New banks fall into liquidity trouble
Instead of recovery, woes become double.
Regulations on management board reform
Unlikely to become the new norm.
Last few weeks have been happening weeks for Bangladesh financial sector. Bangladesh Bank issued new regulations on the appointment of directors and chairman in the management board of public banks,which are at the heart of bank scam1.Earlier people with little credentials occupied the post and approved loan to projects that do not qualify for it. The result is piling up of Non Performing Loan(NPL) which is jeopardizing stability of the whole banking sector.
Government even concluded initial talks with the IMF for a credit of $4.5 billion to finance budget deficit in the wake of high oil price and ongoing war in Ukraine and bad economic management.Earlier only public and some private banks are in crisis. But now banks that operate islamic banking are also in liquidity crisis.
Depositors have lost their trust in them and queue behind bank booths to withdraw their deposits.But some islamic banks do not have enough money to meet depositors' demand.
Crisis unfolded into these banks after one Nabil Group took Tk 90 billion loan from Islami Bank,First Security Islami Bank and Social Islami Bank. The group followed fraudulent means to unhook the loans. It floated several shell companies and then applied for loans. Addresses provided are later found hoax and all of them appeared to be sister concerns of the Nabil Group,which operates agro-processing and food grain import business in Rajshahi. Islami Bank gave Tk 70 billion to the group and First Security Islami Bank and Social Security Islami Bank provided the rest2. On some occasions, documents were not scrutinized thoroughly. So the blame puts squarely on the new management board of Islami bank, which is mostly formed by members backed by a local business conglomerate. The conglomerate itself took several loans from the banks and invested abroad. Rumours are rife that it even purchased a five-star hotel in Singapore.
It is highly likely that the credit becomes another incident of money laundering. As soon as the news broke, clients’ trust on islamic Banks erodes and many opt to withdraw their deposit. It is translated into these banks' depleted deposits. Situation is so grave that the biggest one, Islami Bank offers 8% interest rate to Mobile Financial Service (MFS) operator Nagad,which is already marred by corrupt practices3.
Furthermore, Islami Bank Bangladesh and Social Islami Bank along with Pubali Bank Limited received Bangladesh Security And Exchange Commission's nod to issue bond in a bid to raise Tk 21 billion from stock market.The islamic banks will use the fund to meet the acute liquidity crisis4.
It appears clearly that islamic banks also face liquidity crisis. New banks fall into such crisis. In general, banking sector instead of recovering falls into deeper crisis. Serious trust deficit translates into depleting deposit and foreign banks’ refusal to LCs issued by local banks. Luckily, IMF in its upcoming board meeting in January may take a decision on approving first instalment of credit, taking into account recent central bank's decision of management board reform. But only time will tell how much it will help the cash-strapped govt and the ailing banks.
Notes And References:
- “Rastrayatto Banker Chairman Note Lagbey 10 Bochhorer Oviggota(Public Bank Chairman Must Have 10 Years Experience)”,jagonews24.com,December 24,2022.
https://www.jagonews24.com/m/economy/news/820089
- “Nasty November for Islamic Bank “ ,Sanaullah Sakib,Daily Prothom Alo,November 24,2022.
https://en.prothomalo.com/business/local/x60ivy2cbn
- “ Aat Percent Sude Amanat Chai Islami Bank (Islami Bank Offers 8% Interest On Deposit)”,Daily Prothom Alo,P-13,December 29,2022.
- “Lendene Goti Firchhey Na,Bond Chharbe Tin Bank(No Pace In Transaction, Three Banks To Issue Bond)”,Daily Prothom Alo,P-13, December 28,2022.
