10 banks faced capital shortfall of Tk 28,949cr in 2020

Ten banks have faced a capital shortfall of Tk 28,949 crore last year because of their high ratio of defaulted loans.

The 10 banks are Agrani, Basic, Janata, Rupali, Sonali, Bangladesh Krishi, Rajshahi Krishi Unnayan, Bangladesh Commerce, ICB Islamic and Padma.

The banks had earlier suffered a wide range of financial scams that eroded their capital base substantially.

Among the lenders, Bangladesh Krishi Bank faced the highest amount of capital shortfall, which stood at Tk 10,819 crore at the end of last year, data from the central bank showed.

As of December last year, the average capital adequacy ratio (CAR), which determines the adequacy of a bank’s capital in keeping with their risk exposure, stood at 11.64 per cent, down from 11.94 per cent three months earlier.

This means the overall capital base worsened in the final quarter of last year.


IDLC Finance Ltd CEO and MD Arif Khan resigns to start own venture

Arif Khan, managing director and chief executive officer of IDLC Finance, resigned today from his position to ‘start his personal business.’

Khan joined the leading non-bank financial institution five years ago and steered the growth of IDLC and brought down non-performing loans at a time when financial sector was riddled with loan scandals.

Currently at least 10 NBFIs are unable to repay depositors money despite the maturity of their funds as scammers siphoned off a large amount of money from the institutions in recent years.

IDLC’s non-performing loans stood below three percent, which much lower than the ratio of default loans in the NBFI sector.

The ratio of default loans stood at 13.29 percent of the outstanding loans in the NBFI sector.

Khan said he has no rift with the IDLC board rather he wants to do something on his own.

“I am not enjoying what I am doing now. I want to start by own business,” Khan told The Daily Star over phone.

He said that IDLC now stands at a strong financial base and its board is one of the best among all banks and NBFIs.

Before joining the IDLC as MD and CEO, Khan served as commissioner of Bangladesh Securities and Exchange Commission (BSEC).

Prior to this, he served IDLC Finance for 15 years and held key positions including the role of Deputy Managing Director, according to the IDLC.

He began his career in 1991 as a Probationary Officer in AB Bank Ltd.

Khan graduated in Finance and Banking from the Dhaka University, and had his MBA from the Institute of Business Administration (IBA). He is a member of the Institute of Cost and Management Accountants of Bangladesh (ICMAB).


There’s good economic news on the horizon, and that’s rattling markets. Wait, what?

A global rout in markets, a sell-off in bonds, all due to the prospect of a strengthening economy? The explanation involves the uncertainty of where interest rates go from here if a post-COVID-19 economy gets cooking. 

A man walks past a stock quotation board at a brokerage in Tokyo on Friday. Markets tumbled Thursday and were down again Friday — paradoxically, on news of a strengthening economy. (Kim Kyung-Hoon/Reuters)

The first signs that the world is winning the battle with COVID-19 has sparked great news for the global economy as the number of people vaccinated grows and the death rate falls.

Once shops and factories reopen, once people trapped working from home are finally set free to spend on restaurant meals and travel, sharing the savings they couldn’t spend during lockdown, that recirculation of money is the very thing that will make economies strong.

So it is fair to ask why stock markets tumbled last Thursday — the Dow and the Toronto market were down again Friday — if the economy is recovering.

As Jim Reid, research strategist at Deutsche Bank told the Financial Times last week, it “proved to be nothing short of a rout in global markets, with the sell-off in sovereign bonds accelerating as investors looked forward to the prospect of a strengthening economy over the coming months.”

A global rout in markets, a sell-off in bonds, all due to the prospect of a strengthening economy? The explanation involves the uncertainty of where interest rates go from here if a post-COVID-19 economy gets cooking. 

The market not the economy

But the first step in understanding the paradox is remembering that “the stock market isn’t the economy,” as now-U.S. Treasury Secretary Janet Yellen once said.

