114 BB officials served with show cause notices for staging demons inside office

The Financial Express, 31 July 2012

Bangladesh bank (BB) has served show cause notices to its record number of 114 high officials who were staging demonstration inside the central bank for seeking promotion.

The central bank for the first time of its history on Monday issued the notice to such a significant number of officials that include 18 deputy managers and 96 assistant managers of its cash department at its Motijheel headquarters.

All officers of BB’s cash department went to the governor floor and started observing work abstention at about 9.30 AM on Sunday to press home their one point demand.

During the protest programme that had lasted for one and a half hours also seriously disrupted official works, prompting the authorities of central bank to issue the show cause notice ordering the protesters to submit their reply within August 7.

The show cause notice said the officials took part in the gathering ignoring their duties, which hampered the reputation and service of the bank through disturbing its internal discipline.

“It is considered as a punishable offense and also a clear violation of sections 19(1), 42(a) and 44(1) of Bangladesh Bank Staff Regulations, 2003,” the notice mentioned.

The protesters were also instructed to reply the reasons to the department concerned on why punishable measures should not be taken against them for breaking the discipline.

Action will be taken against the officials who will not be able to reply the show cause notice accurately, said a BB high official.

The central bank is now going on secret investigation in this regard to take necessary action against the accused officials, he added.

“We have placed proposals for allowing our promotion; we will go for next course of action unless the authorities do not accept our demand within a short time,” the officials who were served the notice said.

BB circular on banks’ land purchase

The financial Express, 31 July 2012

Restrictions have been imposed on purchase of any land, floor space or taking lease of space for ten years and more than that for any purposes other than the use of their own by the head offices, said a central bank circular.

The circular, issued on Monday, directed that a bank could only purchase a floor or take a space on lease for the use of its branch within the area of the city corporation.

If a bank wants to purchase land, building, floor space and acquire their lease, it will have to get prior permission of the central bank, the circular said.

BB sources said some banks have been purchasing land or permanent structures without any logical ground or need which is a violation of the Bank Company Act.

The central bank also received allegations of corruption in the purchase of land by a number of banks. In many cases, owners are selling low quality lands or lands with legal complications to banks at higher prices, the sources said.

This circular has been sent to the chief executive officers of all banks.

It said giving loans for buying lands is on the rise. The land price has been on a steep rise as a sequel to a growing propensity by institutions like banks to buy land and their increased demand for it.

Because of the flow of money to such unproductive sectors, it is having an adverse impact on the country’s economy, it added.

The sources said the amount of bank loans for purchasing land has been increasing every year.

However, the amount of loans for land purchases is, in real sense, is much higher than what is shown in the books of accounts of banks because of a diversion of a substantial amount of credits, sanctioned for other purposes, to making land-related deals.

A high official of a bank admitted that many borrowers take loans from banks and buy land. In one or two years, the price of the land increases because of its scarcity and the borrowers then sell the land at a higher price, reaping a bonanza.

Licence for more insurers soonFive insurance cos may enter the saturated market

Daily Sun 31 July 2012

The government has decided to give licences to new life insurance companies aiming to make the local insurance sector more competitive. Sources hinted that the government might issue licences to five new insurers, taking the number of the country’s insurance companies to 19.

The Banking Division of the Finance Ministry has finalised a guideline to allow new insurance companies in the country’s one of the key financial sectors, said a senior official of the Banking Division.

The official also informed Finance Minister AMA Muhith has already approved the guidelines, which would be sent to the Insurance Development Regularity Authority (IDRA) for making an announcement in this regard.

Chief executives of some of the existing life insurance companies, however, said no more insurance company is required in Bangladesh at this moment since the market is already oversaturated.

They also observed that at least three insurers among the existing ones are passing tough time in terms of their premium earnings and poor claim-settling capacity.

Applicants who have submitted applications earlier to set up new insurance companies would be required to submit their applications again to comply with the new guidelines, the sources confirmed.

Over 560 applications have been submitted so far following a finance ministry’s announcement regarding issuance of licence to new insurance companies and banks.

“IDRA will publish a fresh announcement soon, seeking applications to establish new insurance companies, as we have already finalised the guideline in this regard,” another senior official of the banking division said.

He also said the guideline has incorporated stringent terms and conditions to allow only the ‘capable ones’.

As per to the guideline, Tk 300 million will be required as paid-up capital to establish a new life insurance company while non-life insurance company will be required Tk 400 million as paid up capital under the Insurance Act 2010.

It also said 60 percent of the said Tk 300 million will have to be provided by the respective sponsors of the proposed companies. The companies will have to issue 40 percent public shares within three years from the commencement of their operation.

The minimum shareholding stake of each sponsor will be Tk 2.0 million for the life insurance companies and Tk 2.5 million for non life insurance companies while the maximum will be 10 percent of their respective total capital.