(24 décembre --- 30 décembre)
Cliquez pour voir/cacher
Ma Semaine Gastronomique
| Date |
Petit déjeuner |
Déjeuner |
Dîner |
Snacks,Sucreries,Boissons et Fritures |
| 24 |
Pain tchapati,Chou |
Riz,Purée d'haricot,Soupe aux lentilles |
Riz,Purée de pomme de terre,Soupe aux lentilles |
Fritures (Chou-fleur, Aubergine) |
| 25 |
Pain tchapati,Omelette |
Riz,Purée de pomme de terre,Chou |
Pain tchapati(fait par moi),Purée de pomme de terre,Chou |
Dattes |
| 26 |
Pain tchapati,Chou,Dattes,Œuf dur |
Riz,Purée d'haricot,Soupe aux haricots vigna mungo,Poisson pama croaker |
Pain tchapati(fait par moi),Soupe aux haricots vigna mungo,Chou-fleur |
Dattes |
| 27 |
Pain tchapati,Omelette,Dattes |
Riz,Purée de pomme de terre et haricot,Pama Croaker,Soupe aux lentilles |
Pain tchapati(fait par moi),Soupe aux lentilles |
Dattes,Œuf dur |
| 28 |
Pain tchapati,Omelette,Dattes
|
Riz,Purée de tomate,Purée de sésame,Pomme de terre,Chou |
Pain tchapati(fait par moi),Chou-fleur, Courge amère, Bombili |
Dattes |
| 29 |
Pain tchapati,Œuf dur,Tomate,Dattes,Chou |
Riz,Courge amère, Tomate,Bombili,Soupe aux lentilles |
Pain tchapati(fait par moi),Soupe aux lentilles |
--- |
| 30 |
Pain tchapati(fait par moi),Omelette,Tomate
|
Riz,Purée de pomme de terre et haricot,Pama croaker,Pois chiches et pomme de terre |
Riz,Purée de pomme de terre et haricot,Pama croaker,Pois chiches et pomme de terre |
Dattes |
In the world cup, Bangladeshi fans steal the show
Causing attention and bilateral ties to grow.
Deepen economic ties for continuous trade flow
And euphoria has some meaning to know.
Curtain fell for FIFA world cup 2022. Despite being no participant of this world cup,Bangladesh garnered lots of media attention due to its crazy football fans. In any world cup,streets and rooftops are ornamented with flags of Brazil,Argentina, Germany,Italy. I encountered flag of Spain on balcony and rooftops of some houses too. Numerous examples of jersey of Brazil,Argentina, Germany are sold in the streets. This year was no exception. Except semifinals and final, projection of the matches on giant screen was limited because of tense political atmosphere.
But nothing matches the joy and fun we had experienced when we were kids back in the 90’s. There was just one channel, the state-owned BTV that aired the matches. And in between matches cinemas,songs and foreign movies were broadcast. Those were the perks for staying awake late at night and the main attraction for us.Besides we collected stickers and post cards of the players. Trembling tables and showcases and utensils caused by wild screams whenever a goal was scored by the favorite team is a timeless manifestation of affection of Bangladeshis to the sport. Maradona,Matthäus,Baggio,Schillaci,Donadoni,Cannigia,Roger Milla,Rossi,Jorginho,Zico were some of the names I could recall at the moment. But Argentina and Brazil largely dominated the support base.It would not br an exaggeration if someone dubbed the country a colony of Latin America. Without firing a single shot the two countries from the other side of the globe overtook Bangladesh. This year's crazy jubilation is the continuation of that football empire.
It is indeed interesting that Argentina is going to open an embassy,closed back in the early 80’s,in Bangladesh again to acknowledge the love of the football fans.Both the countries have remarkable similarities. Both have witnessed dictatorial rule.Corruption,inflation, current account shocks are common to both economies. Protests of mothers of disappeared political activists of recent years and of those who lost dear ones in the military coups in the late 70’s remind us the protest of mothers of 30000 disappeared during the military rule (1976-83) in Argentina. Both the countries witnessed how worst the inflation could be. Argentina witnessed wild fall of its currency against dollar. Bangladesh in recent years sold significant part of its forex reserve to peg its currency against dollar. Military coups in both the countries gave birth to structural corruption.