Over the long haul, there is no question that a strong and growing economy adds to the value of the companies that operate within it. A study of 17 advanced economies by researchers at the University of Bonn showed that over the long term, total stock market values climb with gross domestic product.

U.S. Treasury Secretary Janet Yellen departs the White House. The stock market is not the economy, she once said. (Tom Brenner/Reuters)

But as we clearly saw last year when the U.S. stock markets hit record highs even as GDP shrank more than it had in 70 years, that relationship is not perfectly in sync.

In both Canada and the U.S., central banks have expressed confidence that the economy will grow strongly this year and next. Not only that, but to help put people back to work, both Bank of Canada governor Tiff Macklem and Fed Chair Jerome Powell have promised to keep interest rates low until there are clear signs the employment and business activity have recovered.

So everyone seems to agree the economy will grow stronger. But while central banks try to hold rates down, there are increasing signs that the private investors in the bond market are anticipating rates will rise, making existing bonds worth less.

Interest rates rising?

Bonds are not generally the subject of supper table conversation in Canadian households, but the interest rates set in bond markets affect Canadians in many ways, including the rate you pay for your mortgage. According to mortgages brokers Rate Spy there are early signs that mortgage prices may be following bond yields up.

The key point to understand the role of bonds in the rising economy is one of the things people often find most confusing about them: existing bonds fall in value as interest rates rise. (For more explanation of how that works and why bonds matter, this previous column serves as a primer.)

As Reuters reported on Friday, “from the United States to Germany and Australia, government borrowing costs on Friday were set to end February with their biggest monthly rises in years as expectations for a post-pandemic ignition of inflation gained a life of their own.”

Bank of Canada Governor Tiff Macklem says he expects any rise in inflation to be temporary, but bond traders seem to disagree. (Blair Gable/Reuters)

Economists are divided over whether low interest rates set by central banks and large injections of cash into the economy announced by governments will lead to inflation. Macklem has offered a pretty firm “no” but it appears that last week, the mass of global bond traders appeared to disagree with the Bank of Canada governor and voted with their money. On Friday some suggested the shift in bonds was actually due to technical factors.

Confusingly, the bond market’s anticipation of inflation — if that’s what it is — is a vote of confidence in the future, because traders think consumers and businesses will want to buy more goods and services, driving up their prices.

Speculation vs. fundamentals

As to why stocks fell in response, there are a number of possible reasons, especially in a market where some fear a growing stock bubble. One is that higher bond prices increase the cost of borrowing for companies that raise money in the bond market. Another is that companies must compete with bonds in the money they pay out in dividends. Both cut into profits.

But perhaps most interesting is the idea that stock markets are going through a transition from speculative casino-style investing, where people buy more because they see prices go up (and vice versa) to one based on actual return.

“Markets are increasingly dominated by price action. The more price falls, the more they sell,” James Athey, an investment manager with Aberdeen Standard Investments told the Wall Street Journal last week. “The problem is that not every investor is a fundamental investor.”

In a market where traders have been making bets on bitcoin with no earnings at all or companies that have so far failed to cover their costs, a switch to “fundamental” investing where valuations are based on what a company is likely to earn in a surging economy could lead to greater market stability in the longer term. But there may be a rough patch first.

Follow Don Pittis on Twitter @don_pittis


WestJet to lay off undisclosed number of pilots amid labour negotiations

WestJet Airlines Ltd. says it is laying off an undisclosed number of pilots amid negotiations with the union that represents them.

Airline spokeswoman Morgan Bell says the layoff notices are going out ahead of the expiration of a memorandum of agreement on March 31. (Darryl Dyck/The Canadian Press)

WestJet Airlines Ltd. says it is laying off an undisclosed number of pilots amid negotiations with the union that represents them.

Airline spokeswoman Morgan Bell says the layoff notices are going out ahead of the expiration of a memorandum of agreement on March 31.

Bell would not disclose the number of affected pilots.

