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Commercial banks are likely to be allowed to include their investments in corporate bonds as high-quality liquid asset under liquidity-coverage ratio (LCR) of Basel-III framework. Bangladesh Bank (BB) made such observations Tuesday at a coordination meeting of major watchdog bodies, namely the Bangladesh Securities and Exchange Commission (BSEC), the Office of the Registrar of Joint Stock Companies and Firms, the Insurance Development and Regulatory Authority (IDRA), the Micro-credit Regulatory Authority (MRA), the Department of Cooperatives (DoC) and Bangladesh Telecommunication Regulatory Commission (BTRC). At the meeting, held at the BB headquarters, the BSEC requested the central bank to allow the banks to comply with the BB's statutory liquidity ratio (SLR) requirement with their investment in the corporate bonds, as a way of stimulating the capital market. The central bank failed to agree with the proposal, placed at the meeting, presided over by BB Governor Fazle Kabir. To justify the refusal, according to officials, the central bank said only the approved securities are eligible for meeting the SLR obligation to the BB. The approved securities are usually treasury bills (T-bills), bonds and other securities whose principal and interest are guaranteed by the government and also include BB'a own securities Rather, the BB expressed its willingness to consider such bonds as high- quality liquid asset but their eligibility will be positively examined by the departments concerned of the central bank, they added.  "We may allow the corporate bonds as high-quality liquid asset under LCR of Basel-III framework after examining its different aspects," SK Sur Chowdhury, deputy governor of the BB, told the FE after the meeting. Basel-III is a new global regulatory standard on banks' capital adequacy and liquidity as agreed by the members of the Basel Committee on Banking Supervision. The third of the Basel Accords was developed in response to the deficiencies in financial regulation exposed by the late-2000s financial crisis. The Basel-III matrix is set to strengthen bank-capital requirements and introduce new regulatory requirements on bank liquidity and bank leverage. Talking to the FE, another BB official said: "We'll consider the issue positively." Currently, around Tk 72 billion was invested in the corporate bonds while only three bonds are listed with the stock exchanges, he added. Meanwhile, a technical committee is working to start trading in the government securities including treasury bills (T-bills) and bonds on the country's stock market using latest technologies, according to the deputy governor. "We're working on the issue to facilitate investors, both domestic and foreign, with starting trade in the government securities in the share markets," Mr. Sur Chowdhury explained.     siddique.islam@gmail.com....

Published at: 2017-08-02 00:00:06

Rents on community or convention centres have marked a substantial rise in the city over the years despite a rapid expansion and improvement in such services, industry insiders said. The demand for rental service continues to rise as many city dwellers now prefer hosting their programmes including wedding and other ceremonies like gaye halud, boubhat and birthday party at community or convention centres, they added. During visit to some community centres, it was found that rents or service charges increased significantly ranging between 46 per cent and 133 per cent in last five to ten years. City dwellers now want to organise hassle-free marriage ceremonies and they prefer spacious places for arranging wedding ceremonies. So, they first choose the community for organising marriage and marriage related programmes there. Even financial capacity of city people has also increased than anytime earlier. On the other hand, ceremonies like weddings are being held in city's different Chinese restaurants and two or five-star hotels.      Earlier, most of these marriage ceremonies were held at the houses of bridegrooms. As there is no available open spaces in the city, demand for such centres has being increasing day by day. The cost of using community/convention centres depends on the number of guests and the choice of menu. There are different types of catering services and food packages in different community centres and Chinese restaurants. Usually, the rent on different centres, Chinese restaurants and hotels is higher during the winter season than that of the summer season.   "Time is changing. We offer many facilities matching with the present time. We don't compromise on hygiene and taste and also high quality catering service," Arif Sikder, manager of Spectra Convention Centre (SCC), told the FE. There are five halls in the spectra centre. Rent on each hall is minimum Tk 22,000 and maximum Tk 55,000 for one shift. It was minimum Tk 10,000 and maximum Tk 35,000 in 2003, he added. More or less 12/14 marriage programmes are held at the centre every month, he said. Community centres have been established in different parts of the city under public and private initiatives. There is no way to deny the necessity of community centres for organising different types of social events apart from marriage. People of Dhaka city prefer to organise marriage ceremonies during the period between November and February. So, it is difficult to get booking during the period, a private community centre owner said. "We generally don't charge any rent for lighting, AC and washroom," an executive of Officers' Club Dhaka told the FE. "We have two halls. The rent for each hall is Tk 0.168 million for one shift. It was Tk 72,000 including value added tax (VAT) and tax in the fiscal year (FY) 2010-2011. Besides, we have own catering services. But it is not included in the hall rent," he said.    There are four halls in International Convention City Bashundhara (ICCB). The rent on halls 1, 2 and 3 is 0.4 million for 24 hours. The rent on a large hall is Tk 0.55 million for twenty-four hours, Shanjida Sharmin Khan, senior executive of ICCB, told the FE on Monday. "We have a spacious hall which can cater to 300 guests at a time. We also provide all kinds of modern facilities in the hall," said Mahfuzur Rahman, manager of Dhaka Ladies Club. Rent on the hall is Tk 92,000 including VAT and tax. It was Tk 69,000 in 2014-2015. The community centres under the two city corporations, Dhaka North City Corporation and Dhaka South City Corporation are relatively more affordable and popular with middle-income group people. Rents for city corporation community centres range from Tk 7,500 to Tk 20,000. The rents vary according to shift. Apart from Sohagh Community Centre, Eskaton Ladies Club, Banani Community Centre, there are area-based community centres which are also relatively affordable with the middle-income groups.     rezamumu@gmail.com....

