Dhaka, Bangladesh (BBN)

The NBFIs are now allowed to invest up to 20 per cent of their total capital in any CPs instead of 30 per cent earlier, according to revised guidelines on CP for the NBFIs issued by the Bangladesh Bank (BB) on Thursday

Moreover, no NBFI can invest more than 10 per cent of its total capital in a single company's CP, it added.

Talking to the BBN, a BB senior official said the central bank wants the NBFIs invest more in the productive sectors instead of such instrument that helps reduce investment concentration in the CPs.

The CP is defined as a secured or unsecured promissory note which shall be issued for maturities between a minimum of 30 days and a maximum of one year.

Market operators, however, said such revision on investment capacity of the NBFIs may not impact the market significantly as issuing of such instrument is yet to get momentum in Bangladesh.

A senior executive of leading NBFI said the authorities concerned should take effective measures to develop CP market in the country.

Under the existing guidelines, the NBFIs will not invest in any CP issued by the organization in which its directors or their affiliates have interest.

The CP is a short-term money-market security issued or sold usually by large corporate entities for funding operating expenses as well as current assets such as account receivables and inventories.

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Dhaka, Bangladesh (BBN)

Talking to the BBN, a senior official of the Bangladesh Bank (BB) said the central bank has already received the certified copy of the High Court (HC) order in this connection.

“The liquidator’s taking of responsibility is now depending on the BB’s official formalities only,” the central banker explained.

He also expects that the liquidator will take the PLFSL’s responsibility within Sunday or Monday after completing the formalities.

Md Asaduzzaman Khan, deputy general manager of the BB’s Financial Institutions Department, has already been appointed as the liquidator.

Officials concerned said the liquidator, after taking charge, will hire an external audit firm to conduct a functional audit to assess the NBFI’s actual financial health.

They also said the liquidator will prioritise settling small investors’ claims first.

“The liquidator will also give emphases on recovery of non-performing loans (NPLs) by taking help of other government agencies concerned.

Considering the PLFSL’s vulnerable financial condition, the Ministry of Finance asked the central bank on June 27 to liquidate the company for protecting the interest of its depositors.

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Bangladesh Bank Headquarters

Dhaka, Bangladesh (BBN)- Non-bank depository corporations’ (NBDCs) household debt accounts for half of the total loan portfolio, which might make them vulnerable to any major shock in the sector, though it is unlikely due to highly populated land demanding country, an official report has said.

The NBDCs refer to deposit taking non-banking financial institutions (NBFIs), Ansar-VDP Unnayan Bank, and Karma Sangsthan Bank provided the loans between 2014 and 2017, according to the Bangladesh Bank (BB)’s latest study report released on Sunday.

During the period under review, it accounted for only about 13 per cent of total loan portfolio of the country’s commercial banks, it added.

The study revealed the banking sector has been the major source of household debt, accounting for around 70 per cent of such loans. The remaining 30 per cent has been provided by the NBDCs.

It also said this is because at low household debt-to-GDP level, the magnitude of disruption in the financial system from any negative shock in the household sector is likely to be minimal.

After some initial rise, household debt as a percentage of (nominal) GDP has remained almost stable since 2015 and stood at 7.6 per cent in 2017, according to the Quarterly Financial Stability Assessment Report (QFSAR) for July-September 2018

Compared with neighbouring countries as well as some other Southeast Asian economies, the central bank said that household debt to GDP ratio in Bangladesh had been the lowest in the last few years.

The ratio was lower than that of India (11 per cent) and Sri Lanka (7.9 per cent) and much lower than the countries, which faced financial crisis of 2007-08.

“The low and stable household debt-to-GDP (gross domestic product) ratio in Bangladesh indicates low possibility of systemic risk origination from the household sector,” the QFSAR noted.

Product-wise analysis of household loans disbursed by the banks at end-June 2018 revealed that mortgage loan covering housing construction, flat and land purchase shared 45 per cent of household debt; loans for consumer goods contributed 17 per cent, followed by 15 per cent share of personal loan against different deposit schemes.

Credit cards and auto loans shared only 5.0 per cent and 3.0 per cent respectively of total household debt, according to the report.

“Though mortgage loans constituted the largest portion of household debt in banks, the risk of property price volatility spreading across the financial system is low as mortgage loans are not yet securitised in Bangladesh,” it noted.

The study found that the classified loans ratio of banks' household loans is considerably lower than the overall non-performing loans (NPLs) ratio of the banks.

Moreover, the gradual fall in household NPLs ratio over the last few years is another positive sign.

This suggests that the debt servicing capacity of the borrowers and monitoring of the banks in the household sector is better than the overall industry, the report added.

“….low level of household indebtedness along with low and falling NPLs ratio in household sector and low possibility of spreading out of risks from property price volatility, in general, do not appear to pose any major stability threat in the near-term,” the central bank noted.

Experience from the global financial crisis of 2007-08 has revealed that excessive accumulation of household debt, disbursement of household debt to subprime borrowers and underlying weaknesses in securitisation of household mortgage debt were the key reasons behind the origination and spread out of the meltdown.