The airline announced on Feb. 5 that it would lay off 120 cabin crew members as of March 2, blaming the measure on the lack of flights to Mexico and the Caribbean.

At the request of the federal government, WestJet and other Canadian carriers agreed to suspend all flights to Mexico and the Caribbean until April 30 in an effort to limit the spread of COVID-19.

Airlines have been in negotiations with the government for months about the terms of a sector-specific aid package, with Ottawa saying that any federal funding for airlines would be contingent on their issuing full refunds to passengers who had their flights cancelled during the pandemic.


Site C dam budget nearly doubles to $16B, but B.C. NDP forging on with megaproject

The B.C. NDP government is forging ahead with the Site C dam project after receiving technical reports concluding the project is safe and financial estimates indicating the cost of reversing the project would have a “severe” impact on taxpayers.

The Site C dam on the Peace River in northeastern B.C. is estimated to cost about $16 billion, nearly double the originally approved budget of $8.8 billion in 2014. (Submitted by Amnesty International)

British Columbia is forging ahead with the Site C dam — the largest public infrastructure project in the province’s history — despite a price tag that’s ballooned to $16 billion and ongoing controversy.

The provinicial NDP government made the decision after receiving technical reports concluding the project is safe and financial estimates indicating the cost of reversing the project would have a “severe” impact on taxpayers.

The estimated price tag of the hydroelectric project in B.C.’s northeast has nearly doubled from the $8.775 billion approved in 2014. A full breakdown of the cost overruns was not provided, but the government said between $3 billion and $4 billion could be attributed to geotechnical delays and construction slowdowns caused by the COVID-19 pandemic. 

The immediate cost of terminating the project would be $10.2 billion in sunk costs, contract termination and environmental remediation, according to the B.C. Ministry of Energy, Mines and Low Carbon Innovation. That would lead to BC Hydro rate increases of up to 26 per cent for 10 years, or $216 per customer per year, the government said.

It could also result in B.C.’s credit being downgraded and BC Hydro becoming reliant on taxpayer subsidies rather than continuing as a self-financing Crown agency.

WATCH | Premier John Horgan defends decision: 

Horgan says with the completion of a technical review showing the megaproject can be built safely, moving forward with construction is in the “best interest of British Columbians.” 2:00

In contrast, the government said moving forward with construction would increase hydro costs by three per cent, or $32 per customer per year over the next 10 years, and costs would continue to be recovered over the project’s lifespan of more than 70 years.

Energy Minister Bruce Ralston said with all that in mind, moving forward with construction remained the best decision for British Columbians.

“B.C. needs more renewable energy to electrify our economy…. I am confident in the path forward for Site C.”

A charged political history

The Site C dam was first proposed in the 1950s as the third in a series of four dams in B.C.’s Peace River region to supply electricity to the province. The first two were built, but Site C was shelved multiple times, including in 1982 and 1989 when the B.C. Utilities Commission determined the province didn’t need the extra energy.

But it resurfaced in 2010 when the B.C. government, under then Liberal premier Gordon Campbell, resurrected the project arguing that the province would need its 1,100 megawatts of power in the century ahead.

Notably, the B.C. Liberals never sent the project to the independent B.C. Utilities Commission for review and Premier John Horgan, then the Opposition leader, was a vocal opponent of the project. He even posed with protesters in the Peace region where approximately 5,500 hectares of land will be flooded, destroying farmland, wildlife habitat and territory occupied by Treaty 8 First Nations.

Ken and Arlene Boon have had their land expropriated by the B.C. government to make way for the Site C dam. Ultimately they will be forced to leave the house Arelene’s grandfather built as the Peace River Valley is flooded. (Submitted by the Peace Valley Environment Association/YouTube)

Once elected, Horgan reversed course on the dam and also commissioned a report from the B.C. Utilities Commission. It concluded the cost of cancelling the project and committing to alternative energy sources could be as good or better for B.C. ratepayers, but the premier ultimately decided the dam “must be completed.”

