Bangladesh’s foreign exchange reserves continued to fall with the usable reserves standing now at USD $ 15.82 billion as per IMF guideline, according to banking sources familiar with the development on Tuesday (November 28, 2023). During the period of the COVID-19 pandemic two years ago, the reserves had soared to $48 billion, thanks to greater inflow of remittances amid reduced import demand. The reserves started decreasing since the eased import restrictions and impact of the Russia-Ukraine war. Also read: Forex reserves below $20 billion after paying ACU The latest foreign exchange report of Bangladesh Bank (BB) revealed that the country's reserves on 23 November stood at $19.52 billion based on the IMF formula (Balance of Payments and International Investment Position Manual) or BPM6. As per the formula, the net reserves will be $3.7 billion less than the total reserve amount, the BB sources said. The BB spokesperson Mezbaul Haque in this regard told UNB that foreign exchange from reserves is spent and deposited every day. Also read: IMF relaxes forex reserve and revenue targets for $4.70 billion loan It is a continuous process of a country, he said advising common people not to panic at the news of decreasing foreign exchange. In July, Bangladesh started calculating its foreign reserves according to a formula suggested by the International Monetary Fund – BPM6. Following the new calculation, Bangladesh's gross foreign exchange reserves that time dropped by $26.44bn to $23.56bn. Also read: Bangladesh stands on the edge of deep ditch before the polls: Dr Debapriya
In Bangladesh, the micro, small, and medium enterprises (MSME) sector faces a financing gap of $2.8 billion, according to IFC, a member of the World Bank Group. With nearly 10 million SMEs contributing to about 25 percent of the country's GDP, enhancing SME financing is key to boosting economic growth, it said on Tuesday (November 28, 2023). To explore the various aspects of financing for small and medium enterprises (SMEs) in Bangladesh, IFC, in association with Bangladesh Bank and the government of Norway, organized a conference in Dhaka. Read: BTCCI to promote Bangladesh as 'gateway to South Asia' for Thailand Experts, policymakers, and stakeholders from across the world shared their insights to help foster a resilient and inclusive environment for SME financing in the country. The event touched upon the partnership between IFC and Bangladesh Bank, results of an impact assessment study carried out on women-owned SMEs, next-generation SME financing trends, and global best practices in SME financing. It also addressed the challenges and opportunities in SME financing, identifying solutions and innovations in light of global SME finance developments. Highlighting the joint efforts of IFC and Bangladesh Bank in SME financing, the conference showcased initiatives, including developing the country’s first Credit Guarantee Scheme (CGS), reforming an SME finance policy, and strengthening the sector’s capacity. IFC’s impact study on CGS, supported by the Norwegian Embassy, revealed that the number of first-time borrowers receiving loans in cottage, micro, and small enterprises and the average ticket size of the loans for women-owned micro and small enterprises was statistically significantly higher after the launch of CGS than ever before. Women entrepreneurs who received CGS-backed loans reported that it helped their businesses survive amid crises and provided new impetus to thrive. Speaking at the conference as the chief guest, Governor of Bangladesh Bank, Abdur Rouf Talukder, said that recognizing that cottage, micro, small and medium enterprises (CMSMEs) are the backbone of society, Bangladesh Bank is spearheading several initiatives to mainstream medium and small businesses into the financial landscape. "This includes establishing a new and dedicated Credit Guarantee Department that has already piloted an online platform—the Credit Guarantee Information Management System—to help lodge applications seamlessly. We are at an important crossroads of economic development and must ensure that everyone, especially those who often get left out, can be part of the financial picture," he said. Read: BGMEA chief for stepping up economic diplomacy to boost Bangladesh-US trade Deputy Governor of Bangladesh Bank, Abu Farah Md. Nasser, said a strong SME sector is akin to a superpower for creating jobs, export earnings, and productive proficiency. "Now more than ever, we need to work together to enhance credit guarantee schemes, tap into alternative databases for SME lending, and ultimately fast-track CMSME finance in Bangladesh. We want to bridge the gap between rich and poor, make sure men and women have equal opportunities, and boost economic growth across the country," he said. Martin Holtmann, IFC Country Manager for Bangladesh, Bhutan, and Nepal, said Bangladesh is rapidly accelerating its economic development, and creating more and better jobs is a priority they share with the country as long-term partners since 1985. "IFC’s collaboration with Bangladesh Bank to develop SME solutions highlights a milestone in achieving financial inclusion and economic advancement and underscores the transformative power of partnerships, innovation, and our collective commitment to progress. We aim to increase access to financial products that are affordable, sustainable, and responsive to risks while developing institutional, operational, and policy frameworks to ensure the benefits of economic growth permeate every facet of this dynamic nation,” he said. Espen Rikter-Svendsen, Ambassador of the Royal Norwegian Embassy in Bangladesh, said, “Lack of access to finance is the biggest impediment to