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Star Business Report

New entrepreneurs can take up to Tk 10 lakh as collateral-free loans at maximum 10 percent interest rate under a new initiative by the central bank.

The opportunity for young entrepreneurs came yesterday after Bangladesh Bank signed a deal at its office in the city with 32 banks and financial institutions to disburse money from its Tk 100 crore refinancing fund.

The fund will be used to lend up to Tk 10 lakh against only personal guarantee and on easy terms to entrepreneurs trained and selected through programmes launched by public or private organisations like Dhaka Chamber of Commerce and Industry (DCCI).

However, with collateral an entrepreneur can avail up to Tk 25 lakh as loan from banks under the fund.

The fund will extend loans to entrepreneurs who have not taken any loan from a financial institution in the past.

Under the deal, banks and other financial institutions will get refinancing loans from the central bank at an interest rate of 5 percent.

However, the banks and financial institutions must have their default loans below 10 percent to be eligible for the refinancing facility.

“Under the current banking system, adequate collateral is an important part of availing financing. But the lack of adequate collateral poses challenges to the entrepreneurs at the beginning of business," Bangladesh Bank Governor Atiur Rahman said at the event.

Rahman said every year about 20 lakh new faces enter the workforce, with only half of them finding jobs at home and abroad.


“The initiative from the central bank has been taken as part of the policy efforts to create additional employment opportunities."

Rahman said banks cannot limit themselves to signing the participatory agreement only; they will have to be active in finding out new entrepreneurs.

"Bankers have to lose sleep over realising money from large borrowers. But that is not normally seen in case of small entrepreneurs. So, I hope banks will be interested to invest in this segment of clientele even if the profit margin is a bit low."

The governor also praised DCCI whose initiative to create 2,000 new entrepreneurs has acted as a catalyst behind the central bank initiative.

He said more initiatives would be taken if this one succeeds.

Abul Kashem, a deputy governor of Bangladesh Bank, said DCCI would make a list of small entrepreneurs after providing them training.

"Banks and other financial institutions will lend as per the list. However, the lenders will still follow their due diligence in lending money to the entrepreneurs."

Ali Reza Iftekhar, chairman of the Association of Bankers, Bangladesh; Helal Ahmed Chowdhury, vice chairman of ABBD; Selim RF Hussain, vice chairman of Bangladesh Leasing and Finance Companies Association; and Shahjahan Khan, president of DCCI, were also present.

BBA Discussion Forum / 2,500 industrial polluters to face green tax
« on: August 16, 2014, 04:19:54 PM »
By Sohel Parvez

The National Board of Revenue is set to impose green tax on about 2,500 polluting industrial units in a bid to compel them to cut back on their pollution.

The industrial units will have to deposit 1.0 percent of the receipts from their products to the state exchequer, a senior NBR official said yesterday.

“We will soon issue a notice with the names of these polluting units to collect the surcharge,” he said, adding that the revenue authority has already gathered the list of polluting industrial units from the Department of Environment.

The surcharge, introduced this fiscal year, comes as part of the government's move to encourage industries to set up effluent treatment plants and make them aware of the harmful effects of their activities on the environment.

The Buriganga and other rivers around Dhaka, including the Turag, the Bangshi, Tongi Khal, the Balu and the Shitalakkhya, have become highly polluted due to dumping of wastes from tanneries, dyeing factories and other industries as well as households.

Among them, the Buriganga, the lifeline of Dhaka, is the most polluted, having zero oxygen level in its waters for nine months in a year, thanks to the tipping of toxic tannery wastes from Hazaribagh.

Insiders said brick kilns and industries in various sectors such as leather, dyeing, battery, ceramic, steel and re-rolling, rubber, sweater, food processing, rice, sugar, pesticides, fertiliser, printing, poultry, beverage, hospital and  diagnostic centres are likely to face environment protection surcharge or green tax.

The DoE though has not given any breakdown of how many industries in a specific sector pollute the environment.

The number of polluting units is not final though, and the DoE will continue to forward names as and when reports from field inspections come. On the other hand, it will request the tax authority to exclude names if the industries stop pollution and comply with the environmental law.