Since then, the dam’s construction has continued to be plagued by political and technical issues and a rising price tag, ultimately prompting Ralston to ask for a review of the project when BC Hydro reported it had “serious concerns about the project’s scope, schedule and budget. 

Former deputy finance minister Peter Milburn was appointed to review the Site C project in July 2020 and delivered his report to cabinet in January 2021.

More oversight of project risks needed: Milburn report

Milburn’s review, released Friday, found several problems with the way BC Hydro is managing the project and made 17 recommendations.

While there was “no evidence of neglect,” Milburn’s report concluded that the system for assessing the costs and risks of Site C had not been effective and suggested a “reset” was in order.

Built in Brazil and shipped to Prince Rupert, about 1,500 km northwest of Vancouver, these turbine parts were trucked across northern B.C. to the Site C dam construction site in early 2021. (Submitted by BC Hydro)

Horgan said the project had suffered from an “engineering bias,” or the idea that no problem was so big it couldn’t be overcome, but that by following Milburn’s recommendations to improve oversight of the project that would no longer be an issue.

On that note, Friday also saw the government release a report from two engineering experts — John France and Kaare Hoeg — addressing geotechnical concerns, especially the “geological risk” on the right bank of the dam that would require extra foundation work.

The pair concluded that BC Hydro’s proposed solution of installing large piles (concrete-filled pipes) below the dam in order to improve stability and drainage, would result in a project that meets Canadian Dam Association guidelines.

An engineering review by John France and Kaare Hoeg concluded that BC Hydro’s plan for stabilizing the land under the Site C dam is sound. (Submitted by BC Ministry of Energy, Mines and Low Carbon Innovation)

None of this addresses the potential outcome of civil claim filed by the West Moberly First Nation against the B.C. government, BC Hydro and the Attorney General of Canada in 2018.

In it, the nation argues the construction of Site C is a violation of its rights set out in Treaty 8, signed in 1899 with First Nations in northeastern B.C., northern Alberta and northwestern Saskatchewan. 

Flooding the valley would break Treaty 8 promise

In particular, they say, the plan to flood the Peace River valley breaks a promise from the Crown to protect the way of life of signatory nations who occupy that territory.

At the core of the case is the argument that the dam construction will cause irreparable harm to West Moberly territory and the way of life for people who live there — rights protected under Treaty 8.

WATCH | Project violates treaty rights and will destroy the valley, West Moberly Chief Roland Willson says: 

West Moberly First Nation Chief Roland Willson is suing the B.C. government and BC Hydro over the Site C dam, arguing the flooding of the Peace River Valley in northeastern B.C. violates protected treaty rights. 1:37

They have previously said Site C constitutes a $1-billion treaty violation.

West Moberly Chief Roland Willson said the decision to move forward was “disappointing” though “not surprising.”

But he expressed optimism the dam could still be halted in courts.

“It’s an unlawful project…. They’re violating treaty rights.”

In February 2019, the provincial Ministry of Indigenous Relations and Reconciliation entered confidential discussions with BC Hydro, West Moberly and Prophet River First Nations in an attempt to avoid litigation.

In August 2019, the West Moberly rejected offers from the province and committed to moving forward with the legal action.

Additionally, approximately 35 homeowners in the small community of Old Fort — about five kilometres east of the project site near Fort St. John — are suing the province and BC Hydro after two landslides they claim were caused by Site C dam construction rendered their properties worthless. 

Political reaction

Green Party of B.C. Leader Sonia Furstenau said the NDP was throwing good money after bad without properly considering the environmental and agricultural implications.

“We are going to lose an incredible amount of farmland, biodiversity, an entire river ecosystem for a dam that will produce energy at an astronomical cost.” 

She also criticized the government for not being more transparent about the rising costs of the project as construction continued.

“There have been decisions made for the last couple of years with knowledge that there were very serious geotechnical issues, that costs were escalating, that safety concerns were very serious.” 

Despite those issues: “This government continued to make the decision to go forward.”

