Business-Analysis
Bangladesh received $23.91bn remittance in FY2023-24, 2nd highest in fiscal history: Bangladesh Bank
Bangladesh has received US$ 23.915 billion in remittances for the fiscal year 2023-24, ending on June 30, marking the second highest remittance inflow in a fiscal year to date.
Md Mezbaul Haque, Executive Director and Spokesperson of Bangladesh Bank, told UNB that expatriate Bangladeshis sent $2.542 billion in remittances in June 2024. This brought the total remittance amount from July 1 to June 30 of FY 2023-24 to $23.915 billion, compared to $21.610 billion in the previous fiscal year.
Bangladesh Bank extends Tk 5000 crore refinance scheme to support food security
Remittance inflow to Bangladesh rose 15.59 percent year-on-year to $2.542 billion in June, as migrant workers sent more money home for Eid-ul-Azha. In May 2024, expatriate workers sent $2.253 billion in remittances.
Sector insiders attribute this growth to the higher exchange rate of the dollar and the festive occasion of Eid-ul-Azha, which prompted expatriates to send additional remittances to their families.
Economist Dr. Ahsan H. Mansur commented that Bangladesh can increase remittances through legal channels by enhancing financial and non-financial benefits for the remitters. He noted that many remitters prefer the illegal Hundi system due to its higher exchange rate, diverting legal remittances to illegal channels.
Read more: How to safely send remittance to Bangladesh?
What to Consider Before Taking a Personal Loan from a Bangladeshi Bank
Personal loans are a great option for those looking to make a big financial decision in their life. It could be buying a new car, planning a wedding, going on a vacation abroad, paying for higher studies, or getting a new home. Personal loans offer secured debt consolidation as they cover tons of financial needs. While taking out a personal loan is pretty straightforward, you should consider some key aspects before going for one.
Things to Consider Before Taking Out a Personal Loan from a Bangladeshi Bank
Purpose of the Loan
Personal loans are mostly taken as a form of investment source. It can be debt consolidation or a major investment for future benefit. Regardless, a loan means incurring a liability until it is paid off. It is important to properly assess whether taking the loan is a feasible decision or not.
It is also important to consider alternative funding sources like personal savings, emergency funds, or borrowing from family.
Interest Rate
One of the prime things to consider is the interest rate accrued to the loan capital. Currently, Bangladesh Bank has a regulation in place that outlines the upper limit that can be charged by the banks. The Bangladesh Bank interest rate regulation can be checked from the lending rate of scheduled banks (https://www.bb.org.bd/en/index.php/financialactivity/interestlending).
Read more: Top 10 Strongest Currencies in the World as of May 2024
Additionally, a borrower can use websites like aamartaka.com to compare the rates among banks, check eligibility criteria, and even apply through their designated channels.
Understand the Eligibility Criteria
The first thing to consider while applying for a personal loan is to understand the eligibility criteria. Personal loans can come in both secured and unsecured options. Granted that the unsecured options will incur a higher interest rate.
However, most banks require a set of eligibility criteria for one to apply for a loan. For example, the valuation of collateral against the loan or the liquidity level of the applicant. Other aspects like personal history verification, job verification, income, and salary credit account can also be the eligibility criteria depending on the lender. Another key aspect is the history of bankruptcy or loan default which might disqualify a person from applying for a personal loan.
Have a Good Credit Rating
A credit history is one of the key determinants of loan disbursement abroad. One can’t even apply for a credit card without a stable credit rating, let alone a personal loan. Credit rating determines the creditworthiness of an individual, that is how likely they are to repay a loan based on previous credit history.
Read more: How to Buy Bangladesh Government Treasury Bond: Everything You Need to Know
There are several credit scoring systems globally like FICO score and VantageScore. However, in the case of Bangladesh, the banks and NBFIs do not follow a set credit score while approving loans. Alternative credit scoring like asset ownership, utility payments, device data, and rental payments are taken into consideration. It is mostly because a large portion of the demographic is unbanked or underbanked to make credit scoring the sole determinant for loan approval.
