bangladesh bank
Undisbursed portion of agriculture and rural loans will be disbursed to farmers by Bangladesh Bank body
Bangladesh Bank (BB) has decided to form a Bangladesh Bank Agricultural Development Common Fund (BBADCF) to utilize the undisbursed portion of agriculture and rural loans for an acceleration of farm production.k
The Agriculture Credit Department (ACD) of BB issued a circular in this regard and sent it to the top executives of banks on Monday with immediate effect.
The circular stated that banks would deposit money equivalent to the undisbursed amount of farm and rural loans in the BBADCF, and BB would use the fund giving 2 percent interest on the deposits.
Then the money of the BBADCF would be distributed among banks considering the capacity of the depositors’ bank. The banks would pay back the loans to the BB, along with 2 percent interest rate, within 18 months of the fund being released.
Read more: BB disburses Tk 4000 crore as liquidity support to 5 Islami banks
The scheduled banks can disburse loans of BBADCF money among the farmers using respective banks’ networks and can charge an 8 percent interest rate to the farmers’ level. But the banks cannot disburse the loan to microfinance institutions (MFIs), the notification said.
The lender banks have to form a ‘Risk Mitigation Fund’ with 1.0 percent of disbursed loans from BBADC funds.
Banks would be allowed to transfer 4 percentage points of the interest to their income segment on the loans made from the fund.
The BB announced a new agricultural credit policy with a target of Tk 30,911 crore for the current financial year. The target is 8.88 percent higher than the previous year’s target Tk 28,391 crore.
Considering the increased demand for agricultural and rural credit, the disbursement target for the state-owned and specialized commercial banks is fixed at Tk11,758 crore and for the private and foreign commercial banks is fixed at Tk19,153 crore.
Read more: Monetary policy twice a year: BB
The ACD of BB announced the 'Agricultural and Rural Credit Policy’ in July, giving importance to increasing agriculture production considering the Covid-19 pandemic and recent global situation.
In the previous FY-22, all the scheduled banks disbursed agricultural and rural credit of Tk 28,834.21 crore against the target of Tk 28,391 crore, which is approximately 101.56 percent of the affixed target.
The agricultural and rural credits were disbursed among 33, 04,811 persons in a total of which 17, 97,052 women borrowers have received Tk10,829.39 crore.
Besides, 24, 99,945 small and marginal farmers have received around Tk20,182.30 crore from different banks.
Moreover, Tk 19.59 crore was disbursed among 4,073 farmers of char, haor, and less developed areas of the country in the last fiscal year.
Rice, wheat import: Bangladesh Bank asks banks to keep minimum LC margin
Bangladesh Bank has instructed banks to keep a minimum LC margin (cash advance) for importing rice and wheat, in order to keep their market prices at a tolerable level.
Banking regulation and policy department of Bangladesh Bank issued a circular in this regard – with immediate effect – today and sent it to top executives of all banks.
Read more: Bangladesh Bank allows LCs to import commodities for Ramadan
The circular instructed that banks should kept LC margin at the minimum level, depending on the bank-client relationship.
“Rice, wheat and crops prices are seeing an upward trend, owing to the disruption in the global supply chain caused by the Russia-Ukraine war. As a result, the transport cost of global commodities has gone up, affecting prices in the local market,” the central bank circular added.
Read more: Bangladesh wants to buy sugar, wheat, soybean oil from Brazil
To keep the import and supply channel smooth for rice and wheat, Bangladesh Bank asked banks to keep a minimum LC margin.
The central bank also directed banks to take a minimum cash advance from importers while opening LCs for a number of essential commodities in order to keep their prices at a tolerable level during Ramadan.
The demand for edible oil, lentils, onion, spices and dates usually goes up during Ramadan. As a result, the prices of the items also increase.
SSL Commerz gets licence from BB to process offline retail payment
Bangladesh Bank (BB) has given licence to SSL Commerz Limited to process offline payments, through a point of sale (POS) machine to boost a cashless society.
As a result, the SSL Commerz can set up system for processing card payments at retail locations across the country, said Mezbaul Haque, a BB spokesman.
