The readymade garments (RMG) and textile sector entrepreneurs Wednesday urged the government not to enforce the recently issued Bangladesh Bank (BB) circular which tightened rules for classification, provisioning and rescheduling of term loans.

Top apparel industry leaders at a joint press conference in Dhaka said enforcement of the new rules would hamper export-import activities of the RMG and textile sectors.

They said the new circular has curtailed the time limit for repayment of credit, which ultimately would raise the volume of classified loans as RMG and textile industry entrepreneurs depend on bank loans for raw materials import, to expand industrial units and for setting up new projects.

In the circular issued on June 14, Banking Regulations and Policy Department (BRPD) of the central bank curtailed the time limit for assessing probability of loan recovery from borrowers on the basis of qualitative judgments.

The BRPD circular suggests that banks reduce timeframe by three months for classification, provisioning and rescheduling of term loans as per the BB prescribed format for sub-standard (SS), doubtful (DF) and bad/loss (BL) accounts.

Industry leaders say the new BRPD rules would restrict the Bank-client relationship which is a major avenue to recover bank assets by avoiding classification, provisioning and rescheduling.

“Thus, the BRPD’s circular is an untimely move and it would create an impasse in the country’s overall trade and commerce,” said Shafiul Islam Mohiuddin, President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), in a written statement.

“Once a loan is written as BL (bad or loss) account, borrowers will not be sanctioned further credit (short-term) from banks. As a result, the entrepreneur will lose competitiveness as the bank loan will become burden on him or her,” he said.

“On the other hand, the bank will lose its strength when a large amount of money will be blocked as classified,” he said.

He said the RMG and textile industry is reeling under tremendous local and international pressure.

He said two major festivals – Eid-ul-Fitr and Eid-ul-Azha – are approaching and RMG entrepreneurs will need to get prepared for additional payments as bonus.

He said local causes disruptive to production include acute gas and electricity crisis, high tariff for utility services, hike in wages, political impasses including shutdowns, labour unrest, raising tax at source, high rate of interest for bank loans and non-availability of credit from banks.

The Daily Sun/Bangladesh/ 28th June 2012

UK lender HSBC on Tuesday offered its entire stakes in Axis Bank and Yes Bank through share sales worth up to 24.5 billion rupees, according to a term sheet obtained by Reuters.

HSBC offered 19.6 million shares in Axis Bank for 950.9-970.9 rupees each and 16.8 million shares in Yes Bank for 318.1-324.8 rupees per share through its Mauritius subsidiary, the term sheet said.

Shares in both banks were being sold through HSBC's Mauritius subsidiary at discounts of 3 to 5 percent to their closing price on Tuesday, the term sheet said.

The Daily Star/Bangladesh/ 28th June 2012

Garment makers yesterday demanded to exclude the apparel sector from the central bank's new rules for loan classification, rescheduling and provisioning, as the country's highest foreign currency earning sector is passing through a critical time.

Bangladesh Bank issued two circulars on the rules of loan classification, rescheduling and provisioning on June 14, saying that an ongoing loan operation will be classified for non-repayment of any instalment within three months, instead of the six-month duration now in effect.

Term loans of five years have also been brought under the new regulation.

Leaders of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and Bangladesh Textile Mills Association (BTMA) spoke at a joint press briefing at the BGMEA office in the capital.

BGMEA President Shafiul Islam Mohiuddin said it normally takes 120 days for repatriation of money from the exported goods, but the banking regulator reduced the period of Special Mention Account (SMA) to 60 days from 90 days.

“So, transferring the continuous loan and demand loan to SMA within 60 days is not logical,” he said.

He said the number of loan classified factories will increase with the move and banks will not be interested to give more loans to garment factories.

“The move will ultimately hamper investment flow in the private sector,” he said. He also indicated the low import of capital m

The Daily Star/Bangladesh/ 28th June 2012

Stocks continued to rise yesterday on the back of the news of compensation by the government to around 9.33 lakh small investors hit by the stock market turmoil.

The benchmark index of Dhaka Stock Exchange, DGEN, closed the day at 4,551.21 points, having risen by 150.47 points from the previous day.

“SEC's decision to implement the recommended 50 percent interest waiver on margin loan and 20 percent special quota allocation in initial public offerings for small investors acted as the catalyst for the uptrend,” said LankaBangla Securities in its market analysis.

Turnover stood at Tk 277 crore, a considerable 71.16 percent increase from the previous day.

A total of 0.85 lakh trades were executed, with 5.86 crore shares and mutual fund units changing hands at the Dhaka bourse.

Of the major sectors, banks, at 4.01 percent, gained the most, followed by non-bank financial institutions at 3.51 percent, power 2.85 percent, telecommunications 1.34 percent and pharmaceuticals 2.46 percent.

Of the 271 issues that traded on the DSE, 257 advanced, six declined and seven remained unchanged.

Grameenphone was the most traded stock of the day, with 11.31 lakh shares worth Tk 23.26 crore changing hands.

Bangladesh Submarine Cable Company and Meghna Petroleum were the next most popular stocks.

Tallu Spinning featured in the top ten gainers' chart, having advanced by 9.70 percent.

Modern Dyeing and Screen Printing was the biggest loser of the day, falling by 3.22 percent.

Chittagong's Selective Categories Index, CSEX, closed the day at 8,678 points, after gaining 246 points or 2.91 percent.

A total of 1.53 crore shares and mutual fund units worth Tk 62.70 crore changed hands at the port city bourse.

Gainers beat losers 173 to 10, with five securities remaining unchanged.

The Daily Star/Bangladesh/ 28th June 2012

Anwer Hossain Khan

Anwer Hossain Khan has recently been re-elected as chairman of Shahjalal Islami Bank Ltd, according to a statement of the Bank yesterday.

The election took place at the Bank's 154th board meeting where Md Harun Miah and Khandoker Sakib Ahmed were re-elected as vice chairmen.

Khan obtained his masters degree from Dhaka University. He is the chairman and managing director of Anwer Khan Modern Medical College, Modern Diagnostic Centre Ltd, Anwer Khan Modern Hospital and Haji Sakawat Anwara Modern Eye Hospital.

Harun Miah is the managing director of Kushiara Financial Services Ltd, Kushiara Travels Ltd and Homelink Remit Ltd. Ahmed is the managing director of Zuairia Group, Zuairia Trade International, ZED Agrovet and sponsor of Shahjalal Islami Bank Securities Limited.

The Daily Star/Bangladesh/ 28th June 2012