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What is Bangladesh's position in the shift towards a cashless society?
Earlier this year, the Bangladesh Bank planned to offer more permissions for digital banks, building on the progress made by mobile financial services and internet banking in recent decades. This will pave the way for full-fledged financial services based on a 100 percent branchless banking system.
This follows Prime Minister Sheikh Hasina's November 2023 announcement of her plan to build a cashless society to reduce corruption, accelerate economic development, and streamline tax revenue collection. This is part of the Government's broader Smart Bangladesh initiative, which seeks to transform the country into a technologically advanced and sustainable society by 2041.
Mobile payment services are anticipated to eventually surpass all other methods, facilitated by the widespread adoption of smartphones across diverse demographics. Mobile Financial Services (MFS) providers such as bKash, Nagad, and Rocket have become ubiquitous in developing nations like Bangladesh. In addition to facilitating money transfers, these services have streamlined processes such as bill payments and application fees for both government and private institutions, making them more accessible and convenient.
Economy
Bangladesh Bank Loan Interest rate surges past 13.5 percent
The Bangladesh Bank loan interest rate has increased to more than 13.5 percent, which will be implemented from Monday and remain in effect for April. This will be the highest interest rate on loans since July last year. The interest rate on loans is fixed following the six-month moving average rate of treasury bill (SMART) method.
Forex reserves fall by over half a billion USD in one week
Bangladesh's foreign currency reserves fell by $533.82 million in just a week due to a selling spree of the American greenback by the central bank to the commercial banks. The reserves of foreign currencies stood at $19.45 billion on March 27, down from $19.98 billion on March 20, according to Bangladesh Bank data.
Despite robust growth, South Asia's vulnerability to shocks persists, emphasizing the importance of the financial sector and fiscal policy reforms to sustain Bangladesh's strong growth trajectory.
The World Bank's Bangladesh Development Update highlights the country's significant economic rebound from the COVID-19 pandemic but notes ongoing challenges, including high inflation, balance of payments deficits, financial sector vulnerabilities, and global economic uncertainty. Urgent monetary reforms and a unified exchange rate regime are recommended to bolster foreign exchange reserves and mitigate inflation. Structural reforms are also deemed crucial to diversify the economy, enhance resilience, and stimulate infrastructure and human capital investments. Despite South Asia's anticipated robust growth, concerns persist regarding public spending reliance and structural impediments to job creation and climate resilience. The region faces a demographic dividend dilemma, with low employment ratios compared to other developing regions, indicating missed opportunities for economic advancement.
ADB predicts Bangladesh's GDP to grow by 6.1% in FY24, surpassing the World Bank's forecast.
The Asian Development Bank (ADB) forecasts Bangladesh's GDP to grow by 6.6% in the upcoming fiscal year, driven by the continued growth of exports in traditional low-end garments due to the utilization of local yarn and fabrics amid a dollar crisis. This projection exceeds the 5.8% GDP growth observed in the previous fiscal year. ADB anticipates average inflation to moderate to 8.4% in the current fiscal year, supporting private consumption growth. Despite a recent slowdown in economic growth, with the October-December quarter of fiscal 2023-2024 recording a 3.78% growth, the second lowest in three quarters, Bangladesh is expected to have the second-highest GDP growth in South Asia after India's 7%. Conversely, the World Bank predicts subdued growth for Bangladesh due to reduced private consumption caused by high inflation, forecasting a GDP expansion of 5.6% in fiscal 2023-24 and a modest recovery to 5.7% in fiscal 2024-25.
Business
Bangladesh to receive 500,000 smart prepayment meters.
The Bangladesh Rural Electrification Board (BREB) plans to install 500,000 smart prepayment meters, part of an advanced metering infrastructure solution provided by Itron. As the largest power distributor in Bangladesh, BREB aims to modernize its distribution system, offering customers enhanced visibility and control over their energy usage. These smart meters will facilitate automated meter reading, improve billing accuracy, reduce system losses, and enable customer time-of-use tariffs. Additionally, customers can access detailed energy usage information via a web portal. The project aims to strengthen the grid, integrate smart home devices, optimize infrastructure investments, manage outages better, and integrate renewable energy sources. Nafiza Islam from SQ Group, Itron's channel partner, emphasizes the significance of this implementation for BREB in transforming into a smart utility.
MTB, in collaboration with IDEX Biometrics, introduces biometric cards in Bangladesh.
Mutual Trust Bank Limited (MTB) in Bangladesh collaborates with IDEX Biometrics to introduce biometric payment cards, enhancing customer security and convenience. MTB, known for its sustainability and innovation, aims to attract new users and increase card usage among existing customers by offering innovative payment solutions. Syed Mahbubur Rahman, Managing Director & CEO at MTB, underscores the strategic alignment of these cards with the bank's customer-centric approach. Catharina Eklof, Chief Commercial Officer at IDEX Biometrics, highlights the partnership's focus on growth markets in Asia and the goal of improving payment experiences through enhanced security and convenience. IDEX Biometrics specializes in fingerprint biometrics technology, working with leading card manufacturers and technology firms to offer authentication solutions across various sectors.
Fly Dhaka, a new airline, is set to launch by November.
Fly Dhaka Airlines Limited, a new private airline, is set to launch its operations by November this year. Currently, the airline is finalizing the acquisition of the Air Operator's Certificate (AOC) and progressing with personnel recruitment. Lt General (Rtd) Molla Fazle Akbar, CEO of Fly Dhaka Airlines, expressed its vision to position Bangladesh as a global aviation hub and expand its domestic and international presence. The airline plans to commence operations on domestic routes using ATR 72-600 model aircraft and intends to introduce Airbus/Boeing aircraft for global services to ensure safety and efficiency. With the addition of Fly Dhaka Airlines, the total number of private airlines in Bangladesh will increase to four, joining Novoair, US-Bangla Airlines, and Air Astra.
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