The Bangladesh Bank (BB) will announce its next monetary policy on Wednesday for the second half of the fiscal year 2023-24 to tame inflation and ease exchange rate pressure. As part of the preparation, the draft of the monetary policy was approved at the central bank board meeting on Sunday. Bangladesh Bank authorises 90-day buyers' credit to import essentials for Ramadan Officials who attended the board meeting told UNB that the exchange rates would not be real market-based in the upcoming monetary policy as the foreign exchange market is not stable yet. The government policymakers instructed to keep the market under control by following the crawling peg system. Bangladesh Bank unveils SMART-derived interest rates for January “Crawling pegs help control currency movement, especially when there are threats of devaluation. The purpose of crawling pegs is to provide stability,” said an official of the BB involved in the preparation of the monetary policy statement. The monetary policy will focus on controlling the growing inflation, which has been a burning issue over the last eight months. Bangladesh Bank dissolves National Bank’s board Economist and co-founder of PRI Dr Sadiq Ahmed, Director General of the Bangladesh Institute of Development Research (BIDS) Binayak Sen, and Chairman of the Economics Department of the Dhaka University Masuda Yasmin are in the monetary policy committee.
The consumer loan (retail loan) receivers have to pay the higher 13 percent interest starting from the new year, while other borrowers have to pay almost 12 percent, at 11.89 percent, in interest to the banks. Bangladesh Bank (BB) announced the interest rates for January in accordance with the 'SMART' method it introduced since july.. The method on which the loan interest rate is now determined is known as 'SMART' or 'Six Month Moving Average Rate of Treasury Bills'. Bangladesh Bank informs this rate at the beginning of every month. The six-month average interest rate (smart rate) on 182-day treasury bills was 7.10 percent in July this year, 7.14 percent in August 7.20 percent in September, 7.43 percent in October, 7.72 percent in November, and lastly in December smart rate increased to 8.14 percent. According to the rules of the BB, banks can give loans in January by adding margin or interest at a maximum rate of 3.75 percent with the 'smart' rate of December. On the other hand, non-banking financial institutions can add margin at the rate of 5.75 percent.
The interest rate on loans from banks in October has been set at 10.20 percent as per Bangladesh Bank’s formula. The method, based on which the interest rate is now being determined, is known as “SMART” or “Six Months Moving Average Rate of Treasury Bills.” Bangladesh Bank informs of this rate at the beginning of every month. The new interest rate determining method was introduced on July 1, 2023. Earlier, from April 2020, the maximum interest rate on bank loans was 9 percent. With D grade Bangladesh Bank governor fares poorly in global ranking Accordingly, in the current month of October, banks can take a maximum of 10.20 percent interest on large-scale industrial loans. On the other hand, non-banking financial institutions (NBFIs) can charge interest against loans by adding a margin at a maximum rate of 5 percent. Their maximum interest rate will be 12.20 percent and 9.20 percent on deposits. However, the loan interest rate set in October cannot be changed within the next six months. This will make the highest interest rate on agricultural loans in September 9.14 percent. An additional 1 percent supervision charge can be levied on CMSME, personal, and car purchase loans. Bangladesh Bank introduces dollar booking policy for max 1 year Bangladesh Bank publishes the 6-month average interest rate of 182-day treasury bills from January this year. Last January, the smart rate was 6.96 percent. After that, it gradually increased every month and reached 7.13 percent last May. But in June and July, it decreased slightly to 7.10 percent. However, it increased to 7.14 percent in August and reached 7.20 percent in September. On the advice of the International Monetary Fund (IMF), Bangladesh Bank introduced a market-based interest rate system. Despite Bangladesh Bank Governor’s decision to not raise exchange rate before election, dollar rate hiked again The interest rate cap of 9 percent was imposed from April 2020 to facilitate traders. A research report by the central bank also recommends withdrawing or increasing the interest rate limit. But Bangladesh Bank was silent as the government did not give positive consent. One of the conditions of IMF’s USD $4.7 billion loan is to make the interest rate market-based. In light of that condition, the new interest rate system was introduced.