However, the ties need materialism to get strengthened. Bangladesh imports soybean oil,wheat,meat every year. Our spending on cooking oil is staggering. We could easily import these things from Argentina and Brazil. Our RMG items,home appliance,ship,pharmaceuticals could be exported to these countries in exchange. In addition, one or two telecom operators from these countries could be given license to operate here. Currently, we have only three mobile phone operators (Grameenphone+Robi,Banglalink and Teletalk). Entry from another operator from another continent could deepen the strategic ties. Apart from that, Bangladesh Air Force is trying hard to produce advanced jet trainer cum light attack aircraft domestically. Argentina has longed to have fleet of such aircraft. If there is no sanction,Bangladesh and Argentina could jointly develop such aircraft and produce them in bulk quantities so that unit production cost gets significantly reduced. Air Force's ground troops already use Brazil-made sub machine gun. Privatization of defense article production in these countries could pave the path for further defense cooperation.Because only then defense spending could reach private organization, financial institution and research labs of the universities. It is indeed a good news that both the countries are eying for Free Trade Agreement,which will make goods of both the countries cheaper. Meat that most poor people could not afford nowadays will become cheap due to FTA. Container cargoes bound to China and Japan could easily go to Argentina and Brazil. It will be lucrative route if there is indeed FTA with Brazil and Argentina.
It is indeed interesting how Football becomes the navigating star to connect countries located at different continents. Deeper economic ties could bolster the relationship. Crazy euphoria for football will only get a true meaning when economic benefits make a difference into the lives of most of the people in these countries.
(17 décembre --- 23 décembre)
Cliquez pour voir/cacher
Ma Semaine Gastronomique
| Date |
Petit déjeuner |
Déjeuner |
Dîner |
Snacks,Sucreries,Boissons et Fritures |
| 17 |
Pain tchapati,Œuf poché,Chou-fleur |
Riz,Chou,Purée de pomme de terre,Soupe aux lentilles,Poisson paradis filamenté |
Pain tchapati(fait par moi),Soupe aux lentilles,Chou |
Dattes |
| 18 |
Pain tchapati(fait par moi),Dattes,Chou |
Riz,Soupe aux lentilles, Purée de haricot et pomme de terre,Poisson paradis filamenté |
Riz,Soupe aux lentilles, Purée de haricot et pomme de terre |
Œuf dur |
| 19 |
Pain tchapati(fait par moi),Dattes,Omelette |
Riz,Tête de chèvre dans soupe aux poi chiches,Chou,Chou-fleur |
Pain tchapati,Tête de chèvre dans soupe aux pois chiches |
--- |
| 20 |
Pain tchapati(fait par moi),Dattes,Choueochuch-fleur |
Riz,Soupe aux haricots vigna mungo, Purée pomme de terre,Poisson ruhi,Feuilles de moutarde, Feuilles d'Amarante tige |
Pain tchapati(fait par moi),Soupe aux haricots vigna mungo et chou-fleur |
Dattes |
| 21 |
Pain tchapati(fait par moi),Omelette |
Riz,Soupe aux lentilles, Purée de haricot et pomme de terre,Poisson Ruhi,Pois chiches |
Pain tchapati(fait par moi),Soupe aux lentilles et pois chiches, Chou |
Dattes |
| 22 |
Pain tchapati,Chou |
Riz,Soupe aux lentilles,Purée de pomme de terre,Poisson gobie |
Pain tchapati (fait par moi),Soupe aux lentilles, |
Lait,Dattes,Nouilles chow mein |
| 23 |
Pain tchapati,Omelette |
Riz,Soupe aux lentilles,Poisson Labeo Bata |
Riz,Soupe aux lentilles, Poisson Labeo Bata |
--- |
Series of arrests were made abroad
Investors lost money in crypto fraud.
Bangladeshi exporters also engaged in bitcoin trade
Don’t know the number of doomed fate.
Last week authorities across the world took severe actions against cryptocurrency fraud. In Bahama,Police arrested FTX owner Sam Bankman-Fried 1.Billions dollar worth of FTX crumbled and ruined thousands of investors. Another South Korean fled to Serbia after he had failed to pay the investors their due share2. Currency he introduced now worth $0.01. Authorities in Hong Kong alerted people investing in cryptocurrency as it poses huge risk.
This latest development reduced the trust on bitcoin to zero. Very few will interested to invest here in future.
Back in September Bangladesh Bank issued circular banning bitcoin in Bangladesh. Credit cards issued by local banks and Mobile Financial Services(MFS) are being used to do transaction in bitcoin,as noted by Bangladesh Bank. Citing Foreign Exchange Regulations Act 1947,the central bank underscored except fiat money transaction in other unregulated currency is illegal3.