The retail level payment will be possible through using banks’ cards (VISA Card, Master card etc) where the SSL will play a role of processor, he said.
Read: Nagad offers 16% cashback on payment on Daraz
The central bank provides a licence to SSL as Payment System Operator (White Label Merchant Acquiring) first time in the country to introduce an offline payment system.
There are five institutions that are able to handle online payments.
The BB authorized SSL Commerz to make payments under the brand name 'SSL Commerz' within the country subject to the conditions of the Payment Systems Department.
Using this system people can pay at the retail level even for purchasing from an e-commerce platform.
LC margin lowered to ensure stable supply of commodities in Ramadan
Bangladesh Bank (BB) on Sunday asked banks to open letters of credit (LC) for importing essential commodities to ensure stable supply in Ramadan at a minimum margin.
The banking regulation and policy department of the central bank issued a circular in this regard and sent it to the top executives of the scheduled banks with an immediate effect.
The financial sector regulator has issued the directive to regulate price and ensure enough supply of essential commodities such as edible oil, chickpeas, pulses, peas, onions, spices, sugar and dates during Ramadan.
Read more: Monetary policy twice a year: BB
According to the directives, the rate of cash margin to be reserved for import letters of credit (LC) of products.
They issued the directive after recent meetings with trade bodies and the Ministry of Commerce. The businesses leaders have demanded that authorities allow them to open LC easily.
The Bangladesh Bank tightened the LC opening to check unnecessary imports amid the foreign exchange crisis in the domestic market.
Besides, the central banks also looked into the LC prices of goods, and whether it is arriving in the country at a due time or not because Bangladesh Financial Intelligence Unit (BFIU) and the BB in an investigation found that some traders smuggled money in the name of imports.
Read more: General inflation in Bangladesh slightly down to 8.85% in Nov
In some cases, the traders raised the price of goods from 20 percent to 200 percent in January-June this year. As a result, the central bank imposed strict monitoring on the LCs to protect against over-invoicing and under-invoicing.
Monetary policy twice a year: BB
Bangladesh Bank (BB) has again decided to formulate monetary policy twice a year as per the advice of the International Monetary Fund (IMF).
The central bank in a meeting with economists on Monday took the decision. As part of this, the monetary policy will start formulation for the second half of the current fiscal year in January next year, Bangladesh Bank’s chief economist Habibur Rahman, told UNB on Tuesday.
“We have discussed various aspects of macroeconomics including money supply, reserve currency, and interest rates with all stakeholders including economists of the country. The current challenges of the economy were also discussed,” he added.
Read more: General inflation in Bangladesh slightly down to 8.85% in Nov
As per the suggestion of the economists the central bank decided to formulate the monetary policy twice a year, he said.
Monetary policy was announced twice a year since 2006. In 2019, former governor Fazle Kabir announced monetary policy formulation once a year.
Accordingly, he announced the monetary policy for the fiscal year 2019-20 on July 31 of that year. The central bank announced monetary policy only once in the next financial year 2020-21 and 2021-22.
Recently, the International Monetary Fund (IMF) has recommended announcing monetary policy four times a year as a condition of a getting $4.5 billion loan.
Officials said the central bank announces monetary policy based on the data published by the Bangladesh Bureau of Statistics (BBS). And the statistics bureau publishes these data twice a year. As a result, Bangladesh Bank will announce the monetary policy twice a year.
Read more: Business leaders oppose withdrawal of interest cap for sake of investment
Bangladesh Bank will announce the monetary policy for the second half of the financial year in January.
Deposits at IBBL 'completely safe': Bangladesh Bank
In one of his first interactions with the press since officially being appointed as Bangladesh Bank Executive Director and Spokesperson, Md. Mezbaul Haque today said that Islami Bank Bangladesh Limited (IBBL) is very important to the state, and the bank's depositors have nothing to worry about regarding their money.
'Those who have deposited money in this bank are completely safe. Bangladesh Bank guarantees their deposits. But there are many rumors in the market. A good institution cannot be hindered by rumors or otherwise," he said.