the growth of SMEs in Bangladesh, particularly for the women-headed SMEs." Recognizing and addressing the challenges faced by SMEs and women entrepreneurs is not just a matter of economic significance but also a step towards fostering gender equality, he said. "It is essential to create an environment that facilitates easier access to finance for SMEs, encourages more women to take on entrepreneurial roles, and provides them with the necessary financial resources to succeed," said the ambassador. Other participants included Qamar Saleem, CEO of the SME Finance Forum; Abdoulaye Seck, Country Director of the World Bank for Bangladesh and Bhutan; and managing directors and CEOs of leading banking and non-banking financial institutions in Bangladesh. The event also included technical sessions and panel discussions focusing on global best practices and a future roadmap to accelerate the SME financing market in Bangladesh. Read more: BGMEA urges Proparco to provide SMEs with the low-cost fund, grant
The Board of Directors of the Bangladesh-Malaysia Chamber of Commerce and Industry (BMCCI), led by President Syed Almas Kabir, meet with Deputy Governor Kazi Sayedur Rahman of the Bangladesh Bank to discuss key issues affecting the Bangladesh and Malaysian business community. The meeting was attended by Senior Vice President Shabbir Ahmed Khan, Secretary General Md. Motaher Hoshan Khan, and Director Mahbubul Alam Shah. Feni woman receives 200pc cash voucher buying Walton fridge During the meeting, President Syed Almas Kabir shed light on the challenges faced by general clients in cross-border e-commerce refunding. He also emphasized the importance of streamlining the remittance flow through proper banking channels from Malaysia. For effective management of these issues, BMCCI expressed its interest in partnering with Bangladesh Bank to overcome the challenges. Senior Vice President Shabbir Ahmed Khan highlighted the significance of promoting bilateral trade with Malaysia and urged for the implementation of appropriate policies to attract foreign direct investment (FDI). Secretary General Md. Motaher Hoshan Khan addressed the trade gap with Malaysia and emphasized the need to address policies that restrict export volumes. Islami Bank holds Shari’ah Compliance discussion in Banking Operations In response, Deputy Governor Kazi Sayedur Rahman expressed gratitude to the BMCCI delegation for raising these important issues. He requested the chamber to provide pinpointed proposals for review, assuring them that the Bangladesh Bank will handle these matters with utmost importance. The Deputy Governor also emphasized the importance of attracting remittance by providing services such as mobile applications for ease of money transfers, rather than relying solely on incentives. He urged BMCCI to focus on increasing export volumes and diversifying the exportable product to minimize the trade gap effectively. What to Wear for a Job Interview At the end of the meeting, BMCCI delegates echoed their promises to remain committed for fostering a business-friendly environment and enhancing economic cooperation between Bangladesh and Malaysia. The chamber will continue to work closely with Bangladesh Bank to address the challenges faced by businesses and promote bilateral trade growth.
1 USD at Tk 120: Individual traders selling dollars through networks, money changers say they’re empty-handed
Public dependency on the open market for US dollars has increased, where per dollar is being sold at Tk 120-121. The dollar crisis in the kerb market became more acute after Bangladesh Bank and law enforcers raided money changers with allegations of higher exchange rates. In this situation, a number of individuals are selling dollars, through their networks, at Tk 120-121 per dollar. They are becoming the lone source of dollars for those who are traveling abroad for treatment, education, and other emergencies, sources said. Read: Bangladesh Bank introduces dollar booking policy for max 1 year Jamal (not his real name), owner of a money exchange house in Dhaka’s Motijheel area, told UNB today that they cannot buy a dollar even at Tk 115. “How can we possibly sell per dollar at Tk 113.30?” — he asked. Many other money changers and individual floating traders of the US dollar remain idle due to the supply crisis of the currency. In the span of a month, the exchange rate of the US dollar in the kerb (open) market reached Tk 120-121 per dollar from Tk 112. The central bank and law enforcers recently raided money changers and asked to sell per dollar at the previous rate of Tk 113.30. Read: Selling dollars at higher prices: What is Bangladesh Bank’s action against treasury heads of 10 banks? Market insiders said there is a severe shortage of US dollars in Bangladesh. The price of foreign currency is increasing uncontrollably and the value of taka is falling. As a result, the price of the dollar in the kerb market has crossed Tk 120. Talking to various exchange houses and those involved in dollar trading, UNB learnt that most money changers do not have dollars. Secretary General of the Money Changers Association of Bangladesh, Sheikh Helal Sikder, said that Bangladesh Bank has set the dollar price for money changers. In this case, the buying rate is Tk 111.80 and the selling rate is Tk 113.30. Read: Dollar goes off kerb market after central bank-led raids of money exchanges “No one is getting dollars at this price, so the money changers are now sitting empty-handed,” he said. Replying to a query about the dollar shortage in the kerb market, Bangladesh Bank’s Executive Director and spokesperson, Mesbaul Hoque, told UNB that dollars are being traded, but not everyone is selling them.