The decision was taken in the wake of a police investigation that claimed that Tk 75000 crores were laundered abroad and Tk 25000 crores were smuggled out of the country in the span of one year,using MFS platforms,which play a crucial role in digital inclusion. What was worrying back then is that many exporters used crypto money to take orders and paid the bills for ingredients in crypto, as noted the central bank.
As one after another cryptocurrency went bankrupt, the issue here is that how many of our exporters have lost their money in crypto trade. Central bank needs to divulge the matter to the press. Another thing to note is that how many of these exporters took loans from local and foreign banks. The loans ,needless to say,turn into bad loans,causing further woes to ailing banks.
Back in September in my piece “Bangladesh Bans Bitcoin”4,I speculated that in Bangladesh, we have many rental power plants as well as captive power plants for industrial use. I fear many such plants may be used to bit mining operations. When you are producing RMG items or other industrial articles, price of electricity could play a role in fixing the price to maintain the competitive edge. But when you clandestinely operate such facility you are doing a great disservice to subsidized electricity. Electricity bill for such mining facility should not be same as that for industrial unit. Govt is also deprived of vital revenue. If govt allows such facility govt will get much needed revenue and higher price for electricity. This should be applicable for individuals who operate such facility at miniscule level.
As grey practices creep into our vernacular conducts, paying export proceeds in bitcoin is the latest addition. Earlier collapse of e-commerce industry has made destitute thousands of people. Transaction without cash receipt has become the new norm. The kind of digital Bangladesh is unfolding is adding woes to daily lives instead of making it easier, raising out of pocket expenditure instead of reducing it and full of illicit activities.
Key takeaways from this bitcoin debacle: - Identify the exporters who have lost their money in bitcoin trade.
- Identify how many of them took loan from local and foreign banks.
- Does the loss pose any serious threat to the NPL status of the banking system?
- Are the captive power plants being used for bitcoin mining operation?
- Consultation with MFS service providers to devise way to stop money laundering.
- Digital Bangladesh is making a u-turn,making lives difficult and costly.
Notes And References:
- "Sam Bankman-Fried:FTX Founder Arrested In Bahamas",Peter Hoskins,BBC,December 13,2022. For more read at
https://www.bbc.com/news/business-63953096?fbclid=IwAR2kVlkhiPaxiAnetAidBd_vzeZPe9Sch78qxPDlkZV3nNXzta6cUHulXgk
- "South Korea Says Crypto-Fugitive Do Kwon Is In Serbia",Peter Hoskins,BBC,December 12,2022. For more read at
https://www.bbc.com/news/business-63940181?fbclid=IwAR0U2mcB42WqZujuUCil6xdo26zOEadH9S9dHC3z84fAm0WGfDM6Smd-JPU
- "Bangladesh Bank Warns Against Accepting Export Proceeds In And Buying Cryptocurrency",bdnews24.com,September 15,2022.
For more read at
https://tinyurl.com/4b7tfz7h
- "Bangladesh Bans Bitcoin",Rezaul Hoque,September 16,2022.https://hoquestake.blogspot.com.For more read at
https://hoquestake.blogspot.com/2022/09/bangladesh-bans-bitcoin.html?m=1
(10 décembre --- 16 décembre)
Cliquez pour voir/cacher
Ma Semaine Gastronomique
| Date |
Petit déjeuner |
Déjeuner |
Dîner |
Snacks,Sucreries,Boissons et Fritures |
| 10 |
Pain tchapati(fait par moi),omelette,dattes |
Riz,Chou-fleur,Purée de feuilles de coriandre,Poisson batachy |
Pain tchapati(fait par moi),Poisson batachy |
Nouilles |
| 11 |
Pain tchapati,Omelette |
Riz,Aubergines, Ruhi,Chou-fleur-Haricot,Ruhi,Soupe aux lentilles,Poisson batachy |
Pain tchapati,Pois chiches |
--- |
| 12 |
Pain tchapati,Omelette |
Riz,Ruhi,Chou,Œuf poché,Ruhi,Purée de pomme de terre |
Riz,Ruhi,Chou,Pois chiches |
Pois chiches,Riz gonflé |
| 13 |
Pain tchapati,Chou-fleur |
Riz,Soupe aux lentilles, Radis-Haricot-Aubergines-Sec Bombili,Poisson batachy |
Pain tchapati,Pois chiches |
Pois chiches, Riz gonflé |
| 14 |
Pain tchapati,Chou,Œuf poché |
Riz,Ruhi,Haricot, Soupe aux lentilles,Œuf poché,Ruhi,Purée de pomme de terre |
Pain tchapati(fait par moi),Ruhi,Pois chiches |
--- |
| 15 |
Pain tchapati,Omelette |
Riz,Soupe aux lentilles, Purée de pomme de terre,Chou |
Pain tchapati(fait par moi),Chou-Soupe aux lentilles |
--- |
| 16 |
Pain tchapati(fait par moi),Omelette |
Riz,Tapshey poisson,Aubergines, Soupe aux lentilles,Chou-fleur |
Pain tchapati(fait par moi),Tapshey poisson,Aubergines |
--- |
Pay VAT not just to fill govt coffer
But to create a neighborhood safer.
