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Foreign exchange reserve increase US$ 100m to 1.6b in a week |
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February 27, 2001
Dhaka-- - Country's foreign exchange reserve increased by around USD 100 million to 1.6 billion in a week as the finance authorities cracked down on a thriving parallel forex market. The reserve was USD 1.5 billion last week recovering from a shaky position. “The reserve now rose to a comfortable mark due to efficient management and some rescue measures,” Bangladesh Bank governor Dr Mohammad Farashuddin was learnt to have told a meeting of the Parliamentary Standing Committee on Finance Ministry yesterday (Monday). Chaired by committee chairman Prof Ali Ashraf, the meeting at Sangsad Bhaban reviewed the role of the central bank on the economy and took it to task for certain lapses with regard to banking sector. Dr Farashuddin said the forex reserve had increased by USD 300 million in last two months due to the measures, including the central bank’s action against hundi transactions, stopping informal forex market and restriction on import through raising LC margins. Bangladesh Bank's vigorous campaigns to encourage remittance through banking channel and steps to ensure maximum repatriation of export money are also among the reasons that helped the turnaround. The reserves dropped close to 1.2 billion last November when the central bank suffered pressures from some routine overseas payments and import bills. The difference of foreign currency prices between formal and informal currency markets now came down to Tk 1 from around Tk 5 due to the actions, said the Bangladesh Bank governor. The foreign currency coffer slumped to record low in November last year and took an upturn from December. The reserves amounted to US$ 1.349 on December 7. Giving a positive development of banking sector, Dr Farashuddin informed the meeting that 26 commercial banks, including four NCBs, earned Tk 1,300 crore in profits last year. Some 11 private banks declared cash dividends last year while top 15 shares on Dhaka Stock Exchange now include 10 banks, he said. The chunk of default loan came down to 34 per cent from 48 per cent. He said the remaining legal reforms for banking sector would be made as soon as possible to bring back a total discipline in the financial sector. As committee member Syed Masud Reza inquired about the impact of frequent currency devaluation, Dr Farashuddin ruled out any major damage saying that RMG input accounts for maximum import payments which are made in foreign currency from the apparel export proceeds. When committee member Chitra Bhattacharya proposed to introduce collateral-free equity capital for women entrepreneurs, he assured the committee of considering the proposal. The meeting expressed dissatisfaction over the central bank’s negligence to conduct investigation and submit report to the committee on Janata Bank, asking why the bank had to spend Tk 8 crore to recover outstanding loans of Tk 31 crore in November 1998. In the meeting the parliamentary watchdog on finance ministry suggested the central bank to submit the report in its next meeting. The lawmakers also expressed dissatisfaction over the central bank activities as the BB did not submit report on the incident of United Commercial Bank Limited when Akteruzzaman Babu forcibly occupied the bank’s board. Sources said they also criticised Bangladesh Bank for its failure to submit another report to the committee on the problems of private and foreign banks. The central bank was asked to identify problems of private and foreign banks and submit a report to the committee. The meeting emphasised establishing RMG backward and forward-linkage industries and treating cold storage as an agro-based industry. Committee members SM Akram and Karimuddin Bharasha, Finance secretary Dr Akbar Ali Khan and officials concerned were present in the meeting. |