Dhaka, Bangladesh (BBN)

Disbursement of farm credit rose to BDT 46.84 billion during the July-September period of the FY 2020-21 from BDT 35.55 billion in the same period of the last fiscal, according to the central bank latest statistics.

Of BDT 46.84 billion, eight state-owned banks disbursed BDT 17.83 billion, and the remaining BDT 29.01 billion was disbursed by the private commercial banks (PCBs) and foreign commercial banks (FCBs).

All scheduled banks have achieved nearly 17.82 per cent of their annual agricultural loan disbursement target for FY ‘21, fixed at BDT 262.92 billion.

The central bank is set to review the performances of agriculture credit disbursement and recovery of all private commercial banks (PCBs) at a meeting that is scheduled to be held in the central bank headquarters in Dhaka on October 29, according to the officials.

Talking to the BBN, a senior official of the Bangladesh Bank (BB) said the central bank is working continuously to achieve the agriculture loan disbursement target by the end of this fiscal year.

He also sad a six-member monitoring team of the central bank is now overseeing the implementation of farm credit disbursement target among the banks.

The BB earlier announced a stimulus package of BDT 50 billion for small and medium businesses and entrepreneurs in the farm sector.

Besides, the central bank had announced another policy asking the banks to provide crop loan to farmers at 4.0 per cent interest rate while the BB will provide the rest 5.0 per cent as interest subsidy.

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Dhaka, Bangladesh (BBN)

The instruction will be made during an online meeting with top executives of 16 banks and four non-banking financial institutions (NBFIs) to be held on Monday with Bangladesh Bank (BB) Governor Fazle Kabir in the chair.

The central bank is expected to ask the banks and NBFIs to expedite execution of the stimulus package for cottage, micro, small and medium enterprise (CMSME) sector to help revamping the economy from the adversity of the ongoing Covid-19 pandemic.

The banks and NBFIs, which have loan disbursement targets BDT 500 million and above, have been selected to participate at the review meeting.

Earlier on July 02, the BB governor met top bosses of 23 banks, which have loan disbursement targets BDT 3.0 billion and above, set by the central bank earlier, for the same purpose.

The BB has already formed a BDT100 billion revolving refinancing scheme to help banks and NBFIs for the implementation of the package for the CMSME sector.

In April, the central bank issued a guideline for providing working capital facilities amounting to BDT 200 billion in line with the government's announcement for the CMSME sector affected by the coronavirus pandemic.

Prime Minister Sheikh Hasina has so far announced 19 stimulus packages worth BDT 1.03 trillion to offset the impacts of the pandemic on various sectors.

The packages, which are 3.7 per cent of the country's gross domestic product (GDP), are now being executed under the supervision of the central bank and the finance ministry.

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Dhaka, Bangladesh (BBN)

The government’s such borrowing reached BDT 130.87 billion in the first month of FY 2020-21 through issuance of treasury bills (T-bills) and bonds against BDT 70.50 billion pre-auction target, set by the Ministry of Finance earlier to partly meet budget deficit.

Of the total borrowing, BDT 109.32 billion was taken out from the banks and the remaining BDT 21.55 billion from individuals and corporate entities, according officials.

Meanwhile, the government's cumulative net bank borrowing stood at BDT 80.59 billion until July 29 after adjustment of payback worth BDT 28.72 billion to the central bank, according to a Bangladesh Bank (BB), the country’s central bank, confidential report.

Actually, its borrowing from the banking system rose by nearly 109 per cent to BDT 722.46 billion as on June 30, 2020 from BDT 345.87 billion in the same period of the previous fiscal.

Falling trend in sales of national savings certificates and lower revenue collection was forced the government borrowing more from the banking system in FY '20.

The government's net borrowing through selling savings tools dropped by more than 71 per cent to BDT 144.28 billion in FY '20 from BDT 499.39 billion a year ago.

A drastic fall in the sales of the savings instruments mainly due to the automation of its selling process amid COVID-19 led to such decrease in the government's borrowing from the source.

The government has already targeted a 'hefty' borrowing from the country's banking system to finance the budget deficit partly for the current fiscal year.

As per the budget documents, the government's bank borrowing is set to jump by over 79 per cent to BDT 849.80 billion for the FY '21 from BDT 473.64 billion a year ago.

On the other hand, the government has already set its borrowing target from savings instruments at BDT 200 billion to meet the budget deficit partly for FY '21.

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Dhaka, Bangladesh (BBN)

The disbursed amount is just 7.50 per cent of total BDT 200 billion financial support meant for the CMSME to help the sector weather the adverse impact of the Covid-19 pandemic.

Loans amounting to BDT 27.50 billion were sanctioned to more than 8000 small enterprises during the period, according to central bank's statistics.

Senior bankers, however, said that some strict conditions, imposed by the BB on the policy as well as higher operational costs than those of large industrial and service sector loans are mainly responsible for the slower disbursement of such loans.

Under the existing policy, the banks and NBFIs can lend manufacturing and services 50 per cent and 30 per cent respectively while the remaining 20 per cent for trading purposes.

Rejecting the bankers' allegations, a senior central banker said the central bank has included such conditions in line with the government's desires.