This week is going to be Value Added Tax(VAT) week. VAT plays a crucial role in filling govt's coffer. 31 years ago when then finance minister Saifur Rahman introduced the VAT very few thought it would account mammoth share of government’s revenue. By any standard it was a bold and visionary step back then.Mr Rahman,who lost his life in a tragic road accident in 2009,was criticized right and left for the move.Nevertheless,he implemented the plan and now we are reaping its benefits.
In 1991-92,VAT revenue represented Tk 16.775 billion and income tax revenue was Tk 13.00 billion. In 2015-16,VAT revenue was Tk 539.16 billion and income tax revenue was Tk 517.96 billion. In 2021-22,VAT revenue was Tk 1.27 trillion and income tax revenue was Tk 1.05 trillion(Source:BER 2021).Earnings from VAT overwhelmingly dominate govt’s total revenue earnings. Though many people’s income slips through the income tax net,VAT touches people from all walks of life.Peasants, workers,housewives, unemploymed all pay VAT through their daily transactions. All goods and services are subject to 15% VAT regulations.
Govt uses the VAT money to pay subsidy and other expenses.Though mismanagement in public banks put them into precarious position,govt keeps funding these banks using taxpayer’s money to run operation. On the other hand,duties and taxes on export items are still low. Many exporters do not bring their money back home and pay a very low source tax,1%. Yet they receive regular subsidy.Government should raise the source tax to 2.5% and provide subsidy to export earnings brought back home. Even 0.25% increase in export tax would yield good revenue for the government without compromising the competitiveness of the exportable items.
Micro entrepreneurs and street vendors fall out of NBR's reach because their businesses do not fall into NBR's VAT category. Meanwhile, extortion from Dhaka streets every year reached Tk 14 billion ,according to an NGO study.NBR could introduce special bonds/tools for them which opens the alley for purchase of bonds worth Tk 100/500 every month/quarter at their own will.Part of the revenue will be used to form crisis fund for them in case of working capital need or bankruptcy.
In addition, NBR could introduce special gadgets with satellite data link so that road side kiosk and shops could generate VAT included cash receipts and the info could be sent directly to NBR server. We have a communication satellite and we need to make good use of it. Our software developers could develop software for such device and there is no need for foreign firms.
This kind of gadgets without data link already introduced by bus conductors in the name of e-ticketing and squeeze out unreasonable amount from commuters’ pockets. It is interesting to note that those with malevolent intention increasingly hinge on gadgets while govt is shy to introduce them. In local neighborhood shops and groceries, concept of money receipt has become a bygone era thing long ago. To document every transaction this gadget is a must.
Now in Bangladesh we see criminalized neighborhoods with the spread of grey areas in business and other sectors. Introduction of VAT gadgets will create VAT culture at the grassroot level business and decriminalize the neighborhoods with greater transparency and documentation. So we have to pay VAT not only to fill govt coffer but to create a safe neighborhood.This is the apt realization and resolution for a chaotic time we have been going through.