Published at: 2017-08-02 00:00:06

The government has sought from the World Bank (WB) budgetary support credit having no reform-related strings attached, officials said. "We have sought budgetary-support credit in a 'new form' instead of the previously offered loan on 'policy-reform matrix'," a senior Ministry of Finance (MoF) official said Monday.  "The government will not go for any large reforms before the next general election. So, it has recently requested the Bank to offer the long-pending budgetary support in another form instead of the earlier proposed reform-based credit," he told the FE. More than three years ago, the Washington-based global lender had considered providing US$500 million worth of development-support credit (DSC) to Bangladesh government for bankrolling the national budget. However, the government failed to conduct the structural and policy reforms and the possible budget-support credit got stuck. The WB assured of the DSC based on some reform works that include automated fuel-price adjustment, implementation of the VAT law, enactment of the public-private partnership (PPP) law and formulation of its rules, corporatisation of some poor-performing power-distribution companies and strengthening the Load Dispatch Centre of the Power Development Board. A mission from the Washington-based lender will sit with the Economic Relations Division (ERD) today (Tuesday) to discuss the proposed 'new form' of budgetary credit, as defined by the finance ministry. An ERD official said the amount of the credit has yet to be discussed. "After some bilateral meetings, the amount could be finalised based on the demand of the government for job and employment creation." Since job creation is a new challenge for the government, it could consider taking the budgetary-support credit from the WB in a new form instead of previously imposed 'policy reform matrix'-based loan, he added.  Meanwhile, the WB-government talks two years ago in 2015 on the then proposed US$500 million DSC failed to reach a consensus as the government finds some of the reform proposals tougher to take, officials said. The multilateral lending agency proposed some "policy reform matrices" for the Bangladesh government to do the restructuring within a certain period to obtain the then proposed $500 million budgetary-support credit meant for financing budget deficit. The Bank had also asked for formulating market-based interest rates for the national saving certificates (NSCs) curbing government intervention in it and quickening handover of lands for the special economic zones (SEZs). "Some of the World Bank reform proposals are really tough to comply with within the stipulated time. The government has already decided not to implement the uniform VAT system. Besides, some other reforms the WB proposed can also diminish government's image among the people before the election. So, the government will not go for those reform activities at this moment," the official said. The ERD official said if the WB offers the budgetary-support credit for facilitating a better business and investment climate in Bangladesh which will help create more jobs and employment opportunities, the government will actively consider taking the loan. The World Bank is the largest donor to Bangladesh. It used to make commitment to disbursing US$1.5 billion in assistance annually and disburse nearly $900 million. It disbursed a record-highest amount of $1.0 billion in assistance in the financial year 2014-2015 for Bangladesh.     kabirhumnayan10@gmail.com....