Despite Bangladesh Bank Governor’s decision to not raise exchange rate before election, dollar rate hiked again
Bangladesh Bank decided not to bring major changes in the US dollar exchange rate before the upcoming national election. The central bank’s Governor Abdur Rouf Talukder informed of this decision at a meeting with managing directors and CEOs of banks recently. At that meeting, the governor said that Bangladesh Bank will not make any policy changes regarding the dollar market or the foreign currency market before the national election. Despite this decision, the dollar rate has been raised by Tk .50 or 50 paisa in all cases. The price of the dollar has increased to Tk 110 in case of export and expatriates’ income, and to Tk 110.50 in case of import. Read: Selling dollars at higher prices: What is Bangladesh Bank’s action against treasury heads of 10 banks?The dollar rate was hiked again yesterday, which is effective from today. The dollar crisis in the country has become evident since March 2023, following the downturn caused by the Russia-Ukraine war. To deal with this crisis, Bangladesh Bank fixed the dollar price at the beginning. This worsened the crisis. Later, last September, Bangladesh Bank withdrew from determining the price of the dollar. Read: Bangladesh Bank seeks explanations from 13 banks for selling dollars at higher prices This responsibility has been given to the Association of Bankers, Bangladesh (ABB) and Bangladesh Foreign Exchange Dealers’ Association (BAFEDA). Since then the two organizations have been jointly setting the dollar price for export, remittance earnings, and payment of import liabilities. Read more: Dollar goes off kerb market after central bank-led raids of money exchanges
The Bangladesh Bank (BB) has sought an explanation from 13 banks for selling US dollars at high prices. The summoned banks belong to the private sector, including a Shariah-based Islami Bank. The central bank confirmed the information on Monday (September 04, 2023). The letter was sent to different banks on Sunday (September 3) and the banks have been asked to provide an explanation in this regard within the next five working days. Also read: Dollar goes off kerb market after central bank-led raids of money exchanges The bank’s Executive Director and Spokesperson Md. Mesbaul Hoque told UNB that the trading licences of seven money changers have been suspended for selling dollars at higher prices. An explanation has been sought from 10 more money changers following similar complaints. In addition, banks are also being monitored. Punitive action will be taken if concrete evidence is found, he said. In August, the maximum import price of Tk109.5 was set, but some banks sold dollars up to Tk117, and bought it at Tk116. Also read: Bangladesh Bank working to normalise inflation and dollar crisis despite geopolitical challenges Dollar transactions are inspected by Bangladesh Bank's Financial Integrity and Customer Service and Foreign Exchange Inspection Departments. Recently, the central bank sent for inspection due to the increase in the price of the dollar. After collecting the information, the issues of dollar sales are being verified. In 2021, the central bank ordered to spend Tk 500 crore on the CSR sector from the profits of 12 banks due to excess profit. There were two foreign-owned banks and 10 private sector banks on that list. The dollar crisis in the country has become evident since March last year after the start of the Russia-Ukraine war. To deal with this crisis, the central bank fixed the dollar price at the beginning, but the crisis continued. Also read: Bangladesh Bank introduces 'market-based' dollar exchange rate with rate cap
Inflation continues to persist at a high level in Bangladesh, affecting the lifestyles of common people severely as they struggle to survive on limited earnings in the aftermath of the Covid-19 pandemic. Figures released on Sunday showed general inflation remained virtually unchanged at 9.69 percent on a point-to-point basis for the month of July, having been 9.74 percent in June, said the Bangladesh Bureau of Statistics (BBS). The Ministry of Finance and Bangladesh Bank (BB) have blamed the external factors for inflation while they failed to adopt the right fiscal and monetary policy measures, said economists. Read: General inflation virtually unchanged at 9.69 percent in July Talking with UNB former governor of the Bangladesh Bank Dr Atiur Rahman said Bangladesh could not go for adequate tightening of the monetary policy in time to rein in inflation while the US Federal Reserve continues to raise policy rates persistently. He said, the Reserve Bank of India (RBI) has also been raising policy rates consistently, while agriculture production rising consistently to strengthen the supply side. The market imperfections caused by growth curtail the root cause of higher food inflation and other necessities. The depreciation of the Taka had also been raising imported inflation at these times. The rent-seeking on the roads by some quarters besides higher transport prices due to readjusted fuel prices may have also been fuelling