So far, the DoE has found more than 1,200 polluting units in the Dhaka region including the capital city. Khulna and Chittagong have the second and the third highest numbers of polluting units, followed by Barisal, Rajshahi and Sylhet.

Non-payment of green tax will be treated as an offence and punitive measures will be taken, according to the rules on environment protection surcharge issued on June 30.

BBA Discussion Forum / NBR misses collection target by 3.6pc
« on: August 16, 2014, 04:18:57 PM »
Star Business Report

The National Board of Revenue fell short of its tax collection target for fiscal 2013-14 by 3.59 percent, or Tk 4,488 crore, due to lower receipts from income tax and VAT from domestic sources.

Overall collections though rose 10.41 percent year-on-year to Tk 120,512 crore, according to data from the revenue authority which released its annual collection figures yesterday.

With the receipts falling below last year's target of Tk 125,000 crore, taxmen will now have to log in a 24 percent growth in its collections to attain the target of Tk 149,720 crore for the current fiscal year.

Taxmen blamed the slowdown in investment and the sluggish domestic demand for the less-than-target collection figure for fiscal 2013-14.

While economic activities picked up in recent months, the recovery was not enough to help the NBR hit the target despite increased monitoring and efforts to collect VAT at source and realise dues, and initiative to expedite settlement of court cases. Only collection of tax from import stage, mainly customs and VAT, exceeded the target last fiscal year: the NBR logged in Tk 33,230 crore, up 3.18 percent year-on-year.

Collections from VAT and supplementary duty from domestic sources grew 11.75 percent to Tk 43,726 crore. Despite the growth, the receipts fell short of target by Tk 3,124 crore. Income tax collection, which increased 15.51 percent year-on-year to Tk 42,915 crore, was short by Tk 445 crore from the target of Tk 43,360 crore.

BBA Discussion Forum / Stocks continue to gain on growing confidence
« on: August 16, 2014, 04:17:54 PM »
Star Business Report

Stocks gained for the sixth day yesterday, as investors went on a buying spree amid growing confidence.

DSEX, the key market gauge of the Dhaka bourse, gained 34.29 points or 0.77 percent to close at 4,565.

DSES, the shariah index of the DSE, gained 13.45 points or 1.28 percent to close at 1,060.

Spikes in large-cap stocks created optimism among investors, said IDLC Investments, an investment banker.

Among them, Lafarge Surma gained 3.67 percent, Square Pharma 1.93 percent and Grameenphone 1.83 percent.

Stocks gained as large-cap manufacturing stocks have continued to lead the market riding on investors buying interest, stated LankaBangla Securities.

Turnover advanced 3.44 percent to Tk 790 crore from the previous day—the highest in the last six months—indicating that the market is showing sign of life, the stockbroker said.

In response to growing market share of large steel manufacturers, engineering gained 3.66 percent, cement 2.63 percent while non-life insurance fell 0.62 percent.

A total of 1.53 lakh trades were executed with 16.48 crore shares and mutual fund units changing hands on the Dhaka bourse.

Losers took a modest lead over the gainers by 141 to 135, while 25 issues remaining unchanged on the DSE floor.

Square Pharma featured in the most traded stocks chart with 18.44 lakh shares worth Tk 52 crore changing hands followed by MJL Bangladesh and Grameenphone.

Apex Tannery was the highest gainer of the day, as it posted a 12.19 percent gain, while Exim Bank First Mutual Fund was the worst loser, plunging by 10 percent.

Chittagong Stock Exchange also gained with its selective categories index, CSCX, gaining 54 points to close at 8,629.

Losers beat the gainers with 115 to 94 with 23 issues remaining unchanged at the port city bourse that traded 1.29 crore shares and mutual fund units with Tk 54 crore in turnover.

