Banks being made poor-friendly, caring

DHAKA: As the world is now facing economic recession, like developed and developing countries, Bangladesh is also trying its level best to make up its economic stability.

In line with the efforts, Bangladesh Bank (BB) is implementing multifarious policy guide lines, legal and institutional programs to improve the economic sector.

Dr. Atiur Rahman has been at the helm of the top most position of the central bank as the governor that covers the much talked about period. He took up this position of the central bank governor in May, 2009. On May 2 next he will start his last year of journey as governor. During this time many of his promotional initiatives were acclaimed. He has earned an identity of poor- friendly economic pilot. His appreciations for infusing humane concepts in banking sector are now reverberating not only within the country but also outside Bangladesh.

Atiur Rahman has recently been awarded with the prestigious Indira Gandhi Gold Plaque by the Asiatic Society, Kolkata, in recognition of his significant contribution to international co-operation towards human progress. The award will be handed to Rahman in a ceremony at the Vidyasagar Hall of the Asiatic Society in Kolkata on May 7.

At this auspicious moment he exclusively talked to banglanews on the achievements of Bangladesh Bank. Excerpts of the second and final installment of his interview are as follows:

Banglanews: You talked about the new strategy of the bank surveillance. Would you explain, on what side the importance is given in fixing the strategy.

Governor: Look, since I became the governor of the central bank, I have been working to make the banking sector more humane and poor-friendly. Meanwhile, I think that I have become successful. But still lot of work is to be done. In continuation of this process to make the banking sector more stable, central bank has been changing the surveillance strategy. Bangladesh Bank(BB) has attached top most priority to bank supervision. Surveillance has increased in the several aspects of banking sector. For example, to minimize the risk or to mitigate the risk by forming a sound foundation, to enhance the risk oriented supervision, to harmonize the central bank’s regulatory policy in the light of international practice, to increase the capacity, sufficient monitoring has been intensified to increase the institutional governance of the banks. BB has given deep attention to the risk factors relating to banking sector under its on-sight supervision arrangement. We are maintaining strong monitoring in both on-sight and off-sight supervision arrangements. To make it more updated BB is working. Inspection reports would be prepared more speedily in coming days. It is necessary to enhance the monitoring system to ascertain the liquidity situation and management of the banks. Central bank has taken that initiative. We have increased our monitoring in inspection on the whole process of loan sanction, its proper use and loan recovery.

Banglanews: You have told that economy is stable and moving forward. Will it continue? Well speak something on the achievement in GDP growth.

Governor: I think that economic growth is on sound track. In 2008-9 fiscal the actual GDP was 5.7% due to increased production in agriculture and sound growth in various service sectors. In 2009-10 fiscal the GDP was 5.8% while it reached to 6.7% in 2010-11 fiscal year. Per capita national income growth has increased to 24 percent. It appears that GDP would be 6.5 parcent in current year while in coming year it would be near 7%, I think. The average growth rate in last three years would be more than 6.5% which has surpassed than any time before. In case of GDP growth Bangladesh is next to India in this region. We are above Pakistan, Srilanka, Nepal and Maldives in this respect. Moreover, there is no hesitation to term this growth participatory as well as qualitative. Our farmers, labours, small women entrepreneurs and all creative people have contributions in this growth achievement.

Banglanews:  Money inflation has caused dissatisfaction among the common people. How you would explain it?

Governor: Yes, you have told rightly. Due to price hike of food and oil in the world market the inflation has taken upward direction. On the other hand the inflation has reached to 10.10% in last March. To make the inflation at a tolerable stage a practical, controlled and consolidated. Monetary policy has been taken. Like in the neighbouring countries the inflation has reached to an unbearable stage in Bangladesh causing sufferings to the people. But I hope that price inflation of food will be tolerable owing to the steps already taken to check inflation as well as to save the poor. However, meantime the per capita income of the people has increased by one fourth parcent. It means that now the purchasing capacity of the people has increased considerably.

Banglanews: At the initial stage of the present government foreign currency reserve increased but in 2011 it came down. Please say something on this aspect.

Governor: Look, I have no headache for this reserve issue. At the end of 2010-11 the foreign reserve stood at one thousand crore US dollar but at the end of 2011 it slightly slided down. There are justified reasons for it. But the present foreign currency reserve is sufficiently enough. There is nothing to be worried. It is increasing in a regular way. Now it is above one thousand crore US dollar. Figuratively it has increased four times more in the next three years than previous three years. On last April 25 IMF committed one billion credit was added. Moreover, the loan selection committee headed by BB governor has given approval for foreign loan of one billion dollar in the current fiscal.  It is expected that initial capital for three recent approved NRB banks totaling Taka 1200 crore at the rate of Taka 400 crore each will help increase the foreign reserve.

Banglanews: What is the picture of foreign remittance in your tenure? How far it will be possible to keep it stable if new market is not intervened?

Governor: You all know that the remittance received during last three years amounted to 31.8 billion US dollar. 122 crore US dollar which is the highest so far was received in January this year. Never in the past such a huge amount was received in one month. Besides, several dozens  exchange houses were opened in addition to MFI, post office and mobile operators’ remittance disbursement channels enhancing and strengthening the remittance collecting banking network channel. The remittance will surpass 13 billion US dollar in current year. Government is attaching importance in searching new labour markets along with revitalizing the existing markets.

Banglanews: Tell something about export and import trade.

Governor: The present government has substantially increased export growth. During this time the export has reached the growth of 47 percent. In 2009-10 the export earning was 16.21 billion US dollar; in 2010-11 it was 22.92 billion dollar while till March of the current year it was 17.89 billion US dollar. If it is estimated tentatively at 24 billion Us dollar this year, the last three years’ average export earnings will exceed 21 billion dollar. On the other hand in 2009-10 the import cost was 23.74 billion dollar, in 2010-11 the cost was 33.66 billion dollar and in current year the import cost stood at 21.71 billion US dollar. There is no denying that price hike of food and oil in the global market, hiking price of cotton abroad and import cost of capital machineries for power plants have contributed for the excess import spending. However the central bank is very much aware of the fact.

Banglanews: The foreign currency transaction is associated with the increase of reserve. Has the central bank taken any measure to make the transaction of foreign currency easier and hassle free?

Governor: We have withdrawn the system of compulsory pre-approval in foreign currency transaction matter by liberalizing it. We have introduced easy foreign currency transaction policy of spending against current account for foreign tour, training, education, treatment cost and import cost. A definite policy guideline has been taken to bring the remittance through outsourcing of IT with the help of online. At present foreign remittance earning has become easier by exporting services. The software/IT firms can now spend for registration fee, server maintenance cost in foreign currency without the pre-approval of the central bank. This would help increase in the IT sector. In addition, there are arrangements of e-commerce and transaction for advance payment for the software/IT materials and service exporters. Admission fees are being paid by on-line. Opportunities have been created through on-line payment gateway. All these have been done to make foreign currency transaction easier.

Banglanews: Thanks for giving time to Banglanews.

Governor: Also thanks to Banglanews.        

BDST: 1838 HRS, MAY 02, 2012

Edited by:Shahjahan, Copy Editor/ SM Salahuddin, Output Editor