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Daily News Recap
Thursday
November 6, 2014
Analyst:
Salma Yeasmin Xinat
salma@lbsbd.com
Industry
BB moves to realise
unpaid farm credits
The central bank has moved to strengthen the drive for recovery of unpaid farm credits as the
non-performing loans (NPL) in the agricultural sector increased over 20 per cent of late. According to the Bangladesh Bank statistics, the share of NPL in the total outstanding loans in this
sector rose to 20.04 per cent in the July-September period of the current fiscal year (FY). The
NPL was 18.22 per cent as of June 30 this calendar year. Bankers and officials have attributed
such upturn of non-performing loans to the recent flooding and improper sanction of farm credits. Mostly the state-owned commercial banks (SoCBs) and development finance institutions
(DFIs) are counting such unpaid credits. During the period under review, the total amount of
NPLs with four SoCBs and two DFIs stood at Tk 58.86 billion.
Their share accounts for 98 per cent of the total NPL of Tk 60.07 billion in the agriculture sector.
In the Q1 of the FY 15, the total outstanding loan in this sector from the country's banking system was Tk 299.71 billion. "We've already directed all banks to expedite both recovery and disbursement of the farm credits," a senior official of the Bangladesh Bank (BB) told the FE. The
central bank has already held a couple of meetings with top officials of SoCBs, DFIs, private
commercial banks (PCBs) and foreign commercial banks (FCBs) in this connection.
He also said the central bank has already strengthened its monitoring and supervision at field
level to stop diverting loans particularly from farming to other purposes. "We expect that the
volume of NPL in the agriculture sector would decrease by December this year," the central
banker noted. Disbursement of agriculture loan came down to Tk 27.50 billion in the Q1 of the
FY 15 from Tk 28.61 billion in the corresponding period of the previous fiscal, the BB data
showed. All scheduled banks have achieved nearly 17.69 per cent of their annual agricultural
loan-disbursement target for FY 15. The aggregate farm-loan target is Tk 155.50 billion. The
central bank has already taken different initiatives to achieve the target by the end of this fiscal
year through boosting disbursement.
According to the BB data, the overdue loans in the agriculture sector also rose to Tk 76.99 billion in the Q1 of the FY 15 from Tk 75.67 billion in the same period of the previous fiscal. Acknowledging the recent increase in the NPL, an official of a leading SoCB said sometimes improper sanctioning of loans coupled with involvement of middlemen in the process contributes
to the enhancement of NLP. "Political turmoil and frequent strikes also contributed to the piling
up of classified loans in the farm sector," the banker said. Talking to the FE, Monzur Ahmed,
managing director of Rajshahi Krishi Unnayan Bank (RAKUB), said: "We've taken effective
measures so that fresh farm loans do not turn into NPL." He also said the RAKUB has strengthened its recovery drives to help lessen its NPL in the coming months.
News source: http://www.thefinancialexpress-bd.com/2014/11/06/64581
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Daily News Recap
The government has drafted the 'Textile Policy 2014' aiming to double the local textile produc-
Draft Textile Policy2014 seeks to double production
tion by the fiscal year 2019-20, sources said. The annual combined demand for fabric from the
domestic market and the export-oriented garment sector is around 11,400 million metres, of
which 62 per cent, about 7,000 million metres, is met locally. Now, the government has targeted
to raise the domestic production to 14,036 metres by 2019-20, double the existing production,
they added. The move to prepare a new policy was initiated since the existing 'Textile Policy of
1995' has been failing to address the developments in local as well as global textile markets,
officials said. "The fast-growing local textile sector is expected to flourish with the creation of
more skilled workforce, high value-added products through research and use of modern technology. The private sector will play the lead role while the government will provide policy support," the draft said.
The draft policy has recommended reduction of interest rate on bank loan to attract new investment, setting up of industrial park for export-oriented garment sector, duty waiver for imported
raw material and tax holiday to encourage industrial units in less developed areas across the
country. The draft has also suggested coordinated efforts among the sub-sectors. When asked,
a senior official of the Ministry of Textiles and Jute said, they had sought opinion from all concerned stakeholders by October 20 last. "We have got their opinion and will scrutinise those.