Star Business Desk

Euromoney, a leading magazine on global financial markets, has awarded Citi Bangladesh as the Best Trade Bank in the country at its annual Trade Finance Awards for Excellence 2014, the bank said in a statement yesterday.
“This award is excellent recognition for our team in Asia and I would like to thank our clients who place their trust in Citi,” said Sanjay Tandon, managing director and head of trade for Asia, treasury and trade solutions.
“In a highly competitive market, this recognition is greatly appreciated by all of us at Citi. This win demonstrates Citi's commitment to providing the best solutions to its' clients in this region,” said Rashed Maqsood, Citi country officer for Bangladesh.
In the global category, the bank also won the Best Overall Global Trade Finance Bank award, the Best Short-Term Trade Finance Bank award, and the Best Energy Finance Bank award at the ceremony, according to the statement.
Citi also picked up Best Bank and Best Investment Bank in India and Best Bank in Taiwan.
Euromoney Awards for Excellence have been recognised as among the most prestigious in the financial services industry for two decades.

BBA Discussion Forum / Default loans rise in April-June
« on: August 16, 2014, 04:16:03 PM »
Rejaul Karim Byron

Banks' total default loans rose Tk 3,183 crore in the three months from March 31, with the scam-hit BASIC Bank accounting for almost 64 percent of the rise.

On June 30, the banking sector's total default loans stood at Tk 51,345 crore, up 6.59 percent from the first quarter, according to data from the central bank. The amount is 10.75 percent of the total outstanding loans.

The state-run BASIC Bank alone accounted for Tk 2,034 crore of the default loans, which is 40.77 percent of its total outstanding loans. Only ICB Islami Bank has a higher percentage of default loans.

Of the 47 scheduled banks (excluding the nine new banks), 23 banks saw their default loans ascend and 24 descend.

The four state-owned commercial banks' default loans soared Tk 1,030 crore between the months of April and June, with Agrani alone accounting for Tk 571 crore.

The default loans of private commercial banks rose Tk 632 crore, with just two banks responsible for 80 percent of the sum. Foreign banks' saw their default loans increase Tk 196 crore.

Meanwhile, the default loans of three specialised banks -- Krishi Bank, Rajshahi Krishi Unnayan Bank and Bangladesh Development Bank -- dropped.

Anis A Khan, managing director of Mutual Trust Bank, said the reason for the increase in default loans is that Bangladesh Bank allowed special rescheduling facility as a result of political instability last December, which many failed to repay later and have now become default loans.

From December last year to March this year, the banks regularised Tk 14,765 crore via the facility, according to BB.

Nurul Amin, managing director of Meghna Bank, echoed Khan, adding that many banks extended the facility to even their default borrowers to improve their balance sheets.

Many banks showed their bad loans as good ones so that their balance sheets look better and more profits can be given to the owners of banks.

Later, BB inspections detected these irregularities and the loans were classified again. Another reason behind the increase in default loans is that in 2012 and 2013 many loans were given through fraud, which are now gradually becoming defaults, Amin said.

Though the political situation is calm now, an uncertainty still looms large, due to which business has not yet picked up. As a result, many businessmen are unable to repay their loans on time, which also increases the amount of classified loans, the Meghna Bank MD added.

Zaid Bakht, a director of Sonali Bank, said the state-run commercial bank is being very meticulous before sanctioning loans. Subsequently, the loans given out in recent times are not defaulting; the loans which were disbursed before are to blame for the rise in default figures.

Another reason for the rise in default loans of state-owned banks is the jute sector, said Bakht, also the research director of Bangladesh Institute of Development Studies.

BBA Discussion Forum / Summit to find ways for sustainable development
« on: August 16, 2014, 04:02:25 PM »
Star Business Report

A four-day international summit on sustainable development will start on Saturday to find ways to attain development goals more comprehensively.
The event will bring together the participants to explore approaches to be adopted by developing countries to achieve sustainable development goals (SDGs) and confront new and emerging constraints, said Qazi Kholiquzzaman Ahmad, chairman of Palli Karma Sahayak Foundation.
Ahmad spoke at a conference on Bangladesh Summit on Sustainable Development 2014 at the National Press Club yesterday.
The summit will serve as a platform for civil society members, key government figures, donors, the academia and researchers to share and justify their views on a post-2015 sustainable development agendas and policy framework, he said.
The conference will be organised by Eminence, a non-profit organisation. Global Citizen's Forum on Sustainable Development will host the summit.   
The citizen's forum is an open and inclusive forum for people to engage with and commit to the challenges of building a sustainable future for all.
A total of 26 international and national NGOs including the United Nations development agencies will participate in the fair at the Nawab Ali Chowdhury Senate building of Dhaka University.

