Banks and their directors are grappling to comply with two regulatory decisions.

The central bank has recently tightened loan rescheduling and provisioning rules, while the stock market regulator has won a High Court backing to force directors to hold 2 percent shares individually.

These two directives have put both the managements and boards of the banks in a difficult situation.

Against this backdrop, Association of Bankers Bangladesh (ABB) -- a platform of banks' managing directors -- and Bangladesh Association of Banks (BAB) -- a forum of directors -- at two separate meetings yesterday urged the regulators to be accommodative in implementing the new rules.

“We welcome all sorts of monitoring and discipline regarding loans, but these have to be accommodative and supportive to all stakeholders,” Helal Ahmed Chowdhury, managing director of Pubali Bank and vice chairman of ABB, told The Daily Star after the meeting.

The Bangladesh Bank (BB) issued a circular to the banks on June 14, asking them to make a continuous loan classification for non-repayment within three months instead of six months and limit rescheduling scopes within three times.

Chowdhury feared quick implementation of the loan rescheduling rules may give a rise to non-performing loans and an additional requirement for provisioning will eat up banks' profits and as a consequence the government will lose taxes.

The chief executives of banks sought the time till January 2014 to implement these new decisions on loan rescheduling instead of September this year.

They also asked the BB to relax rules for them in maintaining the base for provisioning at minimum 20 percent for collaterally-secured loans.

Bankers said many borrowers might become defaulters unintentionally because of the new decision.

They also said the present liquidity position amid external and internal economic slowdown is not appropriate to tighten the terms and conditions of commercial banks' loan agreements.

On the other hand, with the High Court's judgement on upholding the Securities and Exchange Commission's (SEC) power to impose the section 2CC of SEC ordinance, it has been made mandatory for directors of listed companies to hold 2 percent shares individually.

Directors had filed writ petitions with the High Court challenging the section 2CC of the SEC ordinance, but these were rejected last week.

The BAB's problem seems to be more critical as many directors will lose their directorship for not being able to hold 2 percent shares in line with the SEC decision. The BAB has decided to request the stock to give them a waiver in holding shares as banks' capital base is much higher than others.

“We want a waiver from the SEC in the issue of holding 2 percent shares by each director,” said Nazrul Islam Majumder, chairman of the BAB.

“Banks are very big companies and their paid-up capital is also very high compared to other listed companies,” he said, adding that 2 percent shares of banks would cost at least Tk 30 crore.

The Daily Star/Bangladesh/ 25th June 2012

The government will bring a number of changes to the tax proposals in the budget for the next fiscal year, taking into account the low-income people and the problem-ridden export sector.

Officials of the National Board of Revenue (NBR) said big changes may be made to the proposed tax on mobile phone bills, bank interest and export earnings.

Finance Minister AMA Muhith may give a final declaration in this regard in parliament on Wednesday.

In the proposed budget for the next fiscal year, the government raised tax at source on export receipts to 1.2 percent from the existing 0.6 percent.

But in the face of opposition from businesspeople, the rate may be lowered to 1 percent or 0.9 percent.

The NBR official said the export sector, especially readymade garments, has grown to an annual $18 billion export industry but they pay tax less than the corporate sector does.

The NBR has a plan to increase the tax on the apparel sector gradually and take the rate to 2 percent.

The official said the proposed tax on export earnings is going to be slightly reduced as this year has been showing a sluggish trend.

The government in the next fiscal year's budget proposed a 2 percent tax deduction at source on post-paid and pre-paid mobile phone bills.

The NBR official said either the proposed tax may be completely withdrawn or a threshold bill of Tk 200 may be set in case of taxes on pre-paid mobile bills.

The government has been facing criticism from economists, civil society members and general people since it has proposed the imposition of tax on mobile bills.

The Bangladesh Bank has already suggested that the tax should be levied on post-paid mobile bills instead of the pre-paid ones.

The central bank in a set of recommendations sent to the NBR recently said commercial banks provide mobile banking services to reach more unbanked people.

The BB also said people having accounts with banks that provide mobile banking services can get different services such as receiving remittances and various social safety allowances from the government.

Also, farmers can get fair prices for their produce and market their commodities in time through mobile phones, the central bank said.

The NBR official said they have already talked with mobile phone operators about the imposition of the tax.

The operators have told the tax administrator that if the tax is imposed, maintaining the tax-related documents will be difficult for the operators, according to the official.

Now there are around nine crore mobile phone subscribers in Bangladesh.

The government also proposed a minimum tax on individual taxpayers at Tk 3,000 from the existing Tk 2,000. But now the amount may be brought to its previous level or at Tk 2,500.

In the budget for the next fiscal year, it was proposed to charge 15 percent advance income tax instead of 10 percent on the interest earnings of the bank depositors who do not have any tax identification number.

But the NBR official said the government now plans to relax the rules. If a person has a deposit up to Tk 5 lakh and does not have a TIN, he will now pay 10 percent tax.

According to BB statistics, of the total bank accounts, 98 percent have up to Tk 5 lakh in deposit each. The number of total bank accounts is 5.52 crore now. Besides, the proposed 10 percent advance income tax on insurance premium may also be withdrawn.

Muhith yesterday told journalists that the government is considering the issue of withdrawing the 10 percent interest on insurance premium.