Green Party Leader Sonia Furstenau said the Site C dam project should still be cancelled. (Ben Nelms/CBC)

Since Monday, the Greens have gathered more than 3,000 signatures on a petition calling for the project to be shut down.

The B.C. Liberals, who started construction of the Site C dam under former premier Christy Clark, were also critical of the dam’s skyrocketing costs.

Liberal energy critic Tom Shypitka argued that although the Liberals started the project and supported its completion, it is the NDP that must wear the final costs.

“They took ownership of the project, did their due diligence and signed off and said: ‘Yes, we’re going ahead.’ It’s their show.”

Construction ongoing

Meanwhile, heavy equipment and thousands of people continue to work on the project through the COVID-19 pandemic. The premier said more than 4,000 people are currently employed because of Site C construction, and he is not willing to have them lose their work.

That includes a massive undertaking of rerouting the Peace River near Fort St. John, about 1,400 km northeast of Vancouver, for up to five years. Giant 170-tonne turbines from Brazil were trucked more than 1,000 km from Prince Rupert on B.C.’s North Coast to the project in January, shutting down highways along the way.

The dam is expected to come into service in 2025, one year later than originally planned.


Dairy farmers advised to stop adding palm oil to feed as butter controversy heats up

After news coverage of butter becoming harder to melt, possibly due to palm oil additives in cattle feed, the Dairy Farmers of Canada association is recommending that producers stop the practice for the time being.

Some consumers and a Dalhousie food researcher have reported that some types of Canadian butter are staying harder even after some time at room temperature. (The Canadian Press)

After news coverage of butter becoming harder to melt, possibly due to palm oil additives in cattle feed, the Dairy Farmers of Canada association is recommending that producers stop the practice for the time being.

Gordon MacBeath, a member of the national group’s board and chairman of the Dairy Farmers of P.E.I., said the group is responding to recent concerns about the hardening of some types of Canadian butter.

“It’s just a precautionary [measure] to ensure that consumers maintain confidence in dairy products across Canada,” MacBeath said in an interview with CBC Prince Edward Island’s Island Morning.

Dairy Farmers of Canada also announced on Feb. 19 that it is putting together a working group to study the issue of “fat supplementation in the dairy sector.”

The group will include producers, processors, the Consumers Association of Canada, veterinary nutritionists and animal scientists.

WATCH | Butter won’t melt? Some have theories about why that is:

Canada’s dairy producers are under fire after foodies claimed butter has become harder and put the blame on palm oil. Dairy farmers say adding palm products to cattle feed has become common, but critics say it violates a ‘moral contract’ about the purity of Canadian butter. 1:52

“We want to err on the side of caution and we’re advising producers to just simply drop it as an ingredient in the ration until the working group has an opportunity to do their work,” said MacBeath.

The Quebec Milk Producers Association is also looking at the use of palm fat in feed, and says it will follow the recommendations of the national group.

Palm fat an approved supplement

Palm fat is not a new addition to dairy cattle diets, MacBeath noted. It has been used for about a decade. The supplement is also being used in the United States, the United Kingdom, Australia and New Zealand.

The fat is an energy supplement, MacBeath explained.

“I would compare it to yours and my diet. We need a balance of energy and protein, and the cow is no different. She needs a balance of energy and protein,” he said.

The properties of the butter on your table might change for many reasons from year to year, says Gordon MacBeath, chairman of Dairy Farmers of P.E.I. (Randy McAndrew/CBC)

“Palm supplements are just another energy source for the cow.”

A cow requires about 35 kilograms of feed a day. If palm fat is part of that diet, within that 35 kilograms the cow would typically get 200 to 250 grams of the fat.

In the decade during which palm fat has been used as a supplement for dairy cattle feed, MacBeath said no health issues for the cow or changes to the milk have been detected. He said dairy farmers are in regular consultation with veterinary nutritionists to ensure their cows are getting a healthy diet.

Palm fat is approved as a supplement by the Canadian Food Inspection Agency.