The headline for the summit -- Mission for 100 Years -- posits that sustainable development goals and agendas must be forward-thinking and long-term, Ahmad said.
The conference will revolve around the themes of human development -- access to water and sanitation, sustainable agriculture, quality education, sustainable livelihood, gender equality and women's empowerment, sustainable land and ecosystem management, climate change and sustainable energy, said Shamim Hayder Talukder, founder and chief executive officer of Eminence. 
The outcomes of the summit are to identify the scope of mainstreaming SDGs in national and international development agendas, he added.

BBA Discussion Forum / Current account surplus erodes
« on: August 16, 2014, 04:01:28 PM »
By Rejaul Karim Byron

The current account surplus eroded 35 percent year-on-year in fiscal 2013-14 despite the narrowing of trade deficit.

Last fiscal year, the current account, which reflects the country's net income, stood at $1.55 billion in the surplus in contrast to $2.39 billion the previous year.

The trade deficit shrank 2.89 percent to $6.8 billion on the back of a bigger increase in exports than imports: exports rose 12.04 percent whereas imports grew only 8.92 percent.

The drop in remittance inflow though has been blamed for the slide in current account surplus. Last fiscal year, remittance inflow declined 1.56 percent year-on-year, according to data from the central bank.

“Though the current account surplus decreased, it is still large,” said Zahid Hussain, lead economist of the World Bank's Dhaka office.

While this may be considered positive in terms of having a comfortable external balance and adequate supply of foreign exchange relative to demand, it also reflects the weakness in the domestic investment climate, as a result of which the country is unable to redeploy all its national savings in the domestic economy, Hussain added.

The WB economist further said an emerging economy like Bangladesh is expected to have a deficit in its current account, driven by strong imports of capital machinery and intermediate inputs.

While imports appear to have recovered relative to last year, the growth rate is still in single digit, a significant part of which came from the increase in food and other consumer goods imports, he added.

The impact of current account surplus on the overall balance of payments was reinforced by the surplus in financial account, despite a decline in inflows of foreign direct investment and a sharp increase in outflows on account of trade credit.

The financial account was $2.79 billion in the surplus owing to the increase in net medium- and long-term official loans and the positive 'errors and omissions'.

There was a $504 million inflow in 'errors and omissions' last year in contrast to a $752 million outflow in fiscal 2012-13.

In theory, the current account and the capital and financial account should balance. But in practice, this is not the case, because all BoP items are measured independently, irrespective of actual payment flows.

Errors and omissions are a balancing item, that is a net figure, so that errors in individual items may cancel each other out if they have opposite numerical signs.

Overall balance of payments surplus crept up to $5.5 billion from $5.1 billion in fiscal 2012-13, creating pressure on the nominal exchange rate to appreciate, Hussain said.

Bangladesh Bank remained active on the buying side of the foreign exchange market to prevent any significant exchange rate appreciation. It bought a total of $5.15 billion last fiscal year and $773 million between July 1 and August 7 this year.

On August 12, the taka-dollar exchange rate stood at Tk 77.47, which was Tk 77.63 in June. One year ago, it was Tk 77.75.

BoP is a statement that summarises an economy's transactions with the rest of the world for a specified time period.

BBA Discussion Forum / Solar irrigation pumps gaining traction
« on: August 16, 2014, 04:00:29 PM »
By Suman Saha

Solar-powered irrigation pumps are gaining popularity owing to cost-effective financing and an innovative business model.

The country now has around 120 solar irrigation pumps, the majority of which were installed last year, according to Md Enamul Karim Pavel, head of renewable energy at Infrastructure Development Company Ltd (Idcol).

Of the total, Idcol has installed 40 last year, with the help of other organisations.   

He said an increased number of people are getting interested in solar irrigation pumps due to their financial viability and lower cost.

A farmer has to pay Tk 3,000-Tk 4,000 for each bigha of land as irrigation charge during a crop season for diesel or electricity run pump, whereas for solar irrigation pumps it is Tk 2,500-Tk 2,800, he added.

Considering its immense potential, Idcol has now set a target of installing 1,550 solar irrigation pumps by 2017.