Buying US Dollar Investment Bonds: A Comprehensive Guide for NRBs
When it comes to investments, bonds offer some of the best-secured opportunities out there. As a part of investment facilities through bonds for non-resident Bangladeshis (NRBs), Bangladesh Bank offers US Dollar investment bonds (USDIB). Let's take a detailed look at who this is for, how to apply, and what are the benefits of the bond.
What is a US Dollar Investment Bond?
The US Dollar Investment Bond was first introduced in 2002 as a form of investment opportunity for the NRBs. The key goal was to maintain economic stability and increase foreign reserves by attracting dollar investments. It also provided a secure pathway for the NRBs to invest and gain from their foreign earnings.
The rules for the USDIB were later updated in 2012 where the invested principal and the interest can be repatriated in dollar or taka as per the choice of the investor.
Read more: How to Invest in Bonds: A Comprehensive Guide
Who is Eligible for USDIB?
The government of Bangladesh outlined the eligibility criteria for USDIB investment as follows:
Any NRB living and working abroad earning in foreign currency.Foreign nationals of Bangladeshi origin living abroad and earning in foreign currency. Government and semi-government employees working abroad and earning in foreign currency. This includes those working in Bangladeshi missions or international organizations.
How to Buy USDIB?
The process of buying USDIB starts with opening a foreign currency account in any designated bank that operates USDIB under Bangladesh Bank. Note that the F.C. account is different from the Non-Resident Investor’s Taka Account (NITA) as the investment currency can only be US dollars in this case.
Step 1: Opening a Foreign Currency Account
Almost all the leading commercial banks (both national and private) offer USDIB under their NRB banking services. To open a foreign currency account, an NRB would require the following documents.
- Prescribed Account Opening Form - Two passport-size photographs of each of the account holder and the nominee - Authorized specimen signature card (attested by the Bangladesh Embassy in the residing country) - Proof of employment - Copy of passport (attested by the Bangladesh Embassy in the residing country)
An NRB can easily open the F.C. account in any foreign branch of the available banks or use the mail-in service to open the account in Bangladesh.
Read more: Top 10 Strongest Currencies in the World as of May 2024
Step 2: Document Required for USDIB
The process of applying for USDIB differs from bank to bank. Generally, the following documents are required.
- Bangladesh Bank application form for USDIB (https://fid.portal.gov.bd/sites/default/files/files/fid.portal.gov.bd/forms/4085d5c1_fd59_4be6_921d_c2c491fce6dc/investment.pdf)- Application request to invest in USDIB in the respective bank - Personal declaration form - FATCA form (for NRBs residing in the USA)
Step 3: Applying for USDIB
Once you apply for USDIB, you will need to show equivalent funds in your foreign currency account associated with the bank. The money can be deposited in the F.C. account in one of the following ways:
- Cash foreign currency deposited at an NRB branch of the bank- Traveler cheques - Regular cheques or drafts - Money order receipt - Electronic fund transfer - Once the bank completes the due diligence, it will issue bond scrips against the desired amount of bonds to be purchased.
Read more: How to Buy Bangladesh Government Treasury Bond: Everything You Need to Know
Bangladesh to get third IMF loan installment in June: Finance Minister
Finance Minister Abul Hassan Mahmood Ali announced today that the third installment of the International Monetary Fund's (IMF) $4.7 billion loan will be disbursed in June.
The announcement came after a meeting with IMF Executive Director Krishnamurthy V Subramanian at the finance minister's office in the Secretariat.
IMF approves $1.15 billion on staff-level for Bangladesh in third loan tranche
In response to reporters' questions following the meeting, Minister Ali stated, “We are working to increase the flow of dollars. There are many negotiations and efforts underway in this regard. We hope to resolve this issue soon.”
IMF Executive Director Subramanian expressed support for Bangladesh's efforts. “You are on the right track. We support the work you are doing to resolve the issue,” he said.
IMF delegation holds meetings with energy officials, wants to know govt plan on settling dues
When asked about the status of the third installment, Minister Ali confirmed, “They will pay in June, and there is no obstacle.”
How to Invest in Bonds: A Comprehensive Guide
Bonds are used by issuers to raise money from the capital market. In layman's terms, bonds are essentially instruments of debt created between the lender and the borrower. During certain economic situations, there might be a need for capital generation. As a result, it's normal to see a host of bonds being circulated in the market.
