'Poor investment trend responsible for large excess liquidity in banks'
Monday, 3 August 2009
FE Report
Finance Minister AMA Muhith pinpointed Sunday the prevailing poor investment trend as the key reason behind the presence of a large amount of idle money in the country's banking system.
The commercial banks operating in Bangladesh are awash with an estimated Tk 270 billion in excess liquidity, banking sector data reveal.
"The huge volume of money remaining idle with local banks is the result of the prevailing poor investment regime," Mr. Muhith said.
Many local entrepreneurs are still observing the 'wait and see policy' as far as new investments are concerned, the finance minister said.
He was talking to newsmen after his meeting with a delegation of Bangladesh Ceramicware Manufacturers' Association (BCWMA), led by its President R Mowdud Khan, at his ministry.
Mr Muhith, however, expressed the hope that the overall investment would get a boost within a few months after the finalisation of the Private-Public Partnership (PPP) in September or October next.
Besides, the investment situation is expected to improve as the country's capital market remains vibrant.
He also observed that the global economic scenario was likely to improve after the upcoming boards' meetings of the World Bank and the International Monetary Fund (IMF), which would also help rise investments - both foreign and local - in Bangladesh.
Responding to a question, the finance minister said: "The present culture of transacting savings certificates has to be changed for the sake of boosting investment."
When his attention was drawn to the reduction of bank's lending rates, the finance minister said: "We want to rely on the Bangladesh Bank in this connection."
He also informed the media that the government was still reviewing the 'stimulus package', which was announced for the fiscal year 2009-10, as to where and how such support could be disbursed.
The finance minister, however, admitted that necessary information was still not available for taking decision on the stimulus for the recession-affected export sectors.
During the meeting, the BCWMA informed the finance minister that the local ceramic industry would be able to fetch US$ 100 million worth of export earning by 2015 provided necessary supports were available from the government.
Although the government has already announced the ceramic industry as one of the thrust sectors, it is yet to get any support from the government, the BCWMA president said.
The Association, however, made 10-point demands, including ensuring working capital at the rate of 7.0 per cent from banks, providing of the government's stimulus package and exemption of the existing 10 per cent supplementary duty from the production stage.
Finance Minister AMA Muhith pinpointed Sunday the prevailing poor investment trend as the key reason behind the presence of a large amount of idle money in the country's banking system.
The commercial banks operating in Bangladesh are awash with an estimated Tk 270 billion in excess liquidity, banking sector data reveal.
"The huge volume of money remaining idle with local banks is the result of the prevailing poor investment regime," Mr. Muhith said.
Many local entrepreneurs are still observing the 'wait and see policy' as far as new investments are concerned, the finance minister said.
He was talking to newsmen after his meeting with a delegation of Bangladesh Ceramicware Manufacturers' Association (BCWMA), led by its President R Mowdud Khan, at his ministry.
Mr Muhith, however, expressed the hope that the overall investment would get a boost within a few months after the finalisation of the Private-Public Partnership (PPP) in September or October next.
Besides, the investment situation is expected to improve as the country's capital market remains vibrant.
He also observed that the global economic scenario was likely to improve after the upcoming boards' meetings of the World Bank and the International Monetary Fund (IMF), which would also help rise investments - both foreign and local - in Bangladesh.
Responding to a question, the finance minister said: "The present culture of transacting savings certificates has to be changed for the sake of boosting investment."
When his attention was drawn to the reduction of bank's lending rates, the finance minister said: "We want to rely on the Bangladesh Bank in this connection."
He also informed the media that the government was still reviewing the 'stimulus package', which was announced for the fiscal year 2009-10, as to where and how such support could be disbursed.
The finance minister, however, admitted that necessary information was still not available for taking decision on the stimulus for the recession-affected export sectors.
During the meeting, the BCWMA informed the finance minister that the local ceramic industry would be able to fetch US$ 100 million worth of export earning by 2015 provided necessary supports were available from the government.
Although the government has already announced the ceramic industry as one of the thrust sectors, it is yet to get any support from the government, the BCWMA president said.
The Association, however, made 10-point demands, including ensuring working capital at the rate of 7.0 per cent from banks, providing of the government's stimulus package and exemption of the existing 10 per cent supplementary duty from the production stage.