BBN/SSR/AD

File photo: Wall Street Journal

Dhaka, Bangladesh (BBN)- The central bank of Bangladesh has asked the non-banking financial institutions (NBFIs) to refrain from sending short message service (SMS) through mobile phone, offering high interest rate, to collect deposit.

“The central bank has directed the NBFIs to stop sending SMS, offering high interest rates for attracting people, including professionals, to collect deposit,” a senior official of the Bangladesh Bank (BB) told the BBN in Dhaka.

The NBFIs have already published their respective interest rates on both lending and deposit on websites, the BB official explained.

The central bank of Bangladesh issued a notification in this connection on Tuesday, asking the chief executive officers and managing directors of NBFIs to maintain the instruction for deposit collection.

The instruction came five days after advising the NBFIs to fix interest rate on deposit at a reasonable level for ensuring stability in the country’s financial sector.

On June 21, the central bank asked the NBFIs to fix interest rate at a reasonable level.

On June 20, Bangladesh Association of Banks (BAB) Chairman Nazrul Islam Mazumder at a meeting said many insurance and leasing companies offer more than 12 per cent interest on deposit.

“This must be stopped. Otherwise, depositors will move to those companies,” the BAB chief noted.

Currently, 34 NBFIs are running their business in Bangladesh.

BBN/SSR/AD

Bangladesh Bank Headquarters

Dhaka, Bangladesh (BBN)- The central bank of Bangladesh has asked the non-banking financial institutions (NBFIs) to fix the interest rates on deposits at reasonable level for ensuring stability in the financial sector.

The advice was made at a meeting with chief executives of 11 NBFIs held at the Bangladesh Bank (BB) headquarters in the capital on Thursday with BB Governor Fazle Kabir in the chair.

The BB’s latest moves came a day after Bangladesh Association of Banks (BAB) decision on bring down the interest rates on both lending and deposit at 9.0 per cent and 6.0 per cent respectively from July 01.

On Wednesday’s meeting, BAB chairman Nazrul Islam Mazumder said many insurance and leasing companies offer deposit rates of more than 12 per cent. “This must stop, otherwise, depositors will move to those companies.”

At the meeting, the managing directors (MDs) and chief executive officers (CEOs) of the leading NBFIs assured the central bank high-ups to follow the advice on fixation of interest rates on deposits.

The NBFIs are allowed to collect deposit from individuals and organisations for three months, which will not be allowed premature encashment.

Currently, 34 NBFIs are running their business across the country.

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Dhaka, Bangladesh (BBN) -

The board of directors of non-bank financial institution is going to issue the subordinated bond to improve the capital base (Tier-II) of the company.

The issuance of the bond of LankaBangla Finance is, however, still subject to compliance with the relevant laws and regulatory approval like Bangladesh Bank and Bangladesh Securities and Exchange Commission.

The company also disclosed its first quarter (Q1) earnings results on Tuesday.

As per Q1 financial statement, the company’s consolidated earnings per share (EPS) plunged to BDT 0.16 for January-March 2018 as against BDT 0.60 for January-March 2017.

The consolidated net operating cash flow per share (NOCFPS) was minus BDT 1.28 for January-March 2018 as against minus BDT 4.39 for January-March 2017.

The consolidated net asset value (NAV) per share was BDT 18.45 as on March 31, 2018 and BDT 16.23 as on December 31, 2017.

Each share of the company closed at BDT 27.60 on Monday at the Dhaka Stock Exchange (DSE).

LankaBangla Finance, which was listed on the Dhaka bourse in 2006, paid 7.50 percent cash and 7.50 percent stock dividend for the year ended on June 30, 2017.

The company’s paid-up capital is BDT 5.13 billion, authorised capital is BDT 10 billion and the total number of securities is 513.17 million.

Sponsor-directors own 33.56 percent stake in the company while institutional investors 22.55 percent, foreign investors 1.92 percent and general public 41.97 percent as on March 31, 2018.

BBN/SS/AD

Dhaka, Bangladesh (BBN)

The final approval of the dividend will come during the annual general meeting (AGM) scheduled to be held on May 3 at 11:00am in Dhaka.

The company has also reported earnings per share (EPS) of BDT 2.40, net asset value (NAV) per share of BDT 15.98 and net operating cash flow per share (NOCFPS) of BDT 19.84 for the year ended on December 31, 2017 as against BDT 2.29, BDT 15.39 and BDT 15.28 respectively for the same period of the previous year.

In 2016, the company disbursed 18 percent cash dividend. The company paid 17 percent cash dividend in 2015.

There will be no price limit on the trading of the shares of the company today following its corporate declaration.

Each share of the company, which was listed on the Dhaka bourse in 2009, closed at BDT 38.30 on Sunday at the Dhaka Stock Exchange (DSE).

The company’s paid-up capital is BDT 1.06 billion and authorised capital is BDT 2.0 billion while the total number of securities is 106.39 million.