Published at: 2017-08-02 00:00:06

A move is underway to recognise movable property, too, as collateral against credits. Bankers believe that such a change in traditional mortgage system will help expand lending and spur economic activities.   Bangladesh Bank (BB) has already prepared a draft law titled 'The Secure Transaction Act' providing for such non-traditional mortgage system, officials said. They said BB is expected to finalise the draft within this month. Thereafter, it will be sent to the Ministry of Law, Justice and Parliamentary Affairs for placing before Parliament for approval. Movable property like goods, a document of title, security, instrument, money or any other intangible asset like goodwill will be regarded as collateral after enactment of the law in the making. These are not accepted now in the financial sector as security for loans. Currently, only the immovable like house or flats, land property are accepted by banks and financial institutions as collateral. People familiar with the latest move at the central bank told the FE that this would promote economic activities in the country, and reduce the dependence of lending institutions on immovables as security for credit facilities. This innovation is being financed by Japanese aid-agency JICA under a project named 'secured lending and movable collateral reform in Bangladesh'. A senior person familiar with the developments at the central bank told the FE that they were expecting to finalise the draft by August 30.   A senior official at the Ministry of Finance (MoF) said this initiative is intended to help small and medium entrepreneurs and those engaged in self-employment who are unable to furnish immovable property as security against credits. "SMEs, even startups, may be benefited as their access to the formal credits will rise," said a senior official at the MoF. However, a high-powered monitoring team will meet on the matter at the MoF on August 29. Bankers view that this is a piece of good news for them as it will help expand the volume of credits as the banking system now rolls in "excess liquidity". They also hope this will bring dynamism in the business sectors as well the economy as many will have access to loans based on such property which the banking system has so far ignored as collateral.  Managing Director & CEO of Mutual Trust Bank Ltd (MTB) Anis A. Khan said: "We welcome this type of initiative as it brings dynamism in the economy." He also sees nothing wrong in it. Many will get loans for further investment in business and it will help widen the base of collateral. "The higher security, the higher loans," he told The Financial Express. Mr Khan, also chairman of the Association of Bankers, Bangladesh Limited (ABB), said many will be even able to get loans against their motorised vehicles. "It will have spillover impact on the economy. The insurance sector will also get some sort of business." Another banker, Md Nurul Amin, managing director and CEO at Meghna Bank, said they had long felt the necessity of such arrangements. "Such type of collateral exists in many countries, even in Sri Lanka," he said as an example to justify this initiative towards diversifying collateral. Mr Amin, however, sees some risks of such type of security, such as the owners of such property may sell those to other parties and thus cause a problem to the lending banks. "Suppose, a person gave his vehicles as collateral to a bank and he could sell it to other people, and in such cases bank may face problems." Similarly, he added, the owners of factories may sell their machinery out to others. However, there will be a separate entity paving the way for people to borrow by using such moveable property as security under the act. The institution will help lenders get a risk-free picture of the security to accept movable property as collateral for advances. The oversights body will be established under the name 'Secured Transaction Registration Authority'. The main objective of the authority will be to promote the interests of the national economy by facilitating secure transaction against movable property in compliance with the provisions of the act. The governor of Bangladesh Bank will be chairman of its board or a person nominated by him as his representative will work in the entity. Under the law, the MoF secretary or a person to be nominated by him will stand as second in authority at the Authority. A registrar will also need to be appointed, according to the draft act. The draft also states a designated person from Bangladesh Securities and Exchange Commission will also be on the board. The main function of the board is to ensure registration of security rights of movable property. jasimharoon@yahoo.com....

Published at: 2017-08-02 00:00:06

The US government is not seeking a regime change in North Korea, the secretary of state says, amid tensions over Pyongyang's weapons programme. "We're not your enemy," Rex Tillerson said, adding that the US wanted a dialogue at some point. Meanwhile, a senior Republican senator said President Trump considered going to war with North Korea as an option. Pyongyang claimed that its latest missile test could hit the US west coast and beyond. "We do not seek a regime change, we do not seek the collapse of the regime, we do not seek an accelerated reunification of the peninsula, we do not seek an excuse to send our military north of the 38th parallel," said Mr Tillerson, referring to the border between the Koreas. "We're not your enemy, we're not your threat but you're presenting an unacceptable threat to us and we have to respond." The second test of an intercontinental ballistic missile (ICBM) on Friday, celebrated by North Korean leader Kim Jong-un, was the latest to be conducted in defiance of a UN ban. ANALYSIS: NO GOOD OPTIONS AND LITTLE TIME BARBARA PLETT USHER, STATE DEPARTMENT CORRESPONDENT North Korea's recent long-range missile tests have deepened concern about the threat Pyongyang poses to the US mainland, and strengthened determination here to prevent any strike. That's what the president had in mind in his war talk with Senator Lindsey Graham. The Pentagon has updated military options, but at the same time says a confrontation would be catastrophic. In light of that, Mr Tillerson repeated at length that the US wasn't seeking regime change and said the goal was dialogue, but one not based on the assumption that North Korea could keep its nuclear weapons. Pyongyang has categorically refused such terms. The strategy, said Mr Tillerson, is a sustained campaign of peaceful but intensifying economic pressure to change its mind. But given the advances in ballistic technology demonstrated by the recent ICBM tests, there's growing doubt that denuclearisation is a realistic possibility. As always, there are no good options when it comes to North Korea, but less time to pursue them. President Trump has repeatedly criticised China, which shares a land border with North Korea and is its closest economic ally, for not doing enough to stop Pyongyang's weapons programme. However, Mr Tillerson took a more diplomatic approach, saying that "only the North Koreans are to blame for this situation". "But," he added, "we do believe China has a special and unique relationship, because of this significant economic activity, to influence the North Korean regime in ways that no one else can." In a separate development, Republican Senator Lindsey Graham said that Mr Trump told him that there would be a war between the two countries if Pyongyang continued with its aim to develop a missile programme with the US in its range. "He has told me that. I believe him," Mr Graham said of his conversations with the president in an interview with NBC's Today programme. "If there's going to be a war to stop [North Korea], it will be over there. If thousands die, they're going to die over there. They're not going to die here. And he [Mr Trump] has told me that to my face." Despite the ongoing tests, most experts believe Pyongyang does not yet have the capability to miniaturise a nuclear warhead, fit it on to a long-range missile, and ensure it is protected until delivery to the target. They say many of North Korea's missiles cannot accurately hit targets. Others, however, believe that at the rate it is going, Pyongyang may overcome these challenges and develop a nuclear weapon within five to 10 years that could strike the US.   ....

Published at: 2017-08-02 00:00:06