At least one researcher is questioning whether this is even a problem that needs to be addressed.

Alejandro Marangoni, a food science professor at University of Guelph, said while components of palm oil found in milk fat can affect the melting point of butter, there’s no data to support “sensationalist” claims of a great hardening.

Many possible reasons for change in butter 

There are a lot of things that can change from season to season and year to year that can make a difference to the milk products on your table, said MacBeath.

“Milk is such a natural product. From the time it leaves the cow, it’s processed very little and it ends up in the consumer [market] with very little change,” he said.

Cows need variety in their diet, just like people do. (Benjamin Lecorps/UBC Animal Welfare Program via the Canadian Press)

If there is a change in the butter, he said it’s not unreasonable to assume it’s because of something the cows ate. But MacBeath said the list of potential causes is long.

“To give an example, this year was very dry, so the texture of the forage and the grass the cow is eating is different than it was the previous year,” he said.

“The previous year we had Hurricane Dorian and that changed the quality of the corn.”

Dairy Farmers of Canada notes that dairy cattle feed varies not only from season to season and year to year, but also from place to place, because the type of feed available varies depending on what local farmers are growing.

“While farmers grow the majority of the crops they feed their cows, a number of common feeds like flax, canola, corn, and other plants have been used for decades in a targeted way to ensure cows are meeting their energy requirements,” says a statement posted on the group’s site

“All milk sold in Canada is nutritious and safe to consume and is subject to Canada’s rigorous health and safety standards.”

More from CBC P.E.I.


Canada’s big banks all beat expectations in quarterly results

Toronto-Dominion Bank and Canadian Imperial Bank of Commerce closed out quarterly results reporting on Thursday, joining major rivals in beating expectations, thanks to much lower provisions for loan losses and trading strength even as their retail businesses posted muted growth or declines.

Canada’s major banks surpassed pre-pandemic profit levels in the first quarter as an increase in soured loans failed to materialize. (CBC)

Toronto-Dominion Bank and Canadian Imperial Bank of Commerce closed out quarterly results reporting on Thursday, joining major rivals in beating expectations, thanks to much lower provisions for loan losses and trading strength even as their retail businesses posted muted growth or declines.

All six major banks surpassed pre-pandemic profit levels in the first quarter as an increase in soured loans has so far failed to materialize, but executives cautioned that a rise is still in the cards amid continued uncertainty and as government assistance programs come to an end.

“There are some positive signs with expectations of vaccines, but we need to be vigilant about a possible third wave” of the pandemic, Riaz Ahmed, chief financial officer at TD, Canada’s second-largest lender, said in an interview.

But the bank, which has almost $9 billion of reserves to cover loan losses, is satisfied with its level of coverage for future losses, he added.

CIBC reported higher profit at all its businesses, exceeded first-quarter expectations along with all of Canada’s other big banks. (Sam Nar/CBC)

TD reported a decline of 13 per cent in its U.S retail business, while growth in its Canadian banking unit was driven largely by its wealth business, which also helped lift earnings at the other lenders.

In addition to margins under pressure, anemic loan growth, and higher expenses in TD’s U.S. business, “strong contributions previously received from Ameritrade have ebbed under the new, previously announced earnings from Schwab,” Barclays analyst John Aiken said in a note.

CIBC reported higher profit at all its businesses, with strength in capital markets, and the recovery of $89 million in provisions on performing loans offsetting sluggish growth in its Canadian banking unit.

TD reported adjusted net income of $1.83 a share, in the three months to Jan. 31, versus analysts’ expectations of $1.49 a shares. CIBC saw adjusted income rise to $3.58 a share, compared with estimates of $2.81 a share.

RBC chief is optimistic

On Wednesday, Royal Bank of Canada chief executive David McKay expressed optimism.

“As we approach a year into the global pandemic, we are encouraged by both the number and efficacy of vaccines,” McKay told analysts on a conference call.