“We want to install more solar irrigation pumps across the country as it will ensure a sustainable energy solution and reduce dependency on fossil fuels,” said Mahmood Malik, Idcol's chief executive officer.

Till now, Idcol has approved 198 solar irrigation pumps, with 55 of them already set up and the remaining under the implementation phase, he said.

Under Idcol's solar irrigation programme, pumps with 5-11 kWp capacity and dynamic head ranging from 10-18 metres are being used.

The pumps can supply 5-6 lakh litres of water per day, sufficient to provide irrigation facility for 1,500 decimal of land for paddy and 3,500 decimal of land for vegetable cultivation per season.

“Installation of solar irrigation pump will certainly help the country save a huge amount of foreign currency,” Malik said.

Currently, there are almost 1.61 million irrigation pumps running in the country, of which 1.34 million are diesel-run and 0.27 million electricity-run.

The 1.34 million diesel-run pumps consume 1 million tonnes of diesel worth $900 million per year, with the government providing subsidy of $280 million to keep the diesel fuel cost down, Idcol said.

On the other hand, the 0.27 million electricity-run pumps consume about 1500MW of electricity per year.

The programme aims to install solar PV-based irrigation systems and replace the diesel-based ones in off-grid areas where there are possibilities to produce three types of crops throughout the year, while remaining free from flooding, arsenic contamination or saline water.

Apart from reducing dependency on expensive diesel fuel, these solar irrigation pumps will ensure lower emission of carbon dioxide in the environment.

Individuals cannot apply themselves for financial assistance under the programme; a sponsor has to assess the viability of the project and send the application to Idcol on his/her behalf.

Idcol provides financial support to solar irrigation projects based on debt, equity and grant ratio of 40:20:40.

Subsidy of 40 percent and concessional financing of only 6 percent interest rate a year enable the sponsors to install pumps and sell water at an affordable rate.

The installation of a solar pump with a capacity to lift around 5 lakh litres of water, sufficient to irrigate 15-20 acres, along with other costs will require around Tk 25 lakh.

BBA Discussion Forum / Expo on e-commerce set for Sep 25
« on: August 16, 2014, 03:59:31 PM »
Star Business Report

A three-day e-commerce fair will kick off in Dhaka on September 25 to popularise online shopping and lure young generation to set up more e-trading companies in the country.

Computer Jagat, a leading ICT magazine in Bangladesh, will organise the exhibition for the sixth time at Begum Sufia Kamal National Public Library in the capital.

“Online shopping is getting popular in the country; but the amount of transaction is still very small,” said Md Abdul Wahed Tomal, convener of the Dhaka e-Commerce Fair 2014.

The fair is expected to increase such trading by building awareness, he said.

The number of e-commerce sites increased fivefold to 500 in the past two years.

Around 2,000 companies are doing business through Facebook, Tomal said at a press briefing at the National Press Club in the city yesterday.

Local e-commerce companies will showcase their products and services at the fair. Along with exhibition, publication programme of e-directory and gaming contest will also be organised.

Renowned ICT personalities and people related to the country's e-commerce industry will deliver key-note speeches in different seminars and workshops.

An awards night will also be organised where renowned ICT personalities will be honoured for their contributions to the sector.

Organisers will also hold around 20 seminars on e-commerce in public and private universities ahead of the fair.

No entrance and registration fee will be charged either to enter into the fair or to take part in the seminars.

The exhibition will also help in creating more entrepreneurs in the sector, said Mohammad Abdul Haque, assistant editor of Computer Jagat.

Many young people are becoming e-commerce entrepreneurs and earning their livelihood without doing regular “9 to 5” jobs, and many of these companies are getting success, he said.

The current decade will see the rise of e-commerce in Asian countries, said Razib Ahmed, editor of Ecombd, a Bangladeshi e-commerce blog. “By 2015, China's e-commerce market will be valued at $540 million; higher than that of USA.”

Online shopping accounts for a major share of daily retail trade in developed countries, and it is also growing in India and China, he said.

E-commerce has the potential to become one of the five leading sectors in Bangladesh in the next 10 years, he said.