But how do you know which bond is right for you? What factors should you consider before investing in a certain bond? Let’s find out.
Types of Bonds
There are several ways to classify bonds. The most common ones are based on issuer, maturity, interest payment structure, and features. Let’s look at the different bonds under each basis.
Based on Issuer
Treasury Bonds
Treasury bonds are issued by the central bank directly on behalf of the government. For short-term investments, an alternative to treasury bonds can be treasury bills.
Read more: How to Buy Stocks: 10 Key Factors to Check
Municipal Bonds
Countries with provincial and local government structures may issue municipal bonds based on the government entity. It works the same way as treasury bonds.
Agency Bonds
Agency bonds are issued by government-affiliated or controlled entities. For example, a government-sponsored enterprise like Biman can issue bonds to raise capital to improve its infrastructure and service.
Investment Grade Bonds
Investment-grade bonds are issued by entities with high credit ratings. Typically the coupon rate for such bonds is low and the investment is more secure.
Junk Bonds
These bonds are issued by companies with low credit ratings and high default probabilities. The returns from these bonds are high whereas the overall investment is less secured.
Supranational Bonds
These types of bonds are issued by international entities like investment banks and the World Bank. The denomination of these bonds is not geographically limited.
Read more: Premortem Analysis: How to Anticipate Failure
Based on Maturity
Short Term Bonds
Short-term bonds usually have a maturity of less than three years. Treasury bills also fall under the short-term bond structure.
Medium Term Bonds
Medium-term bonds have a maturity period between 4 to 10 years.
Long Term Bonds
Long-term bonds usually have a maturity period of over 10 years. It also includes perpetual bonds.
Read more: How to Buy Bangladesh Government Treasury Bond: Everything You Need to Know
Based on the Interest Payment Structure
Fixed-Rate Bonds
Fixed-rate bonds usually have a fixed coupon rate throughout the maturity period of the bond. For example, the Bangladesh Government Treasury Bond is a fixed-rate bond.
Floating-Rate Bonds
Floating-rate bonds can fluctuate compared to a benchmark rate set at the start of bond sales. Here, the coupon rate varies during the lifetime of the bond.
Zero-Coupon Bonds
These types of bonds do not pay any periodic interest rate. Instead, these bonds are sold at a discount and the investor gets back the face value of the investment upon maturity.
Read more: Gold vs Diamond: Which Should You Choose for Investment?
Based on Features
Convertible Bonds
Bonds that can be transformed into predetermined shares of the borrowing entity.
Callable Bonds
Bonds that can be redeemed by the issuer before it reaches maturity.
Puttable Bonds
Bonds that can be sold by the investor to the issuer at a predetermined price before maturity.
Read more: Shares vs Bonds: What is the Ideal Investment Opportunity
Perpetual Bonds
Bonds that do not have any maturity date.
Inflation-Adjusted Bonds
Bonds whose coupon rate and the principal are adjusted per the inflation rate.
Sukuk
Bonds issued in line with the Islamic laws.
Read more: How to Raise Angel Investment for Startups in Bangladesh
Interest payments projected to be Tk 2537 billion over next two fiscals
Bangladesh’s total interest payment on loans for the next two fiscal years is set to reach Tk 2,537 billion, as stated in the government’s ‘Medium Term Macroeconomic Policy Statement for 2023-24 to 2025-26’. The breakdown reveals Tk 1,154 billion slated for the 2024-25 fiscal year and Tk 1,383 billion for 2025-26.
Domestically, the interest payments are projected to be Tk 1,008 billion in 2024-25 and increase to Tk 1,205 billion in 2025-26. Conversely, payments on external loans are significantly lower, with Tk 146 billion due in 2024-25 and Tk 178 billion in 2025-26.
RMG industry must tackle 3 challenges to sustain in competitive market
The government aims to reduce its total expenditure on interest payments by the end of the 2025-26 fiscal year. Historically, in FY 2020-21, 15.4 percent of total expenditures were devoted to interest payments. This figure is forecasted to decrease to 13.5 percent by the end of FY 2025-26.
In more detail, domestic interest payments are expected to drop from 14.4 percent of total government expenditures in FY 2020-21 to 11.6 percent in FY 2024-25, returning to 11.8 percent in FY 2025-26. In contrast, external interest payments, which comprised 0.9 percent of total expenditures in FY 2020-21, are anticipated to rise, reaching 1.7 percent by FY 2025-26.