inflation from the supply side, Dr Atiur said. Read: Bangladesh Bank working to normalise inflation and dollar crisis despite geopolitical challenges He suggested the ways out may be to further tighten monetary policy and reduce public expenditure to reduce public borrowing from the central bank to align fiscal policy along with tighter monetary policy. The competition commission and Consumer Protection Authority must wake up to break the curtails. The roads should also be made rent-free to facilitate smooth flows of goods and daily necessities. The exchange rate must be stabilized at a single rate and hurdles for small entrepreneurs in opening letters of credit with adequate dollar support could ensure smooth supplies of imported goods for consumption and raw materials for continued production of goods and services could also help stabilize the prices of the same. Read: Ex-governors optimistic MPS can claw back inflation, implementation the key The regulators should keep on communicating well in anchoring the inflation expectations so that inflation does not get embedded in consumer psychology. Dr Zahid Hussain, the former lead economist of the World Bank's Dhaka office, told UNB that no measure has been taken to rein the inflation so far. He said the reigning repo rate is not affecting the market, and the increase of 1.0 percent in interest rate from July is not making any impact on the money market. He pointed out that printing currency to meet government expenditures is also fuelling inflation. Read: CPD dismisses budget's projections on growth, inflation, revenue collection Dr Zahid said there is no control over pricing of essentials products in the market, and businesses are making hefty profits showing supply-side uncertainty in the wake of the foreign exchange crisis. Dr Ahsan H Mansur, former economist of IMF and executive director of Policy Research Institute (PRI), told UNB that the BB printed more currency (taka) in a single year than it had in the last 50 years, which brought additional inflationary pressure. Denying the BB claim of printing money as a regular matter that has no impact on inflation, Mansur said printing money against the US dollar, which commercial banks sold to the central bank is a different issue. Explaining the situation, Dr Mansur said despite the dollar crisis, the printing of high-speed money (printing currency) is continuing, which obviously brings impact on higher inflation, resulting in Bangladesh’s inflation rising while Sri Lanka and other Asian countries’ inflation is falling.
Bangladesh received inward remittances of $1.97 billion in July, the first month of Fiscal year 2023-24, which saw a decline on year-on-year basis by 5.86 percent. According to Bangladesh Bank (BB) data, the expatriates sent $2.19 billion remittance in June last month of FY23, saw a fall by 10.27 percent in July. Despite the fall in remittance inflow in July, the central bank officials described it as better than other months. $21.61 billion remittances in FY23, second highest ever Md Sarwar Hossain, a spokesman of the BB, told UNB that the expatriates sent a higher volume of remittances in June thanks to Eid-ul-Azha. Bangladeshi expatriates sent $21.61 billion in remittance in the last fiscal year FY23 (June-July). In the previous FY it was $21.03 billion. Remittances pick up pace ahead of Eid-ul-Azha
Bangladesh Bank has released a recruitment circular for the post of Assistant Director (AD). This time Bangladesh Bank will hire 100 Assistant Managers. Those who haven't applied yet, hurry up. The application period ends next Thursday (July 6). Qualifications required by candidates to apply to Bangladesh Bank: A four-year Bachelor (Honours) or Master's degree in any subject from a recognized university can apply for the post of Assistant Director (General). Must have first division/class or equivalent CGPA in at least two of SSC and above level examinations. No third category will be accepted at any stage. Candidates, whose results of post-graduation or four-year graduation examination have been published or will be published on or before July 6, can apply. Read more: 10 Ways You Can Improve Your English Pronunciation Bangladesh Bank Application Age Limit: Applicants should be between 21 to 30 years of age. However, in case of children of freedom fighters/martyred freedom fighters and disabled candidates, the maximum age limit is 32 years. Bangladesh Bank Assistant Director Pay Scale: Appointed persons will be given salary in the scale of Tk 22,000-53,060 as per National Pay Scale 2015 and other benefits as per bank rules. Bangladesh Bank recruitment process: According to the notification, the candidates have to participate in preliminary, written and oral examination. The pass number of preliminary examination will be decided by Bangladesh Bank. In this case, the decision of Bangladesh Bank will be final. Visit this link (https://erecruitment.bb.org.bd/career/may302023_bb_18.pdf) for details about recruitment. Read more: DESCO Job Circular: 122 people will be recruited in 3 category positions
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.