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Presented by:
Jahid Bin Islam 2008-2-10-083 Abdul Ahad 2008-2-10-211 Hasibul Alam 2008-2-10-169 Fuad Hasan Khan 2008-2-10-287

Presented For:
Quazi Sagota Samina Senior Lecturer East West University

Merchant banks to pay higher corporate tax

Merchant banks will now have to pay 42.5 per cent in corporate tax instead of 37.5 per cent as the revenue board has decided to treat them as 'financial institutions', officials have said. According to NBR, Merchant banks have been mistakenly being treated as private firms, hence fall under the category of financial institutions. As private firms, merchant banks used to pay 37.5 per cent corporate tax under Section 82 of the income tax law. "Both the NBR and the merchant banks did not look into the said Section of the income tax law, under which these banks will have to pay 42.5 per cent corporate tax," an NBR official told the FE.

He said the revenue board was contacting the merchant banks one after one to inform them that they would be treated as 'financial institutions' as per the law. Presently, a total of 50 merchant banks are running their business in the country's stock market.
Excerpted From:The financial Express

BB likely to approve 8 new banks on Mar 27

A total of eight new commercial banks, including three non-resident Bangladeshi (NRB) banks, may get approval at the next board of directors' meeting of Bangladesh Bank, sources said. Names of the three proposed NRB banks -- NRB Commercial Bank Limited, NRB Bank Limited and NRB Bank Limited -- were placed before the board on March 15 for approval, but no final decision was taken at that meeting. "The country will receive around US$ 150 million as paid-up capital, in aggregate, from the NRB banks if the board gives them its approval," a source said, speaking in favor of allowing the three NRB banks. A four-member technical evaluation committee, headed by general manager of the Foreign Exchange Policy Department of Bangladesh Bank -Ahmed Jamal, was earlier formed to examine the primarily selected applications from persons seeking to set up new PCBs. Earlier, 37 applications were submitted with the central bank for setting up new PCBs. Of them, 21 were rejected by a preliminary committee due mainly to the lack of necessary papers and documents. Currently, a total of 47 commercial banks are in operation in Bangladesh.
Excerpted From:The financial Express

Foreign investment in DSE rises 27pc

Foreign investments in the Dhaka stockmarket increased 27.96 percent in February, compared to a month ago, as foreign fund mangers now consider the market lucrative for long-term investment due to low prices of fundamentally strong stocks. The present situation of the market is suitable for long-term investment as the stock prices of many of the fundamentally strong companies have come down, said a foreign fund manager. However, he stressed political stability, improvement in power and infrastructure, macroeconomic equilibrium and foreign investors-friendly policies to attract more investment into the country. Foreign investment in the stockmarket rose by Tk 33 crore in February from Tk 118 crore in January. He said most of the stocks dived to their lowest value due to a series of price corrections last year.
Excerpted From: Daily Sun

Power tariff to go up again

The energy regulator will announce a fresh-hike in power tariff for bulk consumers next week to cut substantially the financial loss being incurred by state-owned Bangladesh Power Development Board (BPDB) because of soaring oil prices in the international market. The BERC held the hearing at its Karwan Bazar headquarters, following a BPDB proposal to raise bulk tariff by Tk 0.41 per unit as prices of petroleum products have gone up. After hearing arguments from the BPDB and other stakeholders, the BERC chairman said per unit of electricity tariff at the bulk level can be hiked by a maximum of Tk 0.31 from the existing Tk 3.74. The BERC evaluation committee, however, recommended a hike of Tk 0.22 per unit for bulk consumers, a commission official said. BPDB Chairman ASM Alamgir Kabir argued that November 24 last year the regulator raised electricity tariff for bulk consumers by 33.57 per cent to be effective in two phases - from December 2011 and February 2012, fixing it at Tk 3.74 per unit when the production cost for per unit electricity was Tk 5.29. Bangladesh now generates nearly 5000 mw of electricity against its demand for 6500 mw.
Excerpted From:The financial Express

Poverty level declines to 31.5pc in 5 years : BBS

Bangladesh's poverty rate has dropped to 31.5 per cent, an 8.5 percentage point decline in the last five years since 2005, according to final Household Income and Expenditure Survey (HIES) released Monday. BBS conducted the survey from February 2010 to January 2011 on 612samples across the country. The upper poverty line in the rural area stood at 35.2 per cent in 2010 against 43.8 per cent in 2005, while in the urban area it was 21.3 per cent in 2010 against 28.4 per cent five years back, the report said. The lowest poverty rate was recorded in Chittagong division at 13.1 per cent, while it is 15.6 per cent in Dhaka, the survey said. BBS report said that in about 20 years since 1991-92, the country's poverty level dropped by 25.2 per cent. The study said the per capita income of the poor is at the highest level in Dhaka division at Tk 1159.30, followed by Rajshahi division at Tk 1119.90 and Rangpur at 1100.35. The survey said per capita expenditure of the poor is Tk 1245.76 at the national level, Tk 1200.02 in the rural areas and Tk 1457.65 in the urban areas.
Excerpted From:The financial Express

Non-food inflation goes up further

Country's non-food inflation jumped to an all-time high of 13.57 per cent in February last, 0.41 percentage more than that of January, national statistics office said Monday. The Bangladesh Bureau of Statistics (BBS) said the nonfood inflation stood at 13.57 per cent in rural area and 13.59 per cent in urban area in the month. The non-food inflation hovered between 4.0 and 6.0 per cent in earlier years. The food inflation in rural areas dropped to 8.05 per cent in February against 10.18 per cent in the preceding month. The food inflation in urban area stood at 10.96 per cent against 12.56 per cent in January last.

