Dhaka, Bangladesh (BBN)– A significant rise in foreign investment in the banking sector propelled the inflow of overall foreign direct investment (FDI) by 24 per cent in the last calendar year, officials said.
The foreign commercial banks (FCBs) witnessed $249.37 million’s worth fresh investment in 2011 complying with the Basel-II guidelines. 
The net FDI inflow into the banking sector increased by nearly 53 percent to $249.37 million in 2011 compared to $163.07 million a year back, according to a central bank survey report.
“We’ve received the highest-ever FDI amounting to $1.136 billion in 2011 because of the higher inflow of foreign investment, especially in the banking sector,” a senior official of the Bangladesh Bank (BB) said, adding that it was $913.32 million in 2010.
“The flow of FDI may increase in different sectors, particularly in the textile sector, due mainly to cheap labour cost that is attracting the foreign investors to invest more in the country,” the central banker noted.
He also said at least six FCBs, out of total nine, have brought funds from their headquarters to meet capital requirement in line with the Basel-II framework.
The central bank earlier instructed the commercial banks for doubling their total capital – paid-up and reserve – to BDT 4.0 billion from BDT 2.0 billion by August 11, 2011. 
The local commercial banks have met the required capital by increasing their reserve or issuing rights shares or floating initial public offerings (IPOs), another BB official said. 
In case of foreign banks, they have complied with the capital requirement by injecting fresh funds from overseas sources or stopping expatriation of post-tax profits, he added.
Besides, the minimum capital required (MCR) had been set at 10 percent with the risk-weighed assets of the banks or BDT 4.0 billion of the total capital, whichever is higher, that would be treated as MCR of the banks under the Basel-II accord.
The net FDI inflow in textile and clothings sector rose to $277.04 million in 2011 from $145.19 million in the previous calendar year due mainly to cheap labour cost, the BB officials said.
A total of $238.21 million was invested in the country’s power, gas and petroleum sectors in 2011, while telecommunication sector, particularly the fast-growing mobile phone companies, were able to attract around $181 million, according to the survey report.
The survey covers 100 per cent foreign-owned companies and joint-venture companies operating in Bangladesh.
 
BBN/SSR/AD-08Oct12-10:10 am (BST)