This ceiling of 10 percent applies to an individual company or family member, either personally, jointly or both family is defined herewith to include spouse, father, mother, son, daughter, brother, sister of the individual or any one dependent on that individual.

The ceiling will be relaxed in the case of an insurance company, set up as a joint venture with a foreign company.

If an individual or members of his/her family had been a loan defaulter with any bank or financial institution anytime during the past five years, s/he will not be eligible to apply as a sponsor of an insurance company.

The guideline said competence, integrity and qualifications of the sponsors for becoming the first directors of the proposed companies will be evaluated.

The would-be directors must fulfill the criterion of a ‘Fit and Proper Test’, and they must have management or business or professional experience for at least 10 years.

An individual awaiting verdict of any undisposed lawsuit in any court will not be eligible to apply, the guideline said.

It said a director or adviser of any insurance company, other than the proposed insurance company, will not be a director of the proposed company. The member of board of directors of a company will be restricted to 20 members, including two independent directors.

The maximum number of directors from a family will be restricted to two in case of the total shareholding of that family exceeds 5.0 per cent, and to one, if the total shareholding of the family is up to 5.0 percent.

Nepal’s 100 items may get duty-free entry to Bangladesh

The Daily Star, 31 July 2012

Bangladesh may give Nepal a duty-free access for 100 of its products, especially vegetables and agricultural ones, as those have a higher demand in Bangladesh, said an official of the commerce ministry of Bangladesh yesterday.

On the other hand, Bangladesh sought from Nepal a duty cut on exports of electronics goods, pharmaceuticals and agro-processed food items, said Commerce Secretary Ghulam Hussain.

Currently Bangladesh and Nepal are in talks to boost bilateral trade through a reduction in duties in overseas trade.

In the ongoing fourth secretary-level meeting in its capital Kathmandu, Nepal also demanded transit facility for smooth transportation of goods between the two countries, said the official.

In the discussion, which began on Sunday, Nepal also called upon Bangladesh to sign the Double Taxation Avoidance Agreement as many Nepalese students come to Bangladesh for higher studies. Nepal has already signed such a deal with India.

“During the meeting Nepal proposed allowing a duty-free access of 100 of its products, especially farm and vegetables,” Hussain told The Daily Star over telephone from Nepal.

“We are in talks now. Nothing is finalised yet. Nepal demanded the duty-free benefit. We have formed some committees for conducting feasibility studies on the demand,” he said without elaborating further.

An eight-member Bangladeshi delegation is in Nepal to attend the secretary-level meeting and to discuss bilateral trade issues. Hussain is leading the team, which returns home today.

As lentil is the major export item of Nepal, the country particularly demanded the duty-free access for lentil and tomato as its exporters face difficulties while exporting these produce to Bangladesh due to higher duties.

Another senior official of the commerce ministry said Bangladesh wants Nepal to use Mongla Port instead of premier Chittagong Port, which is already burdened with cargoes.

Trade between the two countries is in favour of Nepal as Bangladesh imports bulk lentils from Nepal.

Bangladesh exports electronics goods, garment items, agro-processed food items and pharmaceuticals products to Nepal.

According to data from the commerce ministry, Bangladesh exported goods worth $10.84 million to Nepal in fiscal 2010-11, while imported products of $49.00 million.

2 new BB depts to promote digital banking, client service

New Age, 30 July 2012

Bangladesh Bank has introduced two new departments — payment systems department and financial integrity and customer services department — to promote digital banking and to enhance the clients’ interest protection, said central bank officials.
The central bank issued two circulars on the launching of the departments on Thursday.
A BB official told New Age on Sunday that the payment system division was earlier a part of the department of currency management and payment systems.
The BB has constituted the PSD so that the implementation activities of the national payment switch and the e-payment gateway would gear up.
Besides, the activities of Bangladesh automated clearing house, Bangladesh electronic fund transfer network and mobile financial service will be operated smoothly in the coming days under the new department, he said.
Another BB official said that the FICSD had been constituted due mainly to enhance protection of the interest of customers and to decrease the anomalies in the banking sector.
He said the FICSD was earlier a part of the foreign exchange inspection and vigilance department.

Govt raises income tax under spot assessment by Tk 1,000

The financial Express, 30 July 2012

The government has increased income tax for businesses and professionals under spot assessment system by Tk 1,000 in the current fiscal (2012-13) to adjust it with the minimum payable tax.

Businesses with minimum capital up to Tk 0.8 million will have to pay Tk 3,000 income tax, while it has been set Tk 5,000 for the businesses with capital above Tk 0.8 million.

In the just concluded fiscal (2011-12) the rates were Tk 2,000 and Tk 4,000 respectively.

