Bank-Insurance
BB ordered to reserve provisions against losses in shares and bonds
On Wednesday (May 24), Bangladesh Bank issued a directive to banks regarding the reservation of provisions against investment losses in shares, bonds, debentures, and mutual funds of listed companies.
The directive was sent to the managing directors and chief executive officers of all banks operating in the country. According to the central bank’s instructions, if the purchase price of securities, other than government securities, in terms of investment is lower than the latest market value, banks must reserve provisions equivalent to the difference between the purchase price and the latest market value.
This difference in price will be recognized as a loss in investment value. This provision requirement applies to listed shares, bonds, debentures, and mutual funds or any portfolio of funds. Additionally, provisions will be reserved separately for equity shares, bonds, debentures, and mutual funds or any portfolio of listed companies.
In addition, it has been stated that in the case of investment in non-listed equity shares, if the total value of the company decreases, banks must reserve provisions equivalent to the reduced value as a percentage of the investment ratio within the institution, through the medium of the bank. If the invested company ceases to exist or its operations are suspended or deemed non-performing, provisions must be reserved for the same amount as the investment, unless any visible operations are carried out.
Furthermore, the directive specifies that for non-convertible cumulative preference shares, if the bank does not receive the specified interest, dividends, or cash gains as per the agreement, a provision of 25% of the principal amount must be reserved at the end of the first year. For the second year, an additional 25% and a provision of 100% must be reserved if the accrued gains remain unpaid for three years.
According to the recent directive from the central bank, if the average purchase price of be-maturity mutual fund units is lower than the surrender price (the value at which units are returned to the asset management company), banks must reserve provisions equal to the amount of the difference between the average purchase price and the surrender price. In line with these guidelines, banks are required to maintain provisions on a quarterly basis and submit the provision reserve information to the Bangladesh Bank.
This directive, issued under Section 45 of the Bank Companies Act, 1991, will come into effect from June 30th.
In a joint decision, the Bangladesh Foreign Exchange Dealers Association (BAFEDA) and the Association of Bankers, Bangladesh (ABB) have announced a reduction of Tk 0.50 in both buying and selling rates for the dollar.
The new rates, effective from Thursday, November 23, set the purchasing price for dollars related to export proceeds and remittances at Tk 110, down from Tk 110.50. Simultaneously, the selling rate for dollars concerning import settlements has been adjusted to Tk 110.50, a decrease from the previous Tk 111. This decision, reached during a meeting in the city, comes as a revision to the rates set on October 31, when both organizations had increased the official rates for remittance and export proceeds.
Bank-Insurance
HSBC Bangladesh Hosts “Japan – Bangladesh Business Corridor” Event to Strengthen Ties
HSBC Bangladesh recently hosted a corridor event titled “Japan – Bangladesh Business Corridor: Legacy and the Future” to celebrate and strengthen the longstanding relationship between the two countries. The event brought together Japanese businesses operating in Bangladesh and various stakeholders.
Since Bangladesh’s independence, Japan has played a significant role as a bilateral development partner, contributing to trade, investment, infrastructure development, industrialization support, and social development improvements in the country. HSBC recognizes the importance of Japan’s contributions and untapped potential.
Gerard Haughey, Country Head of Wholesale Banking at HSBC Bangladesh, highlighted the evolving relationship between Japan and Bangladesh, particularly in terms of ongoing trade and investment engagements. He emphasized the opportunities for Japanese investors in Bangladesh’s rapid growth and stated that HSBC is ready to facilitate connections to a world of opportunities.
Hirotaka Shibata, Director of Commercial Banking at HSBC Japan, emphasized HSBC’s presence in Japan and its ability to provide “local” connections and knowledge to Japanese investors on both ends of the investment journey. He noted that HSBC Japan considers Bangladesh a priority corridor and is closely collaborating with HSBC Bangladesh to offer the best available services to clients.
HSBC, as a leading international bank, offers expertise in trade, payment, cash management, and project financing support services in Bangladesh. Its extensive presence in 62 countries makes it the preferred choice for foreign businesses, including Japanese stakeholders operating in Bangladesh. With its digital banking capabilities, HSBC has become the go-to bank for inbound Japanese companies, serving infrastructure and private sector investment clients and stakeholders.
The Asian Development Bank (ADB) is set to provide Bangladesh with $338 million in support of domestic vaccine production, aiming to safeguard against a range of diseases. This announcement was made during a meeting between ADB Country Director Edimon Ginting and Planning Minister MA Mannan in Dhaka.
The initiative is part of the Bangladeshi government’s effort to develop a draft project to manufacture vaccines locally, thereby enhancing protection against diseases like COVID-19 and dengue, as well as preparing for potential future health challenges. The ADB’s funding offer consists of a $338 million loan, with half of it carrying a low-interest rate and the remaining portion subject to regular interest.
The ADB is urging the government to expedite the approval of this important project. The Planning Minister assured that diligent efforts would be made to secure swift approval. The ADB Country Director shared that the past fiscal year saw substantial progress in terms of the working environment, disbursement, project implementation, and loan approval in Bangladesh.
The project’s total cost is approximately $351 million. It aims to reduce Bangladesh’s dependence on vaccine imports and bolster domestic production capabilities. The ADB Country Director highlighted that beyond the period of Least Developed Country (LDC) status, Bangladesh may face challenges in procuring vaccines at lower rates and instead may need to purchase them at market prices. To enhance the country’s capacity for vaccine production, this project has been initiated with the aim of swift approval.
Moreover, the ADB has committed $3.5 billion in financing to Bangladesh for the current fiscal year, with approximately $2 billion being concessional and the remaining $1.5 billion being regular funding.
