Good morning. Here's what happened overnight and what you need to know today.
1.
Islamic Banking to be Off Limits to Regular Banks: A bank will not be able to do Islamic banking business along with conventional banking at the same time, according to the draft 'Islami Bank Company Act-2024', as the central bank looks to level the playing field for Shariah-based banks. As of June, 30 conventional banks provide Islamic banking services through their 33 branches and 688 windows. The banks will have to change their banking business model or form a subsidiary company to provide Islamic banking services when the law is effective. (The Daily Star)
2.
How Printing Money without Creating Real Assets Fuelled Inflation: The central bank in FY23 and FY24 supplied liquidity to problem banks, mostly controlled by S Alam Group, by printing new money without generating real assets. As a result, the country's reserve money increased by Tk66,000 crore during these two fiscals, the highest ever in the country's history, which had an immediate impact on inflation by depreciating the taka, Bangladesh Bank data shows. Reserve money is central bank-issued money backed by foreign and domestic assets that function as the monetary base of an economy. (The Business Standard)
3.
Sukuk Investors in Trouble as Beximco’s Rosy Reports Fade: Bad news for Beximco Sukuk investors: their gain from the Shariah-compliant bond-like instrument next month is set to drop to 9 percent -- below the 12.3 percent yield from five year-tenure treasury bonds and the 10.87 percent inflation rate in October. This is due mainly to the plummeting financial performance of Beximco Ltd, the determinant of sukuk payment streams. Beximco's current poor performance contrasts with its financial reports in FY21 -- the year the Shariah-compliant instrument "Beximco Green Sukuk al Istisna'a" was announced to raise Tk 3,000 crore. (The Daily Star)
4.
Bangladesh to Get $1b First-ever ITFC Loan for Fertiliser Imports: Bangladesh is set to receive $1 billion in financing from the Islamic Trade Finance Corporation (ITFC), a member of the Islamic Development Bank, to support its fertiliser imports for the current fiscal year (FY25). According to officials from the Economic Relations Division, the funds will be allocated to ensure a steady supply of fertiliser, critical for sustaining the country's agricultural sector. The interim government's request for the fund follows agriculture ministry concerns in September over a potential urea shortage ahead of the peak Boro season in December. (The Business Standard)
5.
Startup Financing Stalls Due to Absence of BB Effective Policy: The distribution of startup funds by scheduled banks remains minimal, hindered by the absence of an effective policy from the Bangladesh Bank (BB). A total of Tk 0.43 billion in loans had been disbursed to 153 customers as of August this year whereas it hovered at Tk 0.28 billion until June, the latest BB data showed. Out of 52 banks, 25 are yet to provide any loans to budding entrepreneurs. As of August 2024, a cumulative total of Tk 10.05 billion had been raised for the startup financing and of this amount, Tk 5.05 billion was raised by different scheduled banks. (The Financial Express)
6.
Non-tax Revenue Stuck, Trails Far Behind Regional Ratios: Bangladesh trails far behind regional countries in non-tax revenue netting as the NTR-GDP ratio has stagnated within a peanut 1.0 per cent during the last eight years while the government struggles for deficit financing. This happens to be government's second-largest income source, but remains out of focus from the revenue collectors, sources said. In the financial year 2016-17, the NTR ratio with the country's gross domestic product (GDP) was 1.0 per cent that only rose to 1.10 in FY 2019-20 and again dived to hit 0.91 per cent in FY 2018-19. Last year, this ratio was 1.0 per cent while the tax-GDP ratio was 8.54 per cent, according to Ministry of Finance (MoF) data. (The Financial Express)
----Saju Sarker
BBN/SSR/AD