu Naser Ahmed, director of Bangladesh Fertiliser Association, local elites and businessmen were also present on the occasion.

The Bank provides the small and medium entrepreneurs collateral-free loans through its SME project, the news release said.

Source: The Daily Sun/ Bangladesh/ 14th Dec 2011

Mohammad Abu Abdu- llah recently joined United Commercial Bank Limited (UCBL) as the deputy managing director (DMD).

Abdullah, a well known personality in human resource development in Bangladesh, has gained an outstanding experience during his long career of about 38 years at home and abroad, said press release.

He spent his professional career with Unilever during last 10 years and served as a member of the board of directors of Unilever Bangladesh. Prior to joining UCBL, he worked for Prime Bank Limited, AB Bank Limited and Abul Khair Group at senior managerial positions and played leading role in HR, organisation development and change management.

Source: The Daily Sun/ Bangladesh/ 14th Dec 2011