We will incorporate new recommendations, if needed," he added. The ministry will hold a meeting shortly and finalise the draft, he said adding after that the draft would be sent to the cabinet
for approval. "It is not impossible to double the local production if energy is available. To
achieve the target, there should be a directive regarding energy," said Jahangir Alamin, president of the Bangladesh Textile Mills Association.
He also suggested low interest-bearing long-term bank loan to make investment in the sector
viable saying the short-term fund, provided with such a high interest rate, will not help. Regarding the new provision of administrative role of the Directorate of Textiles, he said, "We want one
-stop service so that we get all required clearances including that relating to environment under
one umbrella." If an entrepreneur needs to move door to door for different certificates or clearance, the existence of such a body would mean nothing, he opined. The lion's share of the local
demand is met by the primary textile sector while it meets 30-35 per cent of woven and 80 to 85
per cent of knit fabrics demand, sources added. According to the BTMA, there are 743 textile
mills, 383 yarn and 238 dyeing, printing and finishing mills across the country.
News source: http://www.thefinancialexpress-bd.com/2014/11/06/64585
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Daily News Recap
BTRC for raising
international call
charges
Telecom regulator has recommended the government doubling the charge of international outgoing telephone calls to 12 countries including the United Kingdom, Maldives, Iraq and France
where a large number of Bangladeshis live in. As per the Bangladesh Telecommunication Regulatory Commission (BTRC) proposals, charge for landline calls to UK should be increased to
Tk30 per minute from Tk16 and for mobile phone calls to Tk30 from Tk20. Both landline and
mobile calls to Maldives, where thousands of Bangladeshis work, have been proposed to increase to Tk80 per minute from Tk40. International incoming call termination charge, however,
was recommended to be slashed which many said would have no benefit at all at the user end.
In a letter to the government recently, BTRC said it made the recommendations after having
been requested by two International Gateway (IGW) operators for increasing the charges. For
France, the charge should be Tk35 per minute compared to Tk16 now while for Oman it has
been proposed to increase to Tk40 per minute from Tk27. And the landline callers to Iraq may
have to count Tk18 a minute which is now Tk12 while mobile phone users may see an increase
of per minute charge to Tk20 from Tk14. BTRC said calling charge to Jordan should be increased up to Tk15 a minute from Tk10 per minute. The charge for calls to Morocco it would be
Tk32 from Tk24 currently. Charge hike proposal has also been made for calls to other five
countries – Algeria, Chad, Ivory Coast, Liberia and Sierra Leon.
News source: http://www.dhakatribune.com/business/2014/nov/06/btrc-raising-international-callcharges
Pharma industry to
play vital role in
economy: US envoy
The US Ambassador to Bangladesh Dan W Mozena, said “Bangladesh is the next economic
tiger in the region and pharma industry will play a vital role for this.” The envoy made the comment while visiting the state-of-the-art manufacturing facilities of Beximco Pharmaceuticals Ltd.
(BPL) at Tongi on Tuesday. He was accompanied by Daniel Keen, economic commercial officer, and other officials of the Embassy, says a press release. US ambassador was welcomed
at the plant premises by Nazmul Hassan, MP, managing director of BPL. Chief Operating Officer Rabbur Reza and other senior officials from the company were present on this occasion.
“He will attract the US businessmen to import drug from Bangladesh” He added. Nazmul Hassan MP briefed him about the company activities as well as current status and future prospects
of Bangladesh Pharma industry. The ambassador was told that the company currently has the
highest number of global accreditations in the sector and the country is emerging as a global
generic drug hub in the region with increasing focus on regulated markets. After visiting the
facilities, Dan Mozena and the delegates expressed high satisfaction over the world class operation and quality control practices of Beximco Pharma.
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Daily News Recap
It is worth mentioning here that Beximco Pharmaceuticals Ltd. is a leading manufacturer and
exporter of pharmaceuticals in the country and its state-of-the-art manufacturing facilities are
certified by global regulatory bodies such as TGA (Australia), AGES (EU), ANVISA (Brazil),
GCC (Gulf Member Cou ntries), INVIMA (Colombia), TFDA (Taiwan) among others.
