Emphasizing the price rise, the letter of the letter to the governor

Emphasizing the price rise, the letter of the letter to the governor

Bangladesh Bank has decided to reduce the ratio of debt and deposit to the banking sector to stop aggressive banking. Banks have been informed about this. But the Managing Director of the banks (MD) thinks that if the Bangladesh Bank's decision is implemented, the pressure of inflation will be triggered. This will cause the prices to rise further. On January 15, the bank has sent a letter to the Governor of Bangladesh Bank, Fazle Kabir, on behalf of the Association of Bankers Association of Bankers, Bangladesh (ABB).

This information was found in Bangladesh Bank sources.

In the ABB letter written to the governor, we are concerned that in the near future, the advance depot ratio (ADR) will be reduced to 80.5 percent. If so, then there will be additional deposits of Tk 20 to 25 thousand crore in the banking sector.

In the letter, MD said further, if we implement the new ADR policy of the central bank, the interest rates on deposits of banks will increase. Because, banks will increase interest rates for collecting deposits. There will be no new deposits in the bank system. Only one bank's deposit will go to another bank. As a result, the bank will raise the interest on deposits, existing depositors will get the money from other banks and then they will spend it in the bank. Banks will also increase the interest rate of the loan if interest rates on deposits increase, which will put pressure on inflation.

The main function of the bank is to distribute loans to customers from deposits. In this case, if the general public of the country can collect 100 taka, then the maximum loan of 85 taka can be given. However Islamic banks can lend to the maximum of 90 taka. But in recent times, ADR has exceeded 90 percent of most private banks. As a result, most of the private banks have created liquidity or cash crisis. Under this circumstances, the bankers in the bankers' meeting held on January 3 sternly ordered the commercial banks to refrain from aggressive investments.

After the meeting, Deputy Governor SK Sur Chowdhury said that the situation was created due to the non-payment of the rate at which banks were distributing loans. Instructions have been given at the Bankers meeting to reduce the rates of existing AD Ratio for commercial banks. MDs have been asked to reduce their ad ratios. After the circular issue from the Bangladesh Bank, the new rate of ED ratio will be determined. The rate may be slightly higher of 85 percent for the general banks and 85 percent for the Islamic banks. The rates will be determined by excluding cash deposits (CRRs) and statutory deposits (SLRs) in the central bank. Banks have been asked to prepare the matter from now on.

In fact, the rate at which the banks have disbursed the credit does not raise the deposit, the AD ratio has increased.

ABB Chairman and Dhaka Bank MD Syed Mahbubur Rahman said that the amount of the loan has not been deposited at the rate of deposits. As a result, the AD ratio of the banks increased. The Bangladesh Bank said that 85 percent of AD will not be able to live in any bank.

Meanwhile, the ABB letter written to the governor said that within a short period of time, if the Bangladesh Bank wants to implement this policy fully, then the banks will be able to challenge the ongoing debt distribution challenge. Especially in the current capital loan, payment of import bill for the customer and the distribution of loans to various ongoing projects may be hampered. In this, customers and exporters, SMEs and corporate customers will be feared to be in financial crisis. Then it will be difficult for the banks to handle this situation. Especially in the election year it will be even more difficult. So, if the Bangladesh Bank has to implement the modified ADR policy, it should be implemented at least one year.

ABB's letter said that the option of AD Ratio can be included in the CMELS rating. In other words, those who have ADR will be negative in their rating. In addition, ABB has requested the ADR to be the sub-ordinated bonds under Tier-2 to increase the capital base of the bank. At the same time, it has been demanded to discontinue that one-third of the bank's provisions against the off balance sheet item.

Meanwhile, in the new year to attract deposits, most banks increased interest rates on deposits. According to the new interest rate, Agrani Bank has fixed interest rate of 5 percent, 6 month term deposits 5 percent 25 percent, and 5 percent interest of 5 percent interest in a one-year or longer term deposit by increasing 0.5 percent interest to 0.5 percent interest.

State-run Rupali Bank is giving interest of 5.25 percent by raising nearly one percent from the rate of 4 percent in the three-month period. Instead of 4% to 75% of the 6-month term deposits, they have increased 5% and 5% from one percent to 6 percent. In the short term, from 3 to 4 percent and savings deposits, instead of 3 percent, 4 percent is paying interest.

Dhaka Bank is taking maturity deposits of 6% interest from the beginning of the year 2014 State-owned Agrani Bank increased the rate of interest of all types of term deposits by 0.50 percent. Rupali Bank increased the interest rate by one percent to the bank. Likewise, other banks are also preparing to increase the rate of interest on deposits.

In this context, chairman of state-run Agrani Bank and Bangladesh Institute of Development Studies (BIDS) researcher Dr. Zayed Bakht said, "Private sector entrepreneurs have now increased the borrowing from the bank. The demand for deposits in banks is increasing due to the increased demand for loans. In order to meet the liquidity demand, the banks have increased interest rates on deposits. For this reason, the depositors who have gone out of the bank have started returning to the bank again.

According to the central bank, after the end of October, 10.37 percent deposits in the bank sector increased. The loan increased by 18.40 percent. However, in November, the growth in the private sector debt was 19.66 percent. In October, the credit growth was 18.63 percent, 19.4 percent in September, 19.98 percent in August and 16.94 percent in July. In June, the loan growth was 15.66 percent.