Mazbaul said this after a meeting with the Association of Bankers Bangladesh (ABB) at Jahangir Alam Conference Hall of Bangladesh Bank on Sunday afternoon.
Bangladesh Bank fully guarantees customers' deposits at IBBL. However, there is an ongoing investigation into whether there was any irregularity or corruption at the bank.
“We can say what happened only after investigation,” he added.
Regarding ABB's claim that the maximum interest rate of 12 percent on consumer loans has been verbally approved, he said: "We have not issued any circular in this regard." Consumer loan interest rates are the same as in earlier rules. But if a bank talks about 12 percent then it is advance preparation. If so, we will issue a circular.”
In reply to a question on customers withdrawing deposits from Islami Bank, as IBBL is popularly known, he said that the crisis of trust has passed. Depositors are putting money back into the bank.
Besides, the trade deficit has come down a lot, and the foreign exchange crisis will go soon.
The meeting discussed several issues including the facilitation of importers' letters of credit (LCs) to ensure the supply of essential commodities during the upcoming Ramadan.
“This has been discussed with the MDs and CEOs of the banks. Governor Abdur Rouf Talukder has instructed the MDs to provide all kinds of assistance in the import to ensure the supply of necessities during Ramadan,” Mezbaul said.
He further said that the opening of unnecessary LCs is closed. However, it has been suggested to keep the margin rate at a minimum level in the case of import financing of essential commodities during Ramadan.
Bangladesh Bank names Mezbaul Haque as new spokesperson
Bangladesh Bank (BB) has appointed Md Mezbaul Haque as the new spokesperson of the central bank , replacing Md Abul Kalam Azad.
At the same time, the central bank promoted him to executive director from the post of director.
The post of spokesperson is crucial for the central bank, especially during this time when financial turmoil and loan scams occurred in different banks. The spokesperson has to handle tough questions from dozens of print, electronic, and online media reporters.
The absence of a spokesperson was felt acutely in the last couple of weeks. Reporters published reports using different alternative sources. In this context, the central bank appointed Haque as the new spokesperson to improve the situation.
Read more: BB extends tenure of relaxed ‘risk-weighted’ funding in new investment
He has a career in the central bank for the last 26 years. Haque joined Bangladesh Bank as an Assistant Director in 1993 and pursued a bright career as a Central Banker.
He completed his M.Sc. in Statistics from Jahangirnagar University and MBA from IBA, Dhaka University.
In his central banking career, he has worked as Director of the Payment Systems Department and was a change maker in policy and supervision of national payment systems and the Fintech sector.
He also acted as a driving force in the automation of core banking system, ERP, Networking of the central bank, and other related services. Prior to it, he added value with his work in On-site Foreign Exchange and Vigilance Inspection in the Banking sector. He also worked in off-site bank supervision and was a key team member in implementing CAMELS rating and Risk-based Capital requirements in the Banking sector.
Haque is associated with various training and affiliation programs as well. He is a visiting faculty at the Bangladesh Bank Training Academy (BBTA), Bangladesh Public Administration Training Centre (BPATC), Institute of Business Administration (IBA), University of Dhaka and other Private Universities.
Mobile financial service providers can bring remittance directly: Bangladesh Bank
Bangladesh Bank has allowed mobile financial service (MSF) providers to bring inward remittance, in order to increase remittance inflow.
The foreign exchange policy department of Bangladesh Bank issued a circular in this regard on Tuesday.
According to the circular, authorized dealers can make drawing arrangements directly with exchange houses abroad without prior permission from Bangladesh Bank.
Read more: Bangladesh Bank allows export income, remittance through MFS
Authorized dealers are also allowed to go for drawing arrangements without letters of reference or certificates from the Bangladesh embassy or high commission of the respective country.
In order to bring wider flexibility, MFS providers will be allowed to repatriate wage earners’ remittance in association with internationally recognized online payment gateway service providers, banks, digital wallets, card schemes, and aggregators abroad, said the Bangladesh Bank notification.