(03 décembre --- 09 décembre)
Cliquez pour voir/cacher
Ma Semaine Gastronomique
| Date |
Petit déjeuner |
Déjeuner |
Dîner |
Snacks,Sucreries,Boissons et Fritures |
| 03 |
Pain tchapati,Papaye-Lentilles |
Riz,Chou-fleur, Ruhi,Soupe aux lentilles |
Pain tchapati(fait par moi),Chou-Chou-fleur-Haricot |
--- |
| 04 |
Pain tchapati,Chou-fleur-Haricot |
Pain tchapati,Chou-fleur-Haricot,Ruhi |
Riz-œuf,Ruhi |
--- |
| 05 |
Pain tchapati,Omelette |
Riz,Chou,Purée de pomme de terre,Purée des feuilles de coriandre , Ruhi,Soupe aux lentilles |
Pain tchapati(fait par moi),Pois chiches, Purée de pomme de terre | --- |
| 06 |
Pain tchapati,Chou-fleur |
Riz,Ruhi,Graines de l'épinard malabar,Chou-fleur |
Paratha(fait par moi),Pama Croaker |
Pois chiches, Riz gonflé |
| 07 |
Pain tchapati,Omelette |
Riz,Chou,Feuilles de l'amarante rouge,Pama croaker,Soupe aux lentilles |
Pain tchapati(fait par moi),Chou | --- |
| 08 |
Pain tchapati,Pois chiches |
Riz,Ruhi,Pois chiches,Purée de pomme de terre |
Paratha(fait par moi),Purée de pomme de terre,Pois chiches |
--- |
| 09 |
Pain tchapati,Pois chiches,Omelette |
Riz,Feuilles de Radis,Tête de Ruhi à la Soupe aux haricots mungo,Purée de haricot |
Riz,Tête de Ruhi à la Soupe aux haricots mungo | --- |
Poor tax return of this fiscal year
Result of ambiguity and people’s fear.
National Board of Revenue has set December 31 as the new deadline for submitting tax return. November 30 was the previous deadline. However, lukewarm response from the taxpayers prompted NBR to set the new deadline.
Bangladesh is one of the few countries in the subcontinent where govt has to solicit/campaign for paying taxes. Only 900000 tax returns have been submitted till the last day of November. But the country has 8 million registered tax payers. But the authority believes the number of eligible taxpayers is much higher. That means more taxpayers ate still out of taxnet.
Dismal tax-GDP ratio tells a lot about country’s poor revenue collection.In 2015-16,country’s tax-GDP ratio was 9.49%. In 2020-21,it rose to 8.85% and in 2021-22,it became 8.70%. It has not even reached the double digit figures. Many countries in the region have higher tax-GDP ratio,leaving their govts in a comfortable position to finance their projects.
Breaking down of the tax receipts yields that direct tax on income and profit still lags behind indirect tax like VAT in terms of contribution to revenue generation. In 2015-16,VAT revenue was Tk 539.13 billion whereas income tax revenue was Tk 517.96 billion. In 2020-21,VAT revenue was Tk 1.27 trillion whereas income tax revenue was Tk 1.05 trillion(Source:Bangladesh Economic Review 2022). However, govt has lowered the corporate tax from 22% to 21% for current fiscal year.It should raise it to increase revenue from taxes on income and profit.
One of the good things govt introduced in recent years is the online return and eTIN to identify potential taxpayers. It dramatically increased the number of taxpayers. And all the troubles and hassles taxpayers endured all these years have also been reduced significantly.
Some YouTubers did tremendous help to govt by launching videos on how to submit tax return. I submitted my zero tax return watching such videos. I think NBR should take the initiative to create and disseminate such educational videos to dispel any ambiguity in submitting return. Similar videos can be created to submit VAT return. NBR's job is not only to identify taxpayers but also includes educating the taxpayers. If step-by-step process in filling the tax return is spelt ,more people will be encouraged to submit tax return. In addition ,NBR could also host a frequently asked questions (FAQ) section on its website to respond to some common queries.
More people have the fear that once they submit return they may be subject of future harassment. I think NBR should disseminate the message that everyone should pay tax to contribute to economy. Perception about submitting return needs to be changed and should be replaced with a moral obligation. A well-informed taxpayer, clear about his role, is never shy to pay tax in time. Government has to make sure a harassment-free,informative atmosphere.
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