The Daily Star/Bangladesh/ 25th June 2012

A Rouf Chowdhury, chairman of Bank Asia, inaugurates the Bank's 67th branch in Lalmatia in Dhaka yesterday. Mohammed Lakiotullah, vice chairman, and Md Mehmood Husain, president and managing director, were also present.

The Daily Star/Bangladesh/ 25th June 2012

Non-resident Bangladeshis (NRBs) have become one of the major targets for many commercial banks those are desperately looking for expanding their business beyond domestic squire to secure sustainable liquidity position.

Offering many products and services with lucrative returns on deposits, remittance and other banking services, the banks are trying to fetch as much business as they can from the expatriate Bangladeshis.

The products include different types of savings and investment schemes and bonds.

Many banks have opened exchange houses in different countries to take their services at the doorsteps of the Bangladeshi people living overseas.

According to Bangladesh Bank (BB), there are 63 exchanges houses of Bangladeshi banks in different countries when some banks are awaiting BB’s approval.

Besides, some banks are regularly sending their senior executives to the major labour markets abroad to showcase their products and services to the NRBs and motivate them to be their clients.

The bankers are encouraging the NRBs open accounts and send money home through the banking channel.

The countries those are getting major attention from the banks are Saudi Arabia, United Arab Emirate (UAE), Japan, Singapore, Malaysia, Kuwait, Qatar, Bahrain, the United Kingdom and the United States.

“It is good for the country’s economy if banks can get as much deposit as they can from external resources,” former governor and economist Dr Mohammad Farashuddin said.

He said banks are taking many steps besides introducing innovative products and services for NRBs, which would certainly bring a good yield for the country’s economy.

“Banks are virtually competing with each-other to collect deposit from expatriate Bangladeshis, which is good for maintaining a sound foreign exchange reserve,” Association of Bankers Bangladesh (ABB) Chairman Nurul Amin said.

Amin, also managing director of National Credit and Commerce Bank (NCC Bank) believes that the innovative products of different banks would also increase the flow of remittance through formal channel.

Executive Director of Bangladesh Bank (BB) M Ahsan Ullah said the central bank is now processing the application of banks for opening of exchange houses overseas at faster phases than before.

Besides, drawing arrangements are being made between local and foreign banks for brining remittance from the countries where exchange houses are not allowed.

The BB official expects that the banks’ drive to get more deposit and remittance from NRBs would help the country to build the foreign exchange reserve up to US$ 1.3 billion by the end of the forthcoming 2012-13 financial year.

The reserve already reached at US$ 1.2 billion in the past 11 months of the out-going 2011-12 financial year.

Managing Director of Expatriate Welfare Bank CM Koyes Sami said his bank is planning some products to help increase manpower exports to the global labour market. This public sector specialised bank has already opened five liaison offices in middle-east to render special banking and financial services to NRBs.

“We (bankers) should help people explore the opportunity in the overseas job markets instead of focusing only on taping deposit from NRBs,” he said. Managing Director of Islami Bank Mohammad Abdul Mannan said his bank so far introduced 14 schemes for NRBs, which got good response from them.

The bank, the top despot and remittance earners of this country, also launched a special centre for protecting the interest its overseas clients.

He observed that the special attention of banks to NRBs reduced the inflow remittance through different unofficial channels including hundi.

The Independent/Bangladesh/ 24th June 2012

Bangladesh Youth Enterprise Advice and Helpcentre (BYEAH), an organisation helping young prospective entrepreneurs to start their own businesses, will support with loans to 50 young entrepreneurs this year. The loan will come from SME Foundation, Mutual Trust Bank and Plan Bangladesh.

The selected entrepreneurs who want to expand their own businesses will receive easy term loans from SME Foundation via Mutual Trust Bank. BYEAH will provide training and support services to the youths.

The decision came at a closing ceremony titled “Outreach to Young Entrepreneurs 2012,” organised by BYEAH on Saturday at a city hotel, where 70 short listed entrepreneurs and mentors were invited.

With the support of Plan Bangladesh, following a six week long outreach activity by BYEAH, over 70 entrepreneurs were short-listed with assistance from several organisations, including Team Engine, UCEP, The Hunger Project, British Council and Care Bangladesh.

A total of 50 young entrepreneurs will be chosen for BYEAH’s 2012 youth business support programme.

Syed Rezwanul Kabir, managing director and Chief executive officer of SME Foundation, said the foundation provides assistance to  entrepreneurs get finance and developing skills.

“We try to address their needs so that they can go where they have potential to go. We work on four Es—Entrepreneur, Enterprise, Employment and Empowerment,” he said.

BYEAH follows the business model of Youth Business International (YBI), an international charity organisation established by the Royal Highness, the Prince of Wales in 2000 to support the disadvantaged youths across the globe.

BYEAH has been working to change lives in Bangladesh since 2009 and in 2010 and 2011, BYEAH had supported 12 youth enterprises, which in turn created over 400 jobs in the community.

BYEAH also recruited 15 mentors during this period and has established connections with several organisations that will continue with the recruitment over the next few weeks.

These mentors are business professionals with experience in running their own businesses and are eager to help the new entrepreneurs, said Rubaiya Ahmad, BYEAH  executive director.

The Independent/Bangladesh/ 24th June 2012