News source: http://www.theindependentbd.com/index.php?
option=com_content&view=article&id=236025:pharma-industry-to-play-vital-role-in-economy-us
-envoy&catid=108:business-finance&Itemid=152
Economy
Export earnings
from US marks
8.42pc fall in Q1
Export earnings from the USA, the largest export destination for Bangladesh goods, witnessed
a 8.42 per cent fall during the first quarter (July-Sept) of the current fiscal (2014-15) mostly due
to poor performance of major exportable items to the US market, reports UNB. Bangladesh
exports to USA totalled $ 1,343.13 million in the first three months (July-Sept) of fiscal 2014-15
compared to $ 1,466.65 million during the corresponding period of the previous fiscal (2013-14).
The three-month export figures for FY 15 represents 17.45 per cent of the country’s total export
earnings. According to the statistics compiled by the Export Promotion Bureau (EPB), the major
exports to the US market during the three-month period were woven garment ($ 911.22 million),
knitwear ($ 339.00 million), frozen shrimp ($ 4.74 million), home textiles (23.85 million) and cap
($ 10.99 million).
During the period, around 30.76 per cent of the country’s total woven garment exports entered
the US market, followed by knitwear 10.37 per cent. Bangladesh’s export earnings from the US
in fiscal 2013-14 were impressive totalling $ 5,583.62 million, up from $ 5,419.60 million
notched in fiscal 2012-13. The country’s export earnings to its major export destination totalled
$ 5,100.91 million in fiscal 2011-12, slightly down from $ 5,107.52 million in fiscal 2010-11. The
export earnings in fiscal 2009-10, however, totalled $ 3,950.47 million, down from $ 4,052.00
million in 2008-09, mostly because of the global economic recession. The 2009-10 fiscal
marked the end of an ups-and-down period for Bangladesh exports to the US. From the robust
$ 2.5 billion during the 2000-01 fiscal, exports had fallen below $ 2 billion by 2003-04. Exports
to the US rose steadily to cross the $ 3 billion mark in 2005-06, and peaked at nearly $ 3.6 billion during the 2007-08 fiscal.
News source: http://www.theindependentbd.com/index.php?
option=com_content&view=article&id=236026:export-earnings-from-us-marks-842pc-fall-inq1&catid=108:business-finance&Itemid=152
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Daily News Recap
Capital Market
Revenue earnings
from DSE drop
6.42pc
The government's revenue earnings from the Dhaka Stock Exchange (DSE) fell 6.42 per cent
or Tk 15.99 million in October compared to a month ago due to reduced trade volumes and
trading sessions. The government bagged tax worth Tk 233.43 million in October against Tk
249.42 million in September, registering a decline of 6.42 per cent over the month, according
to statistics from the Dhaka Stock Exchange (DSE). Of the total tax in October, Tk 127.65
million came from the brokerage commission while rest Tk 105.78 million came from the share
sales by sponsor-directors and placement holders, the DSE data showed. The DSE, on behalf
of the government, collects the tax as brokerage commission and sponsor and placement
shares sales at the rate of 0.05 per cent and 5.0 per cent respectively and deposits the
amount to the government exchequer.
Week-long vacation in October on the occasion of Eid-ul-Fitr, reduced trading sessions which
contributed to lower tax collection in October, said a market insider. A total of 17 trading sessions took place in October as against 22 trading sessions in the month of September. The
daily average turnover on the DSE was Tk 7.50 billion in October as against Tk 7.98 billion in
September, which contributed to lower tax collection as tax is calculated on turnover value.
"Tax collection is related to trading volume and value. More trading of stocks generates more
tax for the government," said a DSE official. "Tax collection decreased in the October due to
lower transactions and reduced trading sessions," he said.
"The revenue earnings are related to turnover. It's usual that tax will fell if turnover declines,"
said Akter H Sannamat, managing director of Union Capital. The government's tax collection
from DSE rose in the last fiscal year compared to previous fiscal as trading volume on the
rise. The government bagged tax worth around Tk 1.54 billion in the FY 2013-2014 against Tk
1.27 billion in the FY 2012-2013. The daily average turnover was Tk 4.71 billion in the last FY
which was Tk 3.70 billion in the 2012-2013, according to DSE statistics.