“We need to work together to explore the potential Bangladesh has in e-commerce,” said Jubaer Hossain, senior manager for business development at SSL Wireless, an e-commerce solution provider.

He stressed the need for building customers' trust on online shopping.

In Bangladesh, online shopping, including e-ticket sales and sales through Facebook, has yearly transactions worth around Tk 200 crore, which is growing by nearly 30 percent every month, according to the industry insiders.

The first e-commerce fair was organised in the same venue in February 2013. The Daily Star is a media partner of this year's fair.

BBA Discussion Forum / Stock Turnover hits six-month high
« on: August 16, 2014, 03:58:39 PM »
Star Business Report

Turnover on the Dhaka Stock Exchange hit a six-month high yesterday with the stocks ending in black for the fifth consecutive session, implying an increased interest in buying.

Turnover, the most important indicator of the market, advanced almost 30 percent to Tk 763.90 crore, also crossing the Tk 700 crore level for the first time in the last six months. The premier bourse's turnover stood at Tk 770.40 crore on February 2.

DSEX, the benchmark index of DSE, also hit a three-month high at 4,530.83 points, after registering 1 percent or 44.64 points gain. DSES, the shariah index of the premier bourse, rose 20.92 points or 2.03 percent to finish the week's first trading day at 1,047.02.

Stable macro-economic indicators like foreign exchange reserves crossing $22 billion and the appreciation trend of the taka put a positive psychological impact on investors, IDLC Investments said.

Investor confidence remained high as evidenced by sustainable increase in participation in terms of turnover in the last few sessions, the merchant bank added.

Large-cap centric trading pattern formed the bulk of turnover upshot, with the top ten capturing 38.77 of yesterday's trade, it added.

LankaBangla Securities said the benchmark index crossed the psychological barrier of the 4,500-point level with strong turnover.

“Heavyweight stocks extended their rally further with increased buying interest,” the stockbroker said in its regular market analysis.

Telecommunication continued its gaining streak with 2.97 percent rise, while cement sector increased by 2.91 percent.

Conversely, life insurance with 1.32 percent fall and banks with 0.81 percent decline disappointed investors the most.

Gainers beat losers 165 to 100, with 34 securities remaining unchanged on the DSE.

MJL Bangladesh dominated the turnover chart with 67.40 lakh shares worth Tk 67.81 crore changing hands, followed by Square Pharma, Grameenphone, Active Fine Chemicals and Beximco.

Shahjibazar Power Company was the day's best performer, advancing 9.98 percent, and ICB 1st NRB Mutual Fund was the worst loser, slumping 8.27 percent.

Chittagong stocks also gained yesterday, with the benchmark CSCX increasing by 82.73 points, finishing the day at 8,575.2.

Gainers dominated losers 116 to 91, with 21 securities remaining unchanged on the Chittagong Stock Exchange.

The port city bourse traded 1.41 crore shares and mutual fund units, generating a turnover of Tk 78.53 crore.

BBA Discussion Forum / Bangladesh Bank relaxes car loan policy
« on: August 16, 2014, 03:57:50 PM »
Star Business Report

The central bank has doubled the ceiling for car loans to reflect the increased prices of motor vehicles and provide banks a channel to utilise their excess liquidity.
Banks can now extend up to Tk 40 lakh as car loan, Bangladesh Bank said in a notice yesterday. The previous ceiling for car loans was Tk 20 lakh.
The debt-equity ratio has also been changed to 50:50 from 30:70 earlier. In other words, consumers can now buy cars worth up to Tk 80 lakh by availing a Tk 40 lakh bank loan. Previously, cars worth up to Tk 67 lakh could be purchased by taking out a bank loan.
The move comes in response to the higher market prices and demand for vehicles, said Md Anwarul Islam, deputy general manager of the central bank.
Another BB official said the relaxation of the car loan policy arose from the need to give banks a channel to direct their huge piles of liquidity in the face of sluggish investment demand.
At the end of May, banks were sitting on Tk 140,243 crore of excess liquidity, up from Tk 79,441 crore at the end of June last year.
The increase in car loan ceiling will not affect inflation, as the product is generally consumed by the society's high-income group, Islam added.