This increase is attributed partly to the depreciation of the taka against the US dollar and heightened external financing needs. The prevalence of National Savings Certificates in the debt portfolio, a traditionally high-interest option, has also been a factor in elevated interest costs. However, a projected decrease in the share of these instruments is expected to bring down the implicit interest rate of domestic financing.
The implicit domestic interest rate is anticipated to improve from 10 percent in FY 2020-21 to 9 percent in FY 2024-25 and FY 2025-26. Meanwhile, external borrowings, influenced by global interest rate hikes and local currency depreciation, are likely to increase the external implicit interest rate from one percent in FY 2020-21 to two percent in FY 2025-26.
Mitigating deficit: Govt targets external financing of Tk 1200.3 billion and Tk 1306.4 billion over next two fiscals
Inflationary pressures have kept the yield of marketable securities high, maintaining an overall implicit interest rate of around six percent, which is expected to stay consistent over the medium term.
To address the projected fiscal deficits of Tk 2,792.3 billion in 2024-25 and Tk 3,170.7 billion in 2025-26, the government plans to secure Tk 1,200.3 billion from external sources in the next fiscal and Tk 1,306.4 billion in 2025-26, along with Tk 1,677.7 billion and Tk 1,864.4 billion from domestic sources, respectively.
Mitigating deficit: Govt targets external financing of Tk 1200.3 billion and Tk 1306.4 billion over next two fiscals
In an effort to promote a robust domestic debt market, the Bangladesh government is strategizing to increase its share of marketable securities in the coming years. According to a recent Finance Ministry document, the administration is also committed to continued issuance of Islamic securities Sukuks but has currently shelved plans for Eurobond issuances on the global market.
As fiscal deficits loom, with projections showing a deficit of Tk 2792.3 billion for FY 2024-25 and Tk 3170.7 billion for FY 2025-26—equating to 5% of GDP each year—the government underscores the need for strategic domestic borrowing.
The focus remains on minimizing borrowing costs through traditional external creditors, which are preferred, the document detailed.
The strategy for addressing deficits includes an ambitious target of collecting Tk 1200.3 billion from external sources in FY 2024-25 and Tk 1306.4 billion in FY 2025-26, each constituting 2.1% of GDP.
Domestic sourcing is expected to contribute significantly more, with plans to collect Tk 1677.7 billion and Tk 1864.4 billion over the same periods, representing 2.9% of GDP.
UK's BII supports MSMEs, women entrepreneurs in Bangladesh with $50m debt commitment to BRAC Bank
Significantly, the banking sector is anticipated to contribute Tk 1384.9 billion in FY 2024-25 and Tk 1547.3 billion in FY 2025-26. In comparison, non-banking sectors will contribute Tk 292.8 billion and Tk 317.1 billion respectively.
Savings certificates will add Tk 191.4 billion and Tk 190.3 billion, while other sources are projected to contribute over Tk 100 billion annually.
The government maintains a prudent deficit financing policy to stave off debt distress, keeping the deficit steady at around 5% of GDP and maintaining a stable debt level at around 33% of GDP in recent years, the finance ministry document explained. This balanced approach aims to mitigate the risks associated with deficit financing while prioritizing sustainable economic development.
In terms of the medium-term outlook, the government expects domestic borrowing to remain stable at 2.9% of GDP. However, the approach to marketable securities will see a significant nominal increase, with a planned reduction in the reliance on higher-cost National Savings Certificate instruments, which will see a gradual decrease in their contribution to the financing mix.
External financing is also projected to increase nominally between FY 2023-24 and FY 2025-26, driven by greater disbursement for large projects and increased budget support, though dependent on the pace of project implementation.
Finance ministry to cut corporate tax for industries, consumer goods in upcoming budget
Bangladesh has received considerable budget support from external sources in recent years, a trend expected to continue in the medium term, the document stated, highlighting the ongoing commitment to leveraging both domestic and international financial strategies to meet fiscal challenges.