News source: http://www.thefinancialexpress-bd.com/2014/11/06/64562
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Daily News Recap
Bangladesh Bank on Monday said any person, organisation and company would have to take
BB nod must for
acquiring more than
5pc shares of a
bank
prior approval from the central bank if they hold jointly or individually more than 5 per cent
shares of a bank company. The BB issued a circular to managing directors and chief executive officers of all banks saying that individual person, organisation and company would have
to follow the directives in line with 14 (kha) article under Bank Company Act (Amendment)
1991.
A person, organisation and company will take the prior approval from the central bank through
their bank concerned. Organisations and companies will have to nominate a person who will
hold the shares of a bank company on behalf of them, the circular said. The person will have
to submit the approval letter of the organisations and companies to the central bank.
The shareholders, who will hold more than five per cent shares of a bank, will have to fill up
the central bank’s form to take prior approval from the BB. The person, organisation and company will have to inform the central bank on how they will own the shares of the bank company. The circular said that the shareholders generally owned shares of a bank company by
settling transaction through the capital market or direct purchase of the shares from the bank
or through placement.
The organisations which provide custodial services to the clients will not have to take prior
approval from the central bank if their clients collectively hold more than five per cent shares
of the bank company. The brokerage houses usually play custodial service provider for the
clients.
The BB circular, however, said that any individual client, who would purchase more than five
per cent share of the bank company through custodial service provider, would have to take
prior approval from the central bank. The individual, company and organisation, who have
already owned more than five per cent shares, will not have to take approval from the central
bank. But, the banks will have to inform the central bank about the type of shareholders within
one month after issuing date of the circular, the BB said. According to the bank company act,
any person, organisation or company can hold jointly or individually maximum 10 per cent
shares of a scheduled bank.
News source: http://newagebd.net/63573/bb-nod-must-for-acquiring-more-than-5pc-shares-ofa-bank/#sthash.DqdjQp43.dpbs
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Daily News Recap
Company
Khulna Power to
merge units
Khulna Power Company Ltd (KPCL), the country's first private sector company to produce
power for the national grid, has decided to absorb its two subsidiaries to boost company profits. The subsidiaries KPC Unit Two Ltd and Khanjahan Ali Power Company Ltd -- whose capacities stand at 115 megawatts and 40 MW respectively -- would be merged with KPCL to
take the total generation capacity to 265 MW. The amalgamation of the companies, which will
be completed by December, will boost business through better utilisation of assets, said Shoharab Ali Khan, company secretary of KPCL, adding that its dividend declaration capacity will
also rise.
KPCL owned 90 percent of Khanjahan Ali Power Company and 99 percent of KPC Unit
Two. The cost for operation and maintenance will fall drastically, according to an analyst. The
tax on profits of the two subsidiaries will come down to 24 percent from 35 percent and that
will boost profits, he added. KPCL's net profits rose 26.57 percent year-on-year to Tk 56.38
crore in the quarter that ended on September on the back of growing demand of power. The
company's earnings were Tk 1.56 per share in the quarter, up from Tk 1.23 recorded for the
period last year.
News source: http://www.thedailystar.net/khulna-power-to-merge-units-48903
ICB Islamic Bank will refund cash to 93 percent of the depositors of the erstwhile Oriental
ICB Bank to refund
deposits to 93pc
clients by Nov
Bank this month, the bank said yesterday. The bank used to pay Tk 1 lakh per depositor every
six months, which has also been increased to Tk 5 lakh, effective from the current month. The
remaining 7 percent of the depositors will be paid as per the reconstructed scheme for repayment approved by Bangladesh Bank, said Muhammad Shafiq Bin Abdullah, chief executive of
ICB Islamic.
“This is a giant leap forward for the bank and its esteemed customers, as it has brought to the
fore the credibility of the bank and the commitment it made of repaying the depositors of the
erstwhile Oriental Bank.” BB has extended the deadline for refunding all the affected depositors' fund of Oriental by May 2018. The banking regulator dissolved Oriental's Board of Directors in 2006 after detecting massive corruption, and converted it to ICB Islamic Bank. To safeguard the interest of the depositors, the central bank took over the management and appointed a BB executive director as the bank's administrator.
News source: http://www.thedailystar.net/icb-bank-to-refund-deposits-to-93pc-clients-by-nov48909
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Daily News Recap
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