Small businesses, enjoying the reduced tax rates under spot assessment, will be able to pay the same amount of tax for three consecutive years.

A senior income tax official said the businesses, which came under spot assessment in the last fiscal, can pay tax in the previous rate for the next two years.

Physicians and lawyers, whose professional career has not exceeded five years, can also avail the facility by paying Tk 3,000 minimum tax for three consecutive years.

Minimum tax is fixed at Tk 5,000 for physicians and lawyers, whose professional age ranges between five to ten years.

The National Board of Revenue (NBR) introduced the spot assessment system in the fiscal 2010-11 to encourage voluntary payment of income tax.

Talking to the FE Sunday, NBR member (tax survey) Md Shahjahan said the revenue board conducted nearly 184 spot assessments in the just concluded fiscal.

“Taxmen have issued 14,659 Taxpayers Identification Numbers (TIN) through those spot assessments. Of the TIN-holders, they have completed final assessment of 13,784 taxpayers.”

With the spot assessment, the NBR has collected Tk 28.41 million income tax in the fiscal 2011-12, he said.

In the spot assessment system income tax officials visit different places with one-page tax return and simplified TIN application forms to bring businesses and professionals under tax-net.

The facility of paying the same amount of tax for three consecutive years without auditing has inspired a number of marginal taxpayers to file tax returns.

Officials said the spot assessment system drew the attention of more marginal taxpayers than that of the survey system.

The survey system could not bring taxpayers directly under the tax-net due to procedural complexities. Surveyors collect data and place those to the respective tax offices for necessary actions.

It has been found that only 50 per cent of the surveyed people were finally included in tax-net due to lack of coordination between the surveyors and the relevant tax offices, they added.

Govt moves to allow import of old vehicles from India

The Financial Express, 30 July 2012

The government is considering the option of allowing import of reconditioned vehicles from India, amid opposition by different quarters to the move, according to official sources.

The Ministry of Commerce (MoC) has been asked to submit a report before the parliamentary standing committee on the MoC in the latter’s next meeting, identifying the obstacles to the import and reviewing the existing market condition, the sources said.

“We have included the import of Indian reconditioned vehicles, especially TATA trucks, on the agenda of the next meeting. The MoC will submit a report on it then,” chairman of the parliamentary standing committee ABM Abul Qasem MP told the FE.

He said: “There is an embargo on the import of the Indian reconditioned vehicles. We want to open up the market by removing the barriers.”

Mr Qasem said committee member Sheikh Afil Uddin, lawmaker from Jessore-1 constituency, requested for removal of the obstacles and allowing import of TATA’s reconditioned trucks.

Officials quoted Afil Uddin as saying at a meeting on July 19 that presently Bangladesh imports brand new vehicles–trucks and motorcycles-from India which are lighter than the reconditioned ones.

He said India considers Bangladesh as a third category market and supplies substandard goods, made of sub-standard or low quality materials. As a result, the users need to buy an increased number of spare parts and the vehicles’ life time is very low.

“We need to open up the market for import of reconditioned vehicles manufactured by TATA Motors,” Mr Afil Uddin said.

However, stakeholders have strongly opposed the government’s move, saying that allowing import of Indian reconditioned vehicles would further increase the environment pollution.

“Even the new vehicles, imported from India, are not environment-friendly. Their lower life-time is also in question. How can their reconditioned vehicles be better?” asked Abdul Mannan Khosru, an importer of the Japanese reconditioned vehicles.

Mr Khosru, also the president of Bangladesh Reconditioned Vehicles Importers and Dealers Association, said India is actually planning to make Bangladesh a dumping ground for old vehicles.

“So, India is trying to dump the reconditioned vehicles here through some agents. Many of the Indian vehicles are not even recyclable,” he said adding that the people would get just cheated by buying the Indian reconditioned vehicles without knowing much about them.

Mr Khosru said the cheap and low standard vehicles would enter Bangladesh through under-invoicing and paying less import duty. “So the buyers as well as the country will suffer.”

Opposing the government’s move, Nitol-Niloy Group chairman Abdul Matlub Ahmed said he opposed import of any kind of reconditioned things.

“I am always against the import of reconditioned vehicles since those increase the environmental pollution,” he said. “No vehicle plant will be established in Bangladesh until import of reconditioned vehicles is stopped,” he added.

Every year nearly 8,000 trucks, 2,000 buses and 5,000 brand new mini-trucks enter Bangladesh from India, he said.

Mr Ahmed, importer of TATA’s brand new vehicles, also claimed the quality of Indian vehicles is now better than the past. “If you ride an Indian vehicle now, you will find it of American quality.”

He said the Nitol-Niloy Group is now working on setting up a pick-up manufacturing unit in Bangladesh.

Govt mulls over rice export

Daily Sun, 30 July 2012

Finance Minister AMA Muhith Sunday said the government is planning to export rice to boost the price of the staple food for ensuring fair price to the growers.