"The government wants to create employment opportunities across the country by boosting manufacturing activities with the implementation of the package," the BB official noted.

Let alone cottage and micro, only SMEs are creating employment for 7.8 million people directly and providing livelihood for 31.2 million in Bangladesh.

These also contribute 25 per cent to GDP (gross domestic product), according to Household Income and Expenditure Survey 2016, conducted by the state-run Bangladesh Bureau of Statistics (BBS).

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Dhaka, Bangladesh (BBN)- Eastern Bank Ltd. (EBL) introduced an instant account opening solution –EBL INSTA Account—for the first time in Bangladesh under e-KYC guideline on Sunday.

The leading private commercial bank (PCB) launched the solution to help customers and employees maintain maximum possible social distancing during COVID-19 pandemic.

Interested person can opened such account within a minute, according to the EBL.

“This account will be opened with the NID of the customer, and will offer debit card as well as free cheque book facilities,” an EBL senior official said.

He also said EBL Insta Account comes in both Current and Savings variant, and is available in all EBL Branches.

“This initiative will minimize the total time spent by customers in the bank, while ensuring them top quality digital banking solutions,” the private banker explained.

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Dhaka, Bangladesh (BBN)

The Bangladesh Bank (BB) has extended its foreign currency liquidity support to the banks for making import payment bills liquefied natural gas (LNG), officials said.

The central bank so far sold $835 million to the banks particularly public ones during this fiscal year (FY) 2019-20 on the same ground, they added.

Talking to the BBN, a BB senior official said the central bank would continue providing such foreign currency support to the banks in line with the market requirement.

The BB has already resumed selling of the US dollar to banks directly in the last week of March after more than one month interval to keep the country's foreign exchange market stable.

Talking to the BBN, a treasury head of a private commercial bank said the central bank is providing foreign currency support to banks for offsetting extra pressure on the market, caused by lower export earnings along with falling trend of inward remittances following the ongoing coronavirus outbreak.

The private banker expects that such foreign currency assistance of the BB will continue to help in keeping the foreign exchange market stable.

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Dhaka, Bangladesh (BBN)

The Bangladesh Bank (BB) has also instructed financial service providers to ready a list of key persons, who are involved in critical service management, including the information and communications technology infrastructure.

The advisory came on Thursday, which asked chief executives of the banks to keep the banking and payment services uninterrupted in response to Covid-19 caused by new coronavirus.

Talking to the BBN, a BB senior official said the central bank asked the banks to prepare the continuity plan soon to ensure uninterrupted banking and payment services to clients to tackle in any kind of situation.

He said the functions of the key persons will have to be ensured in any circumstances, such as state of emergency or lockdown.

"We've also asked the banks to ensure round-the-clock operations of alternative delivery channels in order to facilitate smooth transactions," the central banker noted.

The alternative channels include ATMs (automated teller machines), POS (point of sale), e-payment gateway and mobile financial services (MFS) through which a customer can get financial services.

The BB also advised the banks to encourage electronic payments for reducing the use of bank notes, according to the central banker.

Private lenders and non-banking financial institutions have been smarter and have adopted multiple measures to help contain contagion while offsetting the possible setbacks stemming from the coronavirus crisis in Bangladesh.

As part of the measures, a portion of employees of different banks have been allowed to work from home, according to senior bankers.

The Publai Bank has already formed its emergency team to keep uninterrupted banking and payment services, its CEO Abdul Halim Chowdhury said.

Pubali has advised its clients to prefer online transaction facilities to cash handling, Mr. Chowdhury said.

Like Pubali, Prime Bank Limited has already taken some precautionary measures aiming to limit spread of the coronavirus that emerged from China's Wuhan in late December.

"We'll offer leave to our employees, who have been identified as nonessential right now for 15 days," Rahel Ahmed, CEO of Prime Bank, said while explaining its continuity plan.

Besides, Prime Bank has planned to allow some employees to work from home, Mr. Ahmed added.

Prime will continue to contact clients and others using modern communications tools like WhatsApp, Viber and mobile phone instead of physical presence, he added.

Like the private commercial banks, state-owned Bangladesh Krishi Bank has started work on preparing the continuity plan in line with the central bank instructions.

"We'll complete preparation of our plan shortly," Ali Hossain Prodhania, the bank's managing director, said.

Industrial and Infrastructure Development Finance Company, a non-bank lender, has finalised its plan, allowing its 40 per cent employees to work from home from Sunday.

Talking to the BBN, Golam Sarwar Bhuiyan, managing director of IIDFC Limited, they have already issued a circular and asked their branch officials to act according to the plan.

On Saturday, Bangladesh reported its second death from the pneumonia-like disease, with four new cases of virus, bringing the total to 24.

The World Health Organization, WHO, has recommended social distancing as an arsenal to flatten the curve.

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Dhaka, Bangladesh (BBN)

The flow of inward remittances rose to $12.50 billion during the July-February period of FY ’20 from $10.41 billion in the same period of the previous fiscal, according to the central bank latest statistics.

Remittances from Bangladeshi nationals working abroad were estimated at $1.45 billion in February last, registering a decrease of $186.53 million from the previous month. In January 2020, the remittance stood at $1.64 billion.