Top 10 Strongest Currencies in the World as of May 2024
From ancient barter systems to today's sophisticated economies, currency remains the universally accepted medium of exchange. Over centuries, currency has evolved into fiat money, raising questions about how national currencies are valued and which are the strongest globally. Let's explore the ten most valuable currencies as of May 2024.
What is Currency Strength?
The strength of a currency is determined by the purchasing power of the said currency relative to other currencies.
The strength of a currency is calculated through a benchmark (typically USD). For example, if the value of BDT decreases relative to USD, it means that the purchasing power of BDT will fall resulting in depreciation. On the contrary, an increase suggests greater purchasing power and currency appreciation.
Read more: Bangladesh's foreign exchange reserves fall below 20 bln USD
How are Currencies Valued?
The value of a currency is determined in the forex market. The price of one currency in terms of another is called the exchange rate. Exchange rates are determined by supply and demand forces in the market.
But beyond the concept of supply and demand, other factors like economic growth and stability, central bank policies, global trade flows, and market speculation play a huge role in determining the value of a currency.
Historically, the USD enjoyed a strong valuation due to a positive combination of the above factors. Today the USD is the primary reserve currency of the world as many central banks and international institutions hold significant reserves of US dollars for international trade and investment purposes. The Triennial Central Bank Survey conducted by the Bank for International Settlements (BIS) found that the USD was one side of 88% of all forex transactions between 2019 to 2022.
Read more: Explainer: What it means to let taka float
Top 10 Most Valuable Currencies in the World As Of May 2024
Kuwaiti Dinar (KWD)
The Kuwaiti Dinar is the strongest currency in the world with 1 KWD buying 3.26 USD. The KWD is a relatively new currency introduced in the 1960s.
The currency was initially pegged with the British Pound but later re-pegged to an undisclosed basket predominantly focusing on the USD. Like most Middle Eastern countries, the KWD draws its strength from global oil exports.
Bahraini Dinar (BHD)
Bahraini Dinar comes in second with 1 BHD buying 2.66 USD. The BHD was founded in 1965 and has since been pegged to the USD.
Bahrain, being a small island nation in the Persian Gulf draws much of its currency strength from the large oil and gas exports. Additionally, the country has diversified its economic interests to include financial services, tourism, manufacturing, and logistics. The sound monetary policy, strong reserve, and a stable political environment also play into BHD’s strength.
Read more: Bangladesh Bank introduces Crawling Peg System; dollar rate set at Tk 117 with immediate effect
Omani Rial (OMR)
The Omani Rial is the third strongest currency in the world. 1 Omani Rial can be bought for 2.60 USD. The OMR was founded in 1970 and has since been pegged with the USD.
The geographic position of Oman as a Gulf nation has endowed it with massive oil and gas reserves. In addition to the oil and gas exports, the Omani Central Bank has been prudent in formulating fiscal policies. The political stability and FDI inflow combined with a short supply of OMR have been key determinants for its strong position.
Jordanian Dinar (JOD)
Moving away from oil-rich economies, the Jordanian Dinar holds the fourth place among the strongest currencies in the world. 1 Jordanian Dinar is equivalent to 1.41 USD.
Jordan has historically been a politically stable country even though it is positioned in a geographically tense territory. The currency, since its foundation in the 1950s, has been pegged to the USD. The country undertook reform measures to liberalize trade, streamline regulations, and enhance the business environment. Besides, a strong foreign aid and remittance environment also aided JODs strength.
Read more: BB introduces US dollar and currency (Taka) swap for commercial banks
British Pound (GBP)
With over 600 years of history, the British Pound is one of the oldest and strongest currencies in the world. 1 GBP currently buys 1.26 USD. The British Pound is not pegged to any other currency.
Throughout much of the 19th and middle of the 20th century, the GBP was the primary reserve currency of the world. To this day, the GBP takes a minor position right after the USD. Historically, the UK had a strong GDP growth rate with the Bank of England strongly regulating the monetary policies. The high trade balance and foreign investment inflow have worked in favor of the GBP’s position.
How to Buy Bangladesh Government Treasury Bond: Everything You Need to Know
It’s a fact that investment is the only way to exponentially grow wealth. But the caveat is that investment often comes with risk, sometimes low or sometimes very high. If you are looking to invest without having to worry about risk or loss, then you can consider the Bangladesh Government Treasury Bond (BGTB). Here’s everything you need to know about BGTB, how to buy, and calculate the return on your investment.