The export list includes normal rice along with aromatic variety.

The government took the decision as Bangladesh now turned into a ‘rice-surplus’ country and the prices of rice were on the decline, Muhith told journalists after an inter-ministerial meeting held at his secretariat office.

The finance minister said, “The farmers are deprived of fair price as the market price of rice is lesser than production cost.”

The market price of rice is Tk 25 while the production cost stands at Tk 26.50, he pointed out to justify the government move for rice export.

He said the government is pondering over allowing the export of aromatic rice throughout the year instead of a particular period of the year.

The minister said the government had 1.3 million tonnes of food in stock and was collecting another 500,000 tonnes.

He said a decision on export of both aromatic and normal rice would take around six months and will be finalised by the Food Planning and Monitoring Committee (FPMC).

He assured that the planned export would not affect prices on the local market.

When asked whether price of rice sold under OMS will be reduced, Muhith said there were plans to cut OMS rice price which, he said, would be finalised by the FPMC.

Agriculture Minister Matia Chowdhury, Commerce Minister GM Quader, Food and Disaster Management Minister Abdur Razzaque, and Health Minister Dr AFM Ruhal Haque, among others, were present at the meeting.

Tk 125b subsidy needed if power tariff not hiked

Daily Sun, 30 July 2012

Power Division has sought Tk 125 billion as subsidy from the current month to make up the financial losses it has been incurring for selling power at a price lower than the production cost.

“If the tariff is not increased from July 2012, budgetary support of Tk 125 billion will be required to recoup the loss,” Power Division Secretary Md Abul Kalam Azad informed the Finance Division during a meeting at Bangladesh Secretariat last week.

Finance Minister AMA Muhith, Prime Minister’s Economic Affairs Adviser Moshiur Rahman and State Minister for Power and Energy Muhammed Enamul Huq were also present at meeting.

The power secretary informed the meeting that the budgetary support requirement would be around Tk 37 billion if power tariff is hiked by 50 percent of the amount proposed by Bangladesh Power Development (BPDB).

The Bangladesh Power Development Board (BPDB) earlier placed a proposal before Bangladesh Energy Regulatory Commission (BERC) to increase bulk tariff of power by Tk 2.01 per unit to Tk 6.03 from existing Tk 4.02.

“In case of 35 percent increase in power tariff from July 2012, the requirement will be around Tk 64 billion,” Abul Kalam Azad told the meeting.

Electricity production cost currently stands at around Tk 6.87 per unit against a bulk tariff of Tk 4.02, Azad said, adding “The Tk 2.85-gap needs to be mitigated by tariff increase and budgetary support,”

During the meeting, the power secretary also said the average power purchase rate from rental plants hovers between Tk 15 and 18 per unit.

He informed the meeting that the prices of diesel and furnace oil have jumped to Tk 61 and 60 per litre respectively in February this year, up from Tk 42.71 and Tk 26 per litre respectively in March 2009.

“Besides, gas and coal prices currently stand at Tk 79.82 per 1000 cubic feet and $105 per tonne, up from Tk 73 per 1000 cubic feet and $71.5 per tonne in 2009,” he added.

Earlier on July 16, The BERC arranged a public hearing on the PDB’s proposal to increase power tariff by 50 percent at wholesale level.

During the hearing, consumers’ rights groups opposed the proposal to raise bulk power tariffs and suggested forming a committee to level the electricity price using the subsidy to the sector.

However, BERC was supposed to announce the power tariff hike on July 26. But the announcement did not take place as the PDB’s proposal was said to be failed to provide accurate data on power production costs.

Meanwhile, power customers across the country expressed their resentment over double power tariff due to the withdrawal of slabs facilities in paying bills.

BB cautions banks against fake notes ahead of Eid

The Daily Star, 30 July 2012

Bangladesh Bank (BB) has asked its branch offices and all commercial banks to be cautious against fake notes, especially ahead of Eid.

The central bank has also sought cooperation from the law enforcement agencies in this regard. Besides, fake-note resistance committees comprising representatives from banks, police and local administration have been asked to remain alert at district level.

The central bank fears that forgers will try to release fake notes ahead of Eid as cash transactions increase significantly.

“The commercial banks have been cautioned to thwart the entry of fake notes in the banking system,” Ashim Kumar Dasgupta, BB executive director, said yesterday.

The banks have been instructed to ensure the use of modern fake-note detecting machine at all their branches. “We want to eliminate fake notes from the market completely. The fake note resistance committees have been made more active,” he added.

According to the BB, the central bank releases a huge amount of new notes of different denomination against torn or soiled notes or as per demand, especially ahead of Eid every year. Forgers try to take advantage of the situation and slip fake notes into the system.