Deposit Mobilization in Bangladesh : Implications for Rural Financial Institutions and Financial Policies
Author: M.A. Baqui Khalily,
Rural deposit mobilization has been given increased emphasis in Bangladesh. This study examines the pattern and trends in Bank deposits with emphasis on rural branches. A simultaneous equations model was estimated to explain rural deposits. One equation was designed to explain district deposits and the second explained bank branches. Permanent income and inflation indirectly influence deposit through their effect on bank branches. The availability of roads and vehicles directly affects deposits through their impact on transaction costs. Inflation and literacy also affect deposit mobilization. Several suggestions are provided for a strategy for rural deposit mobilization
Urban Rationing in Bangladesh in Mid-1980s: The Distribution of its Benefits
Author: Nuimuddin Chowdhury
This paper first examines the income distributional impact of urban rationing in Bangladesh. It is shown that in 1973/74–a year with practically full participation in urban rationing by all eligible households–Gini coefficient of expenditure in with-rationing situation is 0.274, as compared with 0.30 in the without-rationing situation. In the main, it examines Statutory Rationing (SR)–an increasingly diminutive but still quite important element with Public Foodgrain Distribution System (PFDS)–in distributional terms. The typical household that legitimately receives foodgrain out of SR is established as a non-poor household. Rationing for the urban rich appears to serve well as the motto of SR. The poorest of households in two SR cities, viz. Dhaka and Khulna are essentially cut out from the orbit of SR. Explanation for this are to be sought in (i) the official ban on fresh issue of SR cards in SR cities after 1974, except to Government officials on transfers thereto–thereby counting out lakhs of poor households that streamed into these cities during the decade following 1974 and (ii) in that three of the SR cities, namely Dhaka, Chittagong and Khulna have been the cutting edge of proliferation of economic well-bing of middle and upper-class households since the mid-1970’s–financed mostly on public expense. An unchanged eligibility regime in SR has resulted in an overwhelming majority of urban households who had settled in these cities by 1974 being eligible beneficiaries of SR foodgrains in 1987 without deserving at all the food subsidies while millions suffered malnutrition in villages due to lack of food.
The Effect of Exchange Rate Depreciation on the Loan Repayment Performance of Private Enterprise in Bangladesh
Author: Rehman Sobhan and Ah
This paper analyses the contribution of exchange rate fluctuations of the Taka in contributing to the accumulation of debt overdues of private borrowers from the two DFIs of Bangladesh, BSB and BSRS. The evidence shows that with the exception of a few pre-liberation projects the overwhelming majority of borrowing enterprises have only carried a moderate exchange rate burden as a proportion of their foreign currency liabilities at the time of their repayment or as a proportion of their overdues to the DFIs. The study further establishes that there is no causal nexus between poor repayment performance of particular borrowers and their exchange rate burden. Thus the EFAS policy introduced by GOB to give some relief to defaulters is likely to have little impact on improved loan recovery by the DFIs. Finally the study provides evidence that most borrowers who did face a significant exchange rate burden could compensate themselves through enhancement of their product prices. The roots of the repayment crisis must thus be sought not in the exchange rate burden of the defaulting enterprises but in the substantive operational problems, management and market regimes of these projects.