In this context, MFS providers must have standing arrangements with foreign PSPs to receive foreign currency in their account, and equivalent taka value will be credited to the wage earners’ MFS accounts.
Subsequently, foreign PSPs will provide credit to the designated dealer’s Nostro account (an account that a bank holds in a foreign currency in another bank). After receiving the amount in taka, wage earners’ can use the MFS account from abroad to do all transactions in Taka.
Read more: BFIU suspends cash out from 230 MFS accounts over transactions through hundi
Mobile financial services who want to provide repatriation services have to apply to Foreign Exchange Policy Department by December 31, 2022, with details of proposed arrangements in accordance with the framework outlined above or similar conducive procedures.
Bangladesh Bank will primarily accord permissions, to review arrangements for piloting the initiative.
Bangladesh rolled out MFS in 2011. Since then, the service has seen a boom in the country. At present, 13 MFS operators are providing services to more than 18 crore account holders who are transferring nearly Tk 3,000 crore daily.
Bangladesh Bank forms Tk 5000cr refinance scheme to ensure food security
Bangladesh Bank has formed a refinance scheme of Tk 5000 crore to boost food production and strengthen the country's food security.
Farmers can take loans from this fund at a 4 percent interest rate. They can borrow from this fund for a maximum of 18 months with a grace period of three months.
Bangladesh Bank issued a circular in this regard on Thursday and sent it to top executives of all banks. Farmers can take loans from this fund for crop cultivation, fish, poultry, dairy, vegetables, fruits, and flower firming.
The central bank believes that there is risk of a global food crisis due to the disruption in supply chain and prices of food grains are increasing for this reason.
In such a situation, to ensure the food security of the country, it is necessary to increase production.
Read: No forex crisis from Jan 2023, Bangladesh Bank Gov says
To this end, the central bank has decided to create a refinancing fund of Tk 5000 crore to maintain the flow of loans at low interest in the agricultural sector.
The circular stated that only farmers will get loans from this fund. Small marginal farmers can take a single collateral-free loan up to a maximum of Tk 2 lakh for the cultivation of crops including rice, vegetables, fruits and flowers.
According to the agricultural and rural loan policies of Bangladesh Bank, loans can be disbursed only against the related crop liability in the case of cultivation on a maximum of five acres of land.
Besides, banks can provide loans if it wishes by taking collateral on the basis of the customer-banker relationship.
Read: Bangladesh Bank curtails banks’ power to waive interest on loans
The loan money from this fund cannot be used to adjust the customer's old loan. Loan defaulters will also not get loans from this fund, the circular stated.
The duration of this loan disbursement is set to June 30, 2024, which would be increased if necessary.
No forex crisis from Jan 2023, Bangladesh Bank Gov says
Bangladesh Bank Governor Abdur Rouf Talukder has said there will be no foreign exchange crisis from January 2023, as the country's exports and remittances have become surplus compared to imports.
He said this while speaking on the state of financial sector at the national seminar on LDC Graduation, organized by Economic Relations Division (ERD) in a Dhaka hotel this morning.
Rouf said a Bangladesh Bank investigation found that the country's unusual import volume rose over $8 billion since beginning of this year. After looking into the matter and checking the imported goods, the imports fell to $5 billion, which is usual.
Also read: Forex reserve: Why $10 billion in 2010 was not a worry, but $40 billion today is
"We found in the investigation that some goods were imported with 20 percent to 200 percent over-invoicing. Import volume fell as we checked such incidents," he said.
Bangladesh Bank is also working to check both under-invoicing and over-invoicing, to foreign exchange smuggling, and revenue earning, the Bangladesh Bank governor said.
Also read: Forex reserves drop below $40 billion for the first time since 2020
There is restriction on LC opening, and the central bank is only looking into the LCs' values and actual market value of goods, which will continue to check foreign exchange smuggling through hundi, he said. Planning Minister MA Mannan was the chief guest at the programme. Principal secretary Dr Ahmed Kaikaus, FBCCI president Md Jasim Uddin, ERD secretary Sharifa Khan, also spoke in the function.