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.
Bangladesh Bank has introduced a US dollar booking policy for maximum 1 year, at a higher rate, to meet future requirements. According to the new rules, after one year, the bank will be able to charge a maximum of 5 percent more than the current dollar price with a 'SMART' rate. The central bank issued a circular in this regard on Sunday. Despite Bangladesh Bank Governor’s decision to not raise exchange rate before election, dollar rate hiked again Under the new rules, dollars can be kept with bookings for up to one year. For this, the buyer has to pay extra. It will be determined by the method with which loan interest rate is determined now. Currently, the dollar price for import is fixed at Tk 110.5. If anyone wants to book a dollar for future, he/she will have to pay Tk 123 per dollar after one year. Selling dollars at higher prices: What is Bangladesh Bank’s action against treasury heads of 10 banks?
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
Selling dollars at higher prices: What is Bangladesh Bank’s action against treasury heads of 10 banks?
Bangladesh Bank is working to take disciplinary action against the treasury heads of 10 commercial banks over selling US dollars at prices higher than the fixed rate. The central bank sent letters to these banks mentioning the offence with instructions of punishment. Bangladesh Bank stated in the letter that the treasury chief cannot ignored the responsibility of such offence. Read: Bangladesh Bank assures businesses interest rate won't go too high Banks’ treasury departments handle the demand and supply of money and dollars. In some banks, there is also an officer, of deputy managing director rank, as the head of the treasury department. According to information from various sources, the 10 concerned banks are: Mercantile Bank, Premier Bank, BRAC Bank, Madhumati Bank, Midland Bank, Exim Bank, Social Islami Bank, Al-Arafah Islami Bank, Shahjalal Islami Bank and Trust Bank. Read: Bangladesh Bank relaxes rules for EFPF loan payment Sources said this number of banks may increase. In August last year, Bangladesh Bank removed the heads of the treasury departments of six domestic and foreign banks based on the same complaint. But in the end, the regulatory body could not uphold that decision. Chairman of Association of Bankers, Bangladesh (ABB) and Managing Director (MD) of BRAC Bank, Salim RF Hossain, said that this is a bilateral issue between the central bank and the respective scheduled banks. “Such letters come regularly. Therefore, I do not want to make any specific comments on this issue,” he said. Read: Bangladesh Bank seeks explanations from 13 banks for selling dollars at higher prices
Businesses have sought the US dollar at a fixed rate for import LCs and not to increase the interest rate by much, to maintain a sustainable business environment in the country. The president of the Federation of Bangladesh Chamber of Commerce and Industry (FBCCI) Mahbubbul Alam on Monday placed these requests to Bangladesh Bank (BB) Governor Abdur Rouf Taluder, during a meeting between the two. FBCCI leader Jibon Deb Nath obtains D.Litt degree from France’s Thames International University “We met with the central bank governor with a delegation of top businessmen and expressed our concern on the important issues on behalf of the country’s business community,” the FBCCI president told UNB after the meeting. He said many traders have to open Letters of credit (LCs) buying dollars at a higher price than the fixed rate, which impacts import of goods. The BB’s governor has been requested not to increase the interest rate of bank loans by large margins as the businesses are already facing difficulties in the depreciation of domestic currency taka, Mahbub said. The governor assured the businesses that the interest is now fixed according to the smart rate, there is no option to increase the interest rate to an abnormal level in the current system, the meeting sources said. In the new system, the lending rate for banks will be determined at SMART (six-month moving average interest rate) plus a margin of up to 3 percent. FBCCI president says they are against dishonest businessmen The SMART reference lending rate would be fixed on the basis of the 182-day treasury bills and announced on the first working day of each month. The central bank controls the interest rates of T-bills and T-bonds. Referring to the system the FBCCI president said, "We are very concerned about the rising interest rate and sought cooperation from the Bangladesh Bank so that it does not increase too much." He said businesses are finding it difficult to open letters of credit (LCs) as they are not getting the dollar at Tk 110, a rate fixed by the Bangladesh Foreign Exchange Dealers Association (BAFEDA) and the Association of Bankers, Bangladesh (ABB). Japan wants to increase investment in Bangladesh: Japanese envoy told FBCCI Although a number of importers are getting the dollar at the fixed rate, many others are being compelled to cough up an additional amount to open the LCs, the FBCCI alleged. Executive Director and spokesperson of BB Md Mezbaul Haque said businessmen expressed their concerns about the interest rate. The governor assured them that the interest would not rise much, he added.
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