The flow of inward remittances was $1.32 billion in February 2019.

Talking to the BBN, Kazi Sayedur Rahman, executive director of the Bangladesh Bank (BB), said fewer working days pushed down the inflow of remittances slightly in February.

About the impact of coronavirus, the central banker said they were yet to find out any adverse impact of the disease on the flow of inward remittances.

“We’ve to wait for assessing the impact of coronavirus on the inflow of remittance until April,” he added.

More than 85,000 coronavirus cases have been reported in 57 or more countries around the world causing almost 3,000 deaths, according to the World Health Organization. The vast majority of infections and deaths are in China, where the virus emerged late last year.

“We’re watching closely the inflow of remittances countrywise to avert any unwanted situation,” Mr. Rahman explained.

He also hoped that the inflow of remittances might cross $20 billion-mark by the end of FY ’20.

Echoing the BB official, Md. Ali Hossain Prodhania, managing director of Bangladesh Krishi Bank (BKB), said the inflow of remittances might increase in the current month and that would continue in the coming months following incentive being provided by the government.

The government has already allocated BDT 30.60 billion as incentive in the budget for FY ’20 to encourage expatriate workers to send their money through legal channels.

The government’s incentive along with depreciating mode of the local currency against the US dollar has helped boost the inflow of remittances during the period under review, according to bankers.

The central bank had earlier taken a series of measures to encourage expatriate Bangladeshis to send their hard-earned money through the formal banking channel instead of illegal "hundi" system in order to boost the country's foreign exchange reserves.

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Dhaka, Bangladesh (BBN)

The overall shortfall came down to BDT 66.55 billion as on December 31 of the last calendar year from BDT 81.29 billion three months ago.

However, the shortfall edged up by 0.61 per cent year on year -- to BDT 66.55 billion in 2019 from BDT 66.15 billion a year earlier.

Talking to the BBN, a senior official of the Bangladesh Bank (BB) said lower growth in non-performing loans (NPLs) pushed down the volume of provisioning shortfall with the banks significantly during the period.

The NPLs dropped by nearly 19 per cent to BDT 943.31 billion as on December 31 of 2019 from BDT 1,162.88 billion three months ago.

Also, the share of classified loans in the total outstanding loans came down to 9.32 per cent as on December 31 in 2019 from 11.99 per cent three months back. The figure was 10.30 per cent on December 31, 2018.

The state-owned commercial banks (SoCBs) have faced more provisioning shortfall than their private counterparts, the central banker added.

A total of 11 banks, out of 59, have failed to make the requisite provision against non-performing loans mostly in the Q4 from October to December of 2019.

That number was 12 in the third quarter (July-September) of 2019.

Under the central bank regulations, the banks have to make 0.25 per cent to 5.0 per cent provisions against loans in general category, 20 per cent in substandard category, 50 per cent against doubtful loans and 100 per cent in bad or loss category.

The banks usually make the required provisions against both classified and unclassified loans from their operating profits in order to mitigate risks.

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Dhaka, Bangladesh (BBN)

Surplus cash surged by nearly 19 per cent to BDT 1,056.46 billion as on December 31, 2019 from BDT 889.50 billion three months before, according to the central bank's latest statistics. The amount was BDT 1,119.10 billion as on March 30, 2017.

The amount rose to BDT 833.30 billion in the April-June period of the last calendar year from BDT 638.80 billion in Q1 of 2019. It was BDT 774.80 billion as on December 31, 2017.

The country’s banking sector has been saddled with excessive funds since the second quarter of 2019 as the private sector credit growth was slower, according to bankers.

Talking to the BBN, a senior official of the Bangladesh Bank (BB) said there is no sign of excess liquidity in the banking system being ebbed, though the government continues to borrow from banks.

But the central banker insisted the extra liquidity does not mean “idle money” for the banks.

“The major portion of excess liquidity has already been invested in government securities as risk-free investments for banks,” he explained.

That is unlikely to push up the private credit growth in near future as most of the banks are reluctant to provide fresh loans, though the government and top bankers had agreed to bring down both lending and deposit rates to a single-digit from April 01.

After a meeting with the chairmen and managing directors of private banks on December 30, finance minister AHM Mustafa Kamal announced the decision.

Senior bankers acknowledged the majority of banks are following a conservative approach to sanctioning and disbursing fresh loans and this has pushed down the private credit growth in recent months.

The sector’s credit growth fell to 9.83 per cent in December 2019 on a year-on-year basis from 13.20 per cent a year earlier, the central bank data shows.

This growth was 3.37 percentage points lower than the central bank’s target of 13.20 per cent for the first half of fiscal year 2019-20.

Meanwhile, outstanding loans with the private sector rose to BDT 10,531.51 billion in December from BDT 9,588.51 billion a year ago. It was BDT 10,358.15 billion in November 2019.

Talking to the BBN, Mehmood Husain, managing director and chief executive officer of NRB Bank Limited, said the banks now prefer government-approved securities to general investments to mitigate the possible risks.

Mr. Husain predicted that the falling trend in private sector credit growth would continue until April.

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