The sponsor-directors own 60.68 percent stake in the company, while the government owns 9.34 percent, institutional investors 18.45 percent and the general public 11.53 percent as on February 28, 2108, the DSE data shows.

BBN/SSR/SR

Dhaka, Bangladesh (BBN) - The central bank of Bangladesh has launched a US$240 million refinancing fund to facilitate cottage, micro, small and medium enterprises (CMSME) across the country.

The government has created the fund with taking financial assistance from the Asian Development Bank (ADB) to help CMSME, officials said.

The ADB will contribute $200 million, while the government will provide the rest $40 million to the fund, they added.

Under the refinance scheme, banks and non-banking financial institutions (NBFIs) can provide maximum 90 percent of the total project cost and borrower will have to bear the rest of the cost, according to a Bangladesh Bank (BB) notification.

The borrowers will get maximum BDT 30 million in loans, it added.

The BB circular also said the highest tenure of a mid-term loan will be three years and that for a long-term loan will be five years.

The refinancing scheme will be applicable for the projects outside Dhaka and Chittagong metropolitan areas.
The central bank will receive 4.0 per cent interest from the banks and NBFIs.

But the BB has directed the banks to provide loans to the male borrowers on the basis of market rate of interest.
From the fund, 15 per cent will be reserved for women entrepreneurs and the highest interest rate for them will be 10 per cent.

Of the total fund, two thirds will be fixed for cottage, micro and small industries and the rest of the amount will be for medium industries.

For getting the refinance facility for giving loans under the SME category, the banks will have to fulfill some criteria.
One of those is that the bank will have practical prior experience about SME financing. In the long-term national rating scale, they must have BBB- rating.

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Dhaka, Bangladesh (BBN)

Md. Abdul Hamid, President of the Peoples Republic of Bangladesh, will inaugurate the workshop as chief guest, the organizers said.

Waqf is a religious endowment in Islamic law, typically donating a building or plot of land that no longer belongs to anyone. The profits which are obtained from this endowment are also given away as charity.

Hence the Waqf donation keeps on giving year on year, making it a primer form of sadaqa jaryya (continuous charity); which benefits people who are alive and works as a mercy for the dead.

The workshop is being organized jointly by Islamic Research and Training Institute of Islamic Development Bank, Islami Bank Bangladesh Limited (IBBL) and Centre for Zakat Management.

Researchers, scholars and experts from Bangladesh, Brunei, Indonesia, Japan, the Kingdom of Saudi Arabia (KSA), Malaysia, New Zealand, Nigeria, Thailand, the United Kingdom and the United States will be participated at the workshop.

Local and foreign researchers will present 28 research papers on the international workshop, they added.

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Education Minister of Bangladesh Nurul Islam Nahid addressing at a programme in Dhaka on April 16, 2017. Photo: BBN

Dhaka, Bangladesh (BBN) - bKash Limited has launched disbursement of stipend for the students of secondary schools through building a partnership with the Agrani Bank Limited.
The Minister for Education, Nurul Islam Nahid MP, inaugurated the stipend disbursement via bKash, the leading mobile financial service provider in Bangladesh, as the chief guest at a programme held at the Bangladesh International Mother Language Institute Auditorium in the capital Dhaka on Sunday.
The minister also spoke to the beneficiaries of the scheme in Lalmonirhat through video conferencing.
Sohorab Hossain, Secretary to the Secondary and Higher Education Division under education ministry was the special guest at the programme.
Presided over by Professor Dr. SM Wahiduzzaman, Programme Director, Secondary Education Sector Investment Program (SESIP) and Director General of Directorate of Secondary and Higher Education (DSHE), the programme was also attended by Kamal Quadir, Chief Executive Officer of bKash and Mohammed Ismail Hossain, Acting Managing Director of Agrani Bank, Chai Li, Acting Country Director, Asian Development Bank, Bangladesh Resident Mission and Professor Dr. Jinat Imtiaz Ali, Director General, International Mother Language Institute.
Around 300,000 students of 2916 secondary schools are set to receive the stipends under SESIP, initiated by the education ministry with the technical and financial assistance from the Asian Development Bank to improve secondary education sector as a whole.
The students will receive the stipends in their bKash accounts twice in a year.
bKash CEO Kamal Quadir thanked the education ministry and Agrani Bank for selecting bKash as a disbursement partner in this scheme and hoped to provide students with expanded and affordable access to financial services in a faster, secured and transparent manner.
“With over 165,00 bKash agent points across the country―within walking distance from every house— which are open late at night and also on weekends, thus beneficiaries, can visit any nearby agent point and cash out the money instantly from their bKash accounts.”
He noted that disbursement through bKash will be a convenient, hassle-free and cost savings solution to the beneficiaries as they do not need to go to any bank branches to receive the stipend money. It will also raise awareness on digital financial services among the students.
Launched in 2011, bKash is a joint venture of BRAC Bank, the US-based Money in Motion, World Bank Group’s private sector investment arm International Finance Corporation and Bill and Melinda Gates Foundation.
Apart from sending and receiving money, a bKash customer can also buy airtime, accounts make payment for shopping and pay bills for various services.

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