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FBCCI President Urges Loan Rehabilitation over Wholesale Default Label

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Mahbubul Alam, the recently appointed President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), has already communicated with the Bangladesh Bank, urging for measures to support struggling businesses that are finding it difficult to meet loan repayment obligations. He asserts that the issue of heightened inflation is not exclusive to Bangladesh but is a global concern, evidenced by surges in prices of essential goods and energy worldwide, including in the USA and Europe. While Bangladesh is striving to manage inflation, disruptions in the global supply chain are contributing to supply-side crises and subsequent price hikes in some instances.

In an interview with UNB, Mahbubul Alam shared his insights on various matters, including inflation, the dollar crisis, export diversification, and the challenges tied to achieving Sustainable Development Goals (SDGs). Elected as the FBCCI President from the Sammilito Oikko Parishad for the 2023-25 term, Alam also holds the position of President at the Chittagong Chamber of Commerce & Industry (CCCI). Beyond his business acumen, he has received accolades such as the CIP (Trade) and CIP (Industry) Awards from the Ministry of Commerce, Bangladesh. Additionally, he has been recognized internationally with a “Certificate of Merit” from the World Customs Organization.

Alam emphasizes the importance of not hastily declaring businesses as loan defaulters, particularly in scenarios where some units of a business group face issues while others are operating smoothly. He advocates for granting opportunities to rectify financial challenges rather than resorting to blanket declarations. He acknowledges the concern of loan defaults over the past two years due to non-payment by several entrepreneurs and suggests allowing struggling factories to continue operations as a solution.

Addressing the dollar crisis, Alam emphasizes augmenting remittance earnings by sending skilled workers abroad, and he calls for an improved system for channeling remittances from various parts of the world to Bangladesh. Alam, who owns M/S Alam Trading based in Chattogram, stresses enhancing the capabilities of foreign missions to organize trade fairs showcasing diverse traditions and non-traditional products, contributing to export diversification.

In the context of achieving SDGs, Alam underscores the need for local businesses to bolster their capacity to compete globally amidst the era of free trade. Despite the challenges posed by the Covid-19 pandemic, he commends Bangladeshi entrepreneurs for their resilience in maintaining business operations. Alam also highlights the significance of research and innovation, particularly involving youth, to navigate the demands of the Fourth Industrial Revolution.

Contrary to concerns about AI and machine learning displacing jobs, Alam asserts that numerous tasks still require human involvement. He advocates for increased domestic livestock rearing to meet the consumption demand for eggs, milk, and meat, emphasizing the importance of self-dependency in agricultural produce

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Cenbank Mandates Real-Time Reporting of Willful Defaulters

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The Bangladesh Bank (BB) has issued new instructions to banks to submit data on willful defaulters to the Credit Information Bureau (CIB) database. This directive was issued on Tuesday, requiring immediate compliance from commercial banks and non-banking financial institutions (NBFIs).

In a circular released by the CIB of the central bank, banks have been instructed to report their June data in real-time starting July 1. The circular has been sent to top executives of banks for prompt execution.

This move follows an earlier initiative by the BB, outlined in a circular on March 12, aimed at identifying willful defaulters within the banking sector. The central bank also detailed actions to be taken against such defaulters.

According to the circular, any client who takes a loan anonymously and misuses it will be classified as a willful defaulter. Banks were directed to establish a ‘willful defaulter identification unit’ by April 9 to facilitate this identification process.

The circular further stipulates penalties for non-compliance. Banks that violate these conditions will face fines ranging from Tk 50 lakhs to Tk 1 crore. Continued violations will incur additional fines of Tk 1 lakh per day.

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Cenbank Raises Dollar Price to Tk 117

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The Bangladesh Bank has adjusted the dollar price to Tk117 from Tk110 by introducing the crawling peg exchange rate mechanism.

Under this new approach, the bank will buy and sell dollars with Tk117 as the mid rate.

This decision was reached during a meeting of the monetary policy committee on Wednesday, May 8th.

Additionally, the committee has opted to discontinue the SMART lending rate mechanism, allowing banks to set their lending rates based on dollar demand and supply, according to a circular issued after the meeting.

The crawling peg system permits a currency with a fixed exchange rate to fluctuate within a specified band of rates, combining features of both fixed and floating exchange rate regimes.

On May 5th, Bangladesh Bank Governor Abdur Rouf Talukder announced the adoption of a market-based interest rate and the implementation of a crawling peg system to stabilize the foreign exchange rate.

He stated that the central bank is collaborating with prominent economists and bankers to devise a contractionary monetary policy aimed at curbing inflation and restoring macroeconomic stability.

Earlier, on April 2nd, the World Bank stressed the importance of a crawling peg mechanism aligned with market-clearing exchange rates to narrow the gap between formal and informal exchange rates, as outlined in the latest Bangladesh Development Update report.

Meanwhile, the International Monetary Fund (IMF) has advocated for a market-based dollar rate. In January 2023, the IMF attached several conditions to a $4.7 billion loan facility over a three-and-a-half-year period. Bangladesh has received two installments of the loan by fulfilling nearly all conditions, except for the reserve requirement.

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Cenbank Dissolves National Bank Board Again

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On Sunday (May 5), the Bangladesh Bank (BB) once again dissolved the board of directors of the National Bank.

In a letter addressed to the managing director of the National Bank, the central bank announced the cancellation of the existing board of directors.

Furthermore, the banking regulator established a new board of directors and appointed Khalilur Rahman, the bank’s sponsor director, as the new chairman, according to the BB’s communication.

Mezbaul Haque, spokesperson for the Bangladesh Bank, commented on the development, stating that the action was taken to bolster the bank’s board of directors.

This move comes after a similar action in 2023 when the central bank ordered the dissolution of the National Bank’s board and formed a new one.

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