“This — in addition to significant pent up demand, rising prospects of further stimulus programs, expectations of a gradual easing of lockdown measures and pledges of continued low interest rates — to support the sustained economic recovery.”

A person walks out of the Royal Bank of Canada (RBC) in downtown Toronto on Tuesday. (Sam Nar/CBC)

Executives also pointed to mortgages and the stock markets as factors that boosted the bank’s outlook and profit.

“Canadian housing activity also remains elevated,” said McKay, pointing to an increase in construction permits. “We expect a lack of supply, low interest rates, elevated savings rates, continuing work from home arrangements, and a potential resumption of immigration to underpin continued demand.”

Meanwhile, chief financial officer Rod Bolger said RBC’s Direct Investing saw average trading volumes from individual investors rise 200 per cent compared with the same period last year, and that personal chequing accounts grew by more than 30 per cent.

Auto lending down dramatically

But Bolger noted that the pandemic has made it harder to grow RBC’s commercial and credit card businesses. Neil McLaughlin, the bank’s head of personal and commercial banking, also said that auto lending was down dramatically last year.

“Travel is our biggest category and we are just not seeing consumers spending there,” McLaughlin added. “They are paying down debt.”

McLaughlin said that while the lower credit card balances were providing real challenges for the company, he expects the spending to bounce back.

“I think as the economy opens up and entrepreneurs gain confidence, you’ll start to see commercial lending start to come back, hopefully in the back part of the year,” McLaughlin added.

National Bank of Canada also topped expectations Wednesday as it reported its first-quarter profit rose more than 20 per cent compared with a year ago, boosted by growth across its business.

On Tuesday, Bank of Montreal and Scotiabank kicked off a week of rosy results.

Both banks said economic recoveries driven by the rollout of coronavirus vaccines will boost performance into the year, though BMO executives also said that U.S. clients are benefiting from a faster vaccine rollout compared with Canada.


Indian shares jump on economic growth data, widening vaccination drive

Indian shares closed higher on Monday after the country kicked off an expansion of its COVID-19 vaccine campaign and data showed that the economy returned to growth in the December quarter.

The NSE Nifty 50 index gained 1.6 per cent to end at 14,761.55, while the S&P BSE Sensex closed 1.53 per cent higher at 49,849.84.

Both the indexes slumped nearly 4 per cent on Friday as rising bond yields sparked a massive sell-off in global equities.

But with bond yields easing from last week’s peaks and the US House passing a $1.9 trillion coronavirus relief package, the MSCI world equity index firmed 0.5 per cent on Monday.

Aiding sentiment at home was news that Prime Minister Narendra Modi was inoculated with the first dose of a home-grown coronavirus vaccine, beginning an expansion of the country’s immunisation drive.

Meanwhile, data on Friday showed that the country’s gross domestic product grew 0.4 per cent in October to December, compared with a revised contraction of 7.3 per cent in July to September.

Private sector lenders were the top boost to the Nifty. The Nifty private bank index advanced 1.4 per cent, led by a 3.7 per cent jump in Kotak Mahindra Bank.

The Nifty media index gained the most among sectoral indexes, closing 4.3 per cent higher.

The Nifty auto index added 2.4 per cent, with carmaker Maruti Suzuki India rising 2.2 per cent after it reported a near 12 per cent rise in February sales.

Bharti Airtel ended down 4.3 per cent and was the sole decliner on the Nifty 50. Rival Vodafone Idea finished 1.77 per cent lower.

The losses came after Reliance Jio said on Friday it would offer mobile phones and unlimited services for two years at 1,999 rupees ($27.16).


As online grocery booms in Britain, will new habits die hard?

Britain’s multi-billion pound supermarket industry is placing its bets on whether big-spending older shoppers will stick with buying their groceries online when months of lockdown end.

Having more than doubled during the COVID-19 pandemic to represent 16 per cent of Britain’s roughly 200 billion pound ($281 billion) food retail market, the country has one of the world’s highest take-ups of online grocery.

Ocado boss Tim Steiner says it’s here to stay and will carry on growing quickly.

Not so fast, say bosses of some established rivals.

“A lot of people are talking about the new normal, I’m absolutely convinced that we are not in this new normal right now, we are in the temporary normal, we are in an extraordinary time,” Christian Härtnagel, CEO of Lidl GB, told Reuters.

He believes that as the crisis recedes, so will online grocery penetration, not back to pre-COVID-19 levels of 7 per cent but a lot less than 16 per cent.

Lidl does not offer home delivery and for many the jury is out on whether online sales can ever be as profitable as instore purchasing, where shoppers make more impulse buys and extra transport and logistic costs are avoided.

Older shoppers have led the rapid growth of Britain’s online sector.

A third national lockdown boosted retired households’ online grocery spending in January by 229 per cent year-on-year, making up 28 per cent of the 6.4 million who ordered online in the month, market researcher Kantar found.

Whether they stick with it after restrictions end, possibly in June, remains to be seen. The rollout of vaccine will make people less risk averse and months of isolation have left many eager for the social contact of a visit to the shops.

Stephen Pfeffer, a 75-year old retired bank worker from South Woodford in east London, was classified as a vulnerable person at the start of the pandemic so for much of 2020, he took online deliveries from Waitrose.

“I was forced into online shopping with the first lockdown,” he said.

But after regaining his confidence to venture out, he returned to shopping at stores. Now, he has been vaccinated, he uses online only occasionally for bulky items like wine.

 “I thought, you can’t isolate all the time – let’s get out there and start living again,” he said.

Ocado’s Steiner told Reuters that once customers have experienced the ease of online shopping, they are likely to be converted and he expected online grocery in Britain would double in size again over the next few years.

“When customers have done this three-to-five times they tend to stick with it,” he said last month.

He said similar trends were evident in France, Japan, Sweden and the United States – countries where Ocado has won partnership deals.

Steiner co-founded Ocado in 2000 and has seen its stock market value double over the last year to about 17 billion pounds, much of that based on its potential for further overseas deals.

However, sceptics say traditional supermarket groups in Britain struggle to match online profits with those generated by in-store shopping.

“They’ll tell you they make money out of online,” Fraser McKevitt, head of retail and consumer insight at Kantar, said.

“Whether they do or they don’t, they make less money than if I go to the supermarket.”

He said the big chains have the ability to curb demand by restricting delivery slots and raising delivery charges once social distancing rules are relaxed and they can get more shoppers in their stores.

In any case, some in the industry say it would be wrong to see the shift to online grocery shopping as being as decisive as for newspapers and video and music streaming.

 “Anyone who’s saying this is a permanent change in the grocery sector, there’s no evidence to back that up,” said one executive of a major British grocer who declined to be named.

Much will depend on the investment strategies of Britain’s major supermarket groups – market leader Tesco, Sainsbury’s, Asda and Morrisons – as well as Amazon, which has a less than 1 per cent share of the UK grocery market.

Some critics draw parallels with the space race of the nineties and first decade of this century, when Tesco and Asda in particular built ever bigger superstores.

That fizzled out as shoppers fell out of love with massive out-of-town stores and supermarkets realised they could not make much profit from selling large items, such as furniture.

Some say it is symptomatic of people’s attachment to stores that the supermarkets’ heavy investment in digital capacity had led to only a small proportion of shoppers opting for online purchases until the pandemic struck.

For the big four supermarkets, increased take-up has improved the economics of online, but it still dilutes profits.

Kantar’s McKevitt said he expected online grocery demand to taper, at least in the short term.

The supermarket groups are in a quandary, he said.

“They’re between the devil and the deep blue sea,” he said.

“They don’t want to lose out on market share that will go to rivals if they don’t offer enough online slots or at the right price, but, on the other hand, they would probably rather that people went to their shops.”


Raise awareness on benefits of insurance: PM to companies

Prime Minister Sheikh Hasina today urged insurance companies to take initiative