BBS chief said: "The purchasing power of the people surged in February. So the rise in non-food inflation would not hurt them. The wage rate index increased to 6595.37 in February against 6434.82
Excerpted From:The financial Express

Oil import target of this fiscal revised downward

The government has revised downward the oil import target at 5.8 million tonnes from 6.5 million tonnes during the current fiscal year in a cost-cutting measure by the state-run power entities. It is estimated that the oil import cut will save around Tk 10 billion in foreign exchange, a senior official of the energy ministry told the FE Tuesday. State owned Bangladesh Petroleum Corporation (BPC) said under the revised plan the oil import bill this year will be around Tk 450 billion (US$5.50 billion), 2.17 per cent down from the previous estimate of Tk 460 billion. The corporation calculated the international oil price at around $135 per barrel for its latest fuel oil import. Earlier estimate at oil price in the international price of $120 to $125 per barrel. Depreciation of local currency is also a factor for cost escalation. Taka has depreciated by 15.55 per cent against the US dollar in 2011, said the BPC official. The country has been importing around 5 million tonnes of refined petroleum products, including 3.37 million tonnes of diesel, 1 million tonnes of furnace oil, 395,000 tonnes of jet fuel, 140,000 tonnes of kerosene and 110,000 tonnes of octane for this year. The remaining quantity of petroleum products will come from Eastern Refinery Ltd, the country's 1.5 million tonnes per year capacity refiner, said the official. The country imports both crude and refined oil products to meet domestic demand.
Excerpted From:The financial Express

Southeast Bank declares 15pc cash dividend, 5pc bonus shares

The shareholders of Southeast Bank unanimously approved 15 percent cash dividend and 5 percent stock dividend (bonus share). They also approved the financial statement of the bank for the year 2011, said a press release.

The approval was given at the 17th Annual General Meeting (AGM) of the bank, held at Officers Club in the city recently.
The shareholders also re-elected directors and approved appointment of external auditors for the year 2012. Directors, sponsors and a large number of shareholders of the bank attended the meeting. Alamgir Kabir, FCA, Chairman of the bank, presided.
Excerpted From:Daily Sun

National saving schemes and liquidity

The government has finally raised the rates of return on national savings schemes to competitive levels -- a measure that it should have taken long ago. Net interest rates on bank deposits rose to 12-14 pc during the recent past, but the net rates of earnings on the savings certificates were not appropriately adjusted such that these fell below the bank deposit rates. It has been reported in the media that the government has raised the rates in order to mobilize more funds from the public directly such that it could reduce the level of its bank borrowing. Such a reduction would avoid crowding out of the private sector from the credit market by increasing liquidity of the banks. A reduction in government borrowing would also help reducing inflation. However, a little reflection should reveal that some of these arguments are not tenable.

Prime Bank launches internet banking

Prime Bank has been enhancing technology usage in its banking services with the demand of time. Managing Director of Prime Bank Limited Md. Ehsan Khasru said at a press conference at a city hotel on the eve of launching Altitude internet banking service recently. The IT division of the bank developed the software, he said adding, This is secure, safer and faster than the internet banking used by the other banks of the industry.
Excerpted From:Daily Sun

GP, 9 PCBs top corporate taxpayers in first half

The country's private commercial banks (PCBs) are the major contributors to the volume of corporate tax as they are nine in number among the ten highest income tax payers, while Grameenphone is in the top position.

Grameenphone has topped the list in the payment of tax in the first half of the current fiscal. Standard Chartered Bank, which was in the top position in the corresponding period last year, has been ranked second in first six months of this fiscal. Grameenphone paid Tk 4.0 billion in tax in July-December period, while Standard Chartered Bank Tk 2.48 billion. Among the ten top corporate tax payers, nine are the country's scheduled banks that pay tax at the highest 42.5 per cent rate on their annual earning. Prime Bank Limited and The Hong Kong Shanghai Banking Corporation (HSBC) are in the third and fourth positions by paying Tk 1.12 billion and Tk 887 million respectively in the July-December period. Rahimafrooz Bangladesh Limited Group's Managing Director Firoz Rahim is on the list of top ten corporate tax payers with Tk 5.3 million in income tax. Former Chairman and director of Prime Bank Azam J Chowdhury occupies the next position by paying Tk 4.72 million income tax. A total of 283 companies and 705 individual taxpayers pay income tax under the unit, including 47 banks. Excerpted From:The Financial Express

Novel way of duty evasion

About a dozen small pharmaceutical factories across the country are doing brisk business by importing raw materials under 'block list' and sell those to other factories, instead of producing medicines. Import of pharmaceutical raw materials under 'block list' is exempted from duties. According to the rules of Drug Administration no factories are allowed to import raw materials if they do not manufacture drugs. When asked, a high official of the Directorate of Drug Administration told the FE that the Drug Administration recently carried out a survey and categorized factories from A to F to identify non-manufacturing companies. "After final investigation, we will cancel import permits of those companies who are involved in the illegal trade," the official added. Out of the 230 companies, 200 run their own manufacturing facilities, out of which five are multinationals. Now approximately 97 per cent of the domestic demand of medicines are met by the local companies. A good number of Bangladeshi companies have won accreditation for export from the regulatory authorities in some developed countries.

Excerpted From: The Financial Express