What are Bangladesh Government Treasury Bonds?
Before getting into BGTB, let’s talk about bonds. Bonds are essentially an instrument of debt where the investors (buyers of the bonds) loan money to a borrower (corporations or governments).
BGTB is one such bond where the investor loans money to the treasury department of the Bangladesh government. In exchange, the government offers a coupon rate (interest rate for simplification) on the face value of bonds based on the duration of the investment.
Read more: Premortem Analysis: How to Anticipate Failure
Here are some quick facts about BGTB.
- BGTB is a debt instrument issued by the Bangladesh Bank on behalf of the government. - Any resident, non-resident, and institutional investors in Bangladesh can invest in treasury bonds. - The minimum investment amount (face value) is set at 1 Lac BDT. Any amount multiple of 1 Lac can be invested with no upper limit.- Investments can be done over a maturity period of 2, 5, 10, 15, or 20 years. - The bonds are freely tradeable and transferable in primary and secondary markets. - The coupons (yields) are payable on a semi-annual basis.
Read more: How to Raise Angel Investment for Startups in Bangladesh
Difference between Bangladesh Government Treasury Bonds and Sanchaypatra
There isn’t much difference between Sanchaypatra and treasury bonds in the sense that both are debt instruments issued by the government. In principle, BGTB is offered through Bangladesh Bank whereas Sanchaypatra is offered through the National Savings Directorate under the Ministry of Finance.
Typically, Sanchaypatra is issued for a short term ranging between 3 to 5 years. There’s also an upper limit of up to 45 to 50 Lac BDT on individual investment depending on the type of Sanchaypatra. The interest rate also differs year on year which is typically outlined upfront during investment.
Compared to Sanchaypatra, BGTB has no upper limit of investment. The maturity duration can be up to 20 years with a fixed coupon rate for the entire duration of the investment.
In essence, both Sanchaypatra and BGTB are great risk-free investment options. The choice would depend on the investment amount and maturity duration.
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How Does Treasury Bond Work?
Treasury bonds are different from other investment opportunities like stocks and Sanchaypatra in the sense that treasury bonds can only be bought in stipulated auctions by the Bangladesh Bank. The bank and the brokerage firms act as the primary dealer/bidder on behalf of the investor in the auction (primary market).
At the onset of every auction, Bangladesh Bank stipulates a coupon rate (yield rate). Since the treasury bonds are bought in an auction, the bidder needs to set the expected yield rate equivalent to the stipulated rate or less. However, according to recent data, setting the expected yield equivalent to the stipulated rate is enough to secure the desired amount of treasury bond.
The auction calendar (https://www.bb.org.bd/en/index.php/monetaryactivity/auc_calendar) shows the dates of auctions in which you can bid for the bonds. Note that, every auction doesn’t have bonds for every maturity date. For example, the auction of 21st May 2024 only has bonds with 10-year maturity. If you want to invest in say 2-year maturity bonds, you will have to wait till the bonds become available on a subsequent auction date.
Read more: Gold vs Diamond: Which Should You Choose for Investment?
The bonds bought in primary market bidding can be sold in the secondary market. For example, you need to sell your bonds before maturity. In that case, you will have to submit a written application to the bank or brokerage firm requesting sales of your bond. The bank or the brokerage firm will then direct the sales to BB and deposit the equivalent cash in your account.
Banks to remain open on April 5, 6, and 7 for payment of garment workers’ salary, bonus
Bangladesh Bank has asked the scheduled banks to keep branches open on April 5, 6, and 7 under special arrangement for payment of garment workers' salaries, Eid bonuses, allowances, and export bills.
The Department of Off-site Supervision of the central bank on Sunday issued a circular in this regard and sent it to the top executives of the banks for necessary actions.
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As per the central bank’s instruction, the banks will remain open for transactions from 9:30 am to 12:30 pm on a limited scale.
It instructed banks to keep open the branches in Dhaka metropolitan area, Ashulia, Tongi, Gazipur, Savar, Bhaluka, and the industry-related branches of banks located in Narayanganj and Chittagong ensuring adequate security.