Meanwhile, Abdul Haque, a former president of the Bangladesh Association of Reconditioned Vehicle Importers and Dealers Association (BARVIDA), welcomed the central bank move, as the previous loan policy was “too tough” for the general public.
The new policy will be beneficial for small businessmen who until now could not afford the high cash requirement to purchase a car or utility van, he said.
Haque, however, called for further relaxation of the policy.
The ceiling for auto loan under consumer financing was first fixed in 2004 at Tk 50 lakh; loans could be availed after a 10 percent down payment.
Then in 2005 it was lowered to Tk 20 lakh, to be raised back to Tk 50 lakh in 2010. The debt-equity ratio then was fixed at 50:50.
In 2012, as part of BB's efforts to discourage loans to unproductive sectors, the ceiling was again lowered to Tk 20 lakh and the debt-equity ration set at 30:70.
The new policy will be of particular benefit to the low-income group, according to Hamid Sharif, former secretary general of BARVIDA.
“The previous policy was to arrange for 70 percent of the price of the car and fill in the remaining 30 percent by taking a bank loan, which was beyond them,” he added.
Last year, a total of 10,472 cars, 2,537 microbuses and 945 sports utility vehicles (SUVs) were sold, according to Haque. Between January and March this year, 3,624 cars, 946 microbuses and 355 SUVs were sold.

Reuters, Berlin

Beset by low air fares and relentless competition, airlines around the world are waking up to the value of their frequent flyer programmes and realising they can boost profits as well as brand profile.

A multitude of global carriers -- preserved by complex cross-border ownership rules that curb dealmaking -- means that simply selling tickets is no longer lucrative. Industry body IATA predicts a 3.5 percent drop in fares this year and for airlines' net profit margins to reach just 2.4 percent.

As airlines dig around for new ways to make money, many of them are finding it buried deep in their marketing departments.

Dating back to American Airlines' launch of AAdvantage in 1981, FFPs were originally used to encourage a customer to spend their money with just one carrier by offering free flights as rewards once enough miles had been collected.

Nowadays, however, the programmes, with their rich customer data, have become a currency of their own as airlines realise their value to companies such as credit card providers, hire car companies and hotels. An example: Delta commanded $675 million from American Express for its Skymiles in 2011-2013, according to Euromonitor analyst Nadejda Popova.

Those are not the only kind of deals to which airlines have turned, increasingly inventive as profits nosedive. In 2012 Germany's ailing Air Berlin sold a 70 percent stake in its Topbonus programme to Etihad for 185 million euros ($247.72 million), more than the market value of the German company as a whole at the time. In 2013 an IPO of Smiles helped Brazil's Gol bring down net debt.

Now industry watchers expect more such deals, spin-offs and stock market listings as airlines try to unlock more value from these businesses -- and in turn drive more new revenues.

Brazil's Valor Economico newspaper reported recently that the country's third-largest airline Azul Linhas Aereas could follow in the steps of rivals TAM and GOL by floating its TudoAzul frequent flyer programme as a way of raising funds in the capital market, citing the programme's director.

"The visibility you get from establishing it as a separate unit and the additional focus that it then has in terms of becoming profitable in its own right pushes it to generate revenue from sources other than the core FFP," Jonathan Wober, chief financial analyst at CAPA - Centre for Aviation, an independent aviation market analysis group.

Given that airlines often don't report separate figures, it's hard to say precisely what FFPs are worth. But the figures that are available show how richly valued they are.

When Air Canada spun off 12.5 percent of its frequent flyer programme in 2005 it was valued at C$2 billion ($1.82 billion), or around 20 times its then annual profit of C$99 million. More recently, analysts have put a value of up to $2.5 billion on the loyalty division of Quantas - almost 10 times the unit's annual profit - as Qantas prepares to float or sell part of it under a restructuring.

There are benefits for those airlines that do make money too. Deutsche Lufthansa's new chief executive Carsten Spohr said last month that giving its frequent flyer programme Miles & More an independent profile would lift the entire group's profitability and provide money needed for new planes.

Analysts at KPMG say it's worth an airline putting a programme into a separate unit first before attempting a stock market flotation.

"For IPOs there are a lot of requirements when it comes to transparency. I would recommend letting the programme report results for one or two years first so the market has access to numbers," Magnus Schenk, a transactions director at KPMG in Frankfurt, told Reuters.

