The defaulted loans in the banking sector climbed by about Tk10, 954 crore to Tk1,31, 621 crore in the January-March quarter. According to Bangladesh Bank (BB) the defaulted loans increased by 9 percent from three months ago and 16 percent from a year earlier. Despite different initiative of the central bank, defaulted loans is on a rising trend, which is becoming challenging and a headache, the BB Governor said recently in a conference Association of Bankers Bangladesh (ABB).   In comparison, the default loan figure stood at Tk1,20,656 crore in December 2022. Also Read: Market-based interest rate, unified exchange rate from July: Bangladesh Bank The defaulted loan volume surged in post Covid-19 period while the businesses abstained from repaying loan installments citing poor business. During the pandemic the central bank announced a moratorium on regular repayment of loans that helped a large number of borrowers from becoming defaulters. After withdrawal of the moratorium facility, the defaulted loan volume increased by over Tk 1.20 lakh crore in December last year. Former governor of BB Dr. Salehuddin Ahmed told UNB that a group of businesses is becoming defaulters willfully and the central bank has to be strict with such people. Also Read: IMF-Bangladesh Bank meeting prioritizes unified exchange rate and competitive lending rate He said for lack of good governance, some organized groups have taken more money as loans than their ability, which is a reason behind surge in defaulted loans.

Bangladesh Bank and Islami Bank Bangladesh Limited signed an agreement for participating in the 'Green Transformation Fund’ (GTF). Bangladesh Bank formed this fund of Tk 5,000 crore from its own in order to accelerate the ongoing environment-friendly transformation and expansion of export and production-oriented industries. Also read: IBBL conducts workshop on preventing money laundering and terrorism funding Abdur Rouf Talukder, Governor of Bangladesh Bank, handed over a copy of the agreement to Muhammad Qaisar Ali, Additional Managing Director of Islami Bank. Kazi Sayedur Rahman, Deputy Governor, Md. Khurshid Alam, Executive Director, and Chowdhury Liakat Ali, Director of the Sustainable Finance Department, the central bank along with top officials of both institutions who were present on the occasion, a press release said.  

The Average daily transaction of mobile financial service (MFS) has crossed Tk3200 core and its volume shows a growing trend, said the latest report of Bangladesh Bank (BB). Analysing the data of 13 MFS in the country the BB report said that MFS gets popular in Bangladesh due to convenient transaction opportunities and payment facilities. The BB has released the updated statistics of MFS with information on 13 service providers. It has been seen that in the first month of this year January, customers transacted Tk1.05lakh crore. This figure is the second-highest recorded transaction on mobile so far. “There is no fee to open an account. Money can be sent everywhere instantly. At the same time, many new services have been added including payment of shopping bills, and loan facilities. These are contributing to an increase in the number of users,”  said Dr Salehuddin Ahmed, former governor of the BB. The central bank officials say inward remittances are also coming through MFS. As a result, people's interest and dependence on MFS are increasing. The volume of transactions with customers is also increasing because of multifold uses of this service. According to the BB, in January on average daily transactions through MFS was Tk3245 crore, excluding Nagad mobile finance operator as this MFS provider is not included under the BB financial report. If the Nagad transaction is added, then the MFS’ daily transaction volume would cross Tk4200 crore. The BB report revealed that 60 percent of the transaction was money deposit and windrowing while 40 percent was digital payment in January 2023. The number of customers is increasing day by day with transactions in mobile banking. Currently, 13 banks are providing mobile banking services under different names including Bkash, Rocket, U Cash, My Cash, and Sure Cash. At the end of January 2023, the number of customers registered in mobile banking stood at 19.41 crore. And the number of mobile banking agents has reached 15.69 lakh till January.  

Bangladesh Bank (BB) is going to announce a new monetary policy on Sunday in line with the advice of the International Monetary Fund (IMF). Bangladesh requested the IMF for a loan of $4.5 billion last July, and the global lending agency agreed to give it to Bangladesh subject to conditions. Before lending, the IMF gave several conditions for reforming Bangladesh’s financial sector including setting a monetary policy for every quarter of a fiscal year. In line with the IMF conditions, the central bank has decided to announce a monetary policy twice in a year, which was announced for a single time during a fiscal year under former Bangladesh Bank Governor Fazle Kabir. The BB announced the new monetary policy for the remaining period of the current fiscal year, which will be very challenging as inflation and liquidity crisis are mounting, experts say. Former BB Governor Dr Atiur Rahman told UNB that the economic situation is changing frequently due to variables and volatile geopolitical situations and financial conditions involving Russia-Ukraine war. Read: Target trade-based capital flight, not genuine consumption through imports: Economists The central bank’s decision to return to the announcement of the monetary policy twice a fiscal year is a good initiative, he said. However, it should be kept under close watch to readjust the policy instruments as the market conditions are so unstable, he said. Dr Atiur said curbing demand for goods and services and increasing supply lines are necessary tools for controlling inflation. This is a challenging job given the fast changing external and domestic financial conditions, he said. The central bank should remain cautious about the multiplier effects of creating more reserve money as the private credit growth and public borrowing level have already reached their targeted limits, he said. Indeed, containing inflation should remain the top objective of the upcoming monetary policy as the low and middle income groups of people are in troubled water due to this, said Dr Atiur, who also teaches at the Dhaka University. Former IMF official and economist Dr Ahsan H. Mansur told UNB that the monetary policy cannot bring any impact as the interest rate cap is fixed at maximum 9 percent. Policy interest rate rising will bring a little change in the economy while lending interest rate is a big tool of monetary policy to control money supply and reducing consumption’s demand. With the fixed interest rate, the monetary policy cannot make any change in the economy, he said. Read: Bangladesh Bank raises dollar exchange rate by Tk 1 to Tk 100 Mansur said that the central bank is bringing high power money (HPM) in the market, which will have multiple impacts, and the exchange rate of domestic currency (taka) will also fall then. [High powered money or powerful money refers to that currency that has been issued by the central bank] While the exchange rate will fall, inflation would go up and liabilities of external payment would definitely increase, he said. The new monetary policy will be announced as per the IMF's wishes. As a part of lending, a team of IMF held a series of meetings in Dhaka from October 26 to November 9. The IMF team led by Rahul Anand (Bangladesh’s mission chief) met with the Bangladesh Bank, the Ministry of Finance, the Energy Division, BBS, the planning ministry, BSEC, NBR, and BERC to know the latest economic situation. As part of this, the IMF DMD Antoinette Monsio Sayeh is arriving in Dhaka to review the update and finalize the loan deal with Bangladesh. The BB is announcing monetary policy during her Dhaka visit starting on January 14. A team led by Bangladesh Bank Governor Abdur Rauf Talukder met with the IMF on the side-lines of the World Bank-IMF annual meeting in Washington last October. After the meeting, the governor told reporters that Bangladesh will get the loan from the IMF.

Bangladesh Bank (BB) has simplified documentary formalities for opening Non-Resident Investor’s Taka Accounts (NITAs). The Foreign Exchange Investment Department (FEID) issued a circular on Sunday and sent it to all authorised dealers (ADs) in Bangladesh for the immediate execution of the directive. The circular stated that commercial banks are using different sets of documents for opening NITAs, which may create ambiguity among the applicants. In order to bring uniformity in opening NITAs in the name of NRBs, authorised dealers are advised to obtain specific documents and information from applicants, according to the circular. The BB has specified documents for opening NITAs in order to simplify the documentation. As per the new directive, the documents require applicant's valid passport copy, applicant’s photograph, applicant’s proof of address, reliable source of income of the applicant, nominee or authorised person’s passport or National Identity Card (NID) copy,  nominee or authorised person’s photograph. Also Read: Bangladesh Bank heist: Probe report submission deferred again to Feb 14 For opening NITAs in the name of non-resident foreign nationals or institutions, authorised dealers are asked to fix and distribute a unified set of documents to their branches at home and abroad to comply with the existing rules and regulations. Banks are requested to advise all AD branches and Central Processing Centers (CPCs) for meticulous compliance of the instructions. The ADs have to follow the tools of the Guidelines for Foreign Exchange Transactions 2018 and instructions issued earlier by the Bangladesh Financial Intelligence Unit (BFIU) to stop money laundering and terror financing, the circular said.    

Despite criticism of mismanagement and loan scams, the Islami Bank Bangladesh Limited (IBBL) has secured a top position in making operational profit in 2022, according to a Bangladesh Bank report. The IBBL has now the highest deposit holding in the country. The depositors rushed to withdraw their money from the bank amid reports of loan scams in last November and December. Banks have prepared financial reports based on their branch office information on disbursed loans and their collection update. The BB report released late Saturday found that the operating profit of most of the banks increased in 2022, compared to the same period of the previous (2021) year. Also Read: Deposits at IBBL 'completely safe': Bangladesh Bank According to the report, IBBL is at the top among the banks in gaining operational profit. In 2022 (January-December), the bank made an operating profit of Tk 2,646 crore. In the previous year in 2021, the profit of the bank (IBBL) was Tk 2430 crore. In 2020, it was Tk 2350 crore. Among other banks, in 2022, the state-owned Sonali Bank made an operating profit of Tk 2,520 crore. In 2021, it was Tk 2100 crore. Also Read: IBBL reaches Tk 1.40 trillion deposits, 1.16 trillion investments: IBBL MD But operating profit is not the actual profit of the bank. Net profit will be calculated after saving provision or safety stock at fixed rate against debt from operating profit and payment of corporate tax. Net profit is the actual profit of the bank. State-owned BASIC Bank could not make operating profit in 2022. On the contrary, they incurred a loss of Tk 371 crore; Last year also the loss was Tk 80 crore. Apart from this, Citizen Bank has made an operating profit of Tk 2.54 crore in six months. The bank started operations in mid of 2022. Economist and former adviser of caretaker government Dr. ABM Mirza Azizul Islam told UNB, "Bangladesh Bank is giving special benefits to the defaulters and showing the interest of such loan to the income sector. In this case, the financial report of the bank is being shown well on paper.” Read More: BB disburses Tk 4000 crore as liquidity support to 5 Islami banks He also said, "Political commitment and goodwill are needed to restore order in banks." According to the data of the Central Bank, in the quarter of September 2022, the defaulted loan amount in the banking sector of the country has increased to more than Tk1.34 crore, which is 9.36 percent of the total loan.

Bangladesh Bank (BB) on Wednesday (December 21, 2022) relaxed term loan repayment policy for non-bank financial institutions (NBFIs) after relaxing such policy for banks’ borrowers. The borrowers would not be declared as defaulters if at least 50 percent of the installments are paid as of September, according to a notice of the central bank. The rest of the installments could be repaid on a monthly or quarterly basis within one year after the current repayment schedule of the loan. Read more: BB relaxes ICRRS to facilitate businesses’ loan The loan repayment relaxing policy would also be applied for the funding in investment of shariah-based financial institutions. If borrowers fail to repay the loans, lease and investments within the new repayment schedule, they would be classified as per rules, the BB notification said. The circular stated that the NBFIs are facing difficulties in realising installments on time as the cash flow to SMEs and large enterprises has been affected by the Russia-Ukraine war and global recession. Read more: BB extends tenure of relaxed ‘risk-weighted’ funding in new investment

Bangladesh Bank on Wednesday disbursed Tk 4000 crore as liquidity support to five Islami banks to meet ongoing liquidity crisis, sources in the central bank said. Five Islami banks had earlier applied to the Bangladesh Bank, seeking liquidity support. They are Islami Bank Bangladesh Limited, Union Bank, Social Islami Bank, First Security Islami Bank and Global Islami Bank. The five banks belong to S. Alam group. Central bank’s spokesperson Mezbaul Haque told UNB that it was decided to pay Tk 4,000 crore against Sukuk bond facility. Read more: Bangladesh Bank curtails banks’ power to waive interest on loans Islami banks can take more money, if required, under Sukuk bond facility, he said. While BB Governor and Managing Directors of five Islami banks have denied the liquidity crisis in their respective banks, the liquidity shortage is still hampering the daily transaction, sources said. On Monday, the Islami Bank Bangladesh Ltd’s  deposits fell to Tk1,46,964 crore. On October 31, the deposit of the bank was Tk1,53,272 crore. Earlier, IBBL had been lending money to all Islami banks for so long. But, IBBL is now going to other banks for money, a deputy managing director of the bank told UNB. After the recent loan scam over Tk34,000 crore, a group of people withdrew their deposits from the bank, which is also another reason for the liquidity crisis, he said preferring anonymity. Read more: Default bank loans surge to record Tk 1.25 lakh crore in Bangladesh: BB In this context, five Islami banks have suddenly faced a liquidity crisis and are struggling to meet demand for regular transactions. Officials say the central bank has taken the special initiative to lend money to these banks to keep them afloat. Bangladesh Bank has launched an investigation to look into the scam. The High Court separately has asked for clarification from S Alam group over the scam.  

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.

The country's business leaders have urged against lifting the cap on interest rate arguing that it will affect investment. They also agreed with the Bangladesh Bank governor who insists that it is not the right time to lift the limit. Speaking at a conference here on Thursday BB Governor Abdur Rouf Talukder said they are waiting for a good time to withdraw the interest cap. Md Jasim Uddin, president of Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) opposed any increase in the rate.  "If the interest rate suddenly increases, the investors will plunge into trouble. The manufacturing sector investors need to sell their products in a competitive global market, he said on Friday. Read more: BB extends tenure of relaxed ‘risk-weighted’ funding in new investment He told UNB that the interest rate is still high in Bangladesh compared with many other competitive countries, which will have to be taken into consideration before raising the interest rate. Executive president of the Bangladesh Knitwear Manufacturers Association (BKMEA) Mohammad Hatem said entrepreneurs are suffering losses due to the gas crisis. In this situation increasing interest rate will not be investment friendly. He said Bangladesh has to decide whether it wants to bring in investment or not. Higher interest rate will create uncertainty in many sectors, already suffering from the pandemic and the Russia-Ukraine war. The issue of the interest cap came up Thursday in the opening session of a three-day annual development conference organised by the Bangladesh Institute of Development Studies (BIDS) at a city hotel.  Read more: BB revises cluster credit guidelines to boost small enterprises Speaking at the event BB governor informed that the central bank has already relaxed the interest rate on consumer loans. Regarding the foreign currency exchange rate, Rouf said the BB will allow the market force to determine it.