It's no surprise that investors are interested in FFPs for their data. What makes FFPs particularly sexy is the detail in that data: Not just a rich seam of customers, but a rich seam of rich customers.

BBA Discussion Forum / Tourism sector eyeing brisk business
« on: August 16, 2014, 01:55:03 PM »
By Yasir Wardad

Local tourism sector is eyeing brisk business as thousands of tourists have been thronging the country's most lucrative places thanks to the three-day-long government holiday from Friday to Sunday.

Tour operators are witnessing a rush of people second time just two weeks after the Eid celebration, they said.

Tickets for train, private-run bus and airways from Thursday to Saturday have almost been finished, insiders said.

Shafiqul Islam Belal, official at a private bank, was at Hanif Paribahan at Kalabagan in the city Wednesday night to confirm tickets for Cox's Bazar.

Talking to the FE he said these are last holidays before Eid-ul-Azha and he doesn't want to waste it.

"During Eid-ul-Fitr, it was necessary to remain at home with parents and in Eid-ul-Azha we will be busy with our sacrificing animals," he said.

"An additional one day (Sunday) leave on the occasion of 'Janmashtami' has come as a great pleasure for us," he said.   

However, the hotel booking has swelled by more 50 per cent for Thursday night to Sunday compared to that of normal days, Tour Operators' Association of Bangladesh (TOAB) officials said.

Abul Kauim Chawdhury, General Secretary of Cox's Bazar Hotel-Motel and Guest House Owners' Association said around 50 per cent of the hotel rooms have been booked in more than 400 hotels in the resort town.

He said if weather remains favourable, the booking would go up to 80 per cent by today (Saturday).

Managing Director of Galaxy Travel International Taufiq Uddin Ahmed told the FE that they are expecting good business with local tourists during the three-day vacation as the environment is very suitable for tourists now.

MN Karim, Chairman of Ocean Paradise Hotel and Resort in Cox's Bazar said 60 per cent of his hotel rooms have been booked in advance for next three/four days.

HM Hakim Ali, President of Bangladesh International Hotel Association said the industry is regaining from the losses it incurred last year for political turmoil.

Md Shamsad Ali, counter manager of Hanif Paribahan at Kalabagan, told the FE that tickets of Thursday (night) to Friday for Chittagong and Cox's Bazar were sold out before Tuesday.

He said generally on Thursday night, many service-holders go home to pass two days of official holiday on the weekend (Friday and Saturday).

"But, these three days' leave at a row, has pushed up the demand for tickets significantly," he said.

BBA Discussion Forum / 100 social businesses launched
« on: April 20, 2014, 06:58:44 PM »
100 social businesses launched

Yunus Centre Social Business Design Lab, a platform promoting projects based on Prof Muhammad Yunus's idea, yesterday crossed a milestone of producing more than 100 projects.   
The disclosure came at the 14th Yunus Centre Social Business Design Lab at the Grameen Bank auditorium in Dhaka, Yunus Centre said in a statement.
The Nobel laureate provided a summary of the projects presented at the lab so far. Of the 113 projects, 97 were approved for implementation, 36 are operational and 54 received investments, getting prepared to start the business soon.
Investors have already put in over Tk 1.25 crore in these social business projects.
At the lab, 14 new social business plans were presented, including 12 new entrepreneurs' projects and businesses launched by young entrepreneurs who are the children of Grameen Bank families.

In addition, a social business of Red Worm Vermicompost to produce organic fertiliser from earth worms by Sazzad Hossain and another project—Tripty Handicrafts—by Luke Swanson, were also presented.
All of the 14 projects received a go-ahead, which will be finalised for investment and implementation as next step, according to the statement.
Agreements were also signed for the launch of seven social businesses.
Grameen Kalyan signed two agreements: one with Habib Dairy and another with Jahangir Engineering Workshop, the Yunus Centre also said.
Grameen Trust signed four deals with Adhare Alo Enterprise, Faruk Information and Community Centre, Jalal's Homemade Bag and Khaja Tiles and Sanitary.
The next design lab will take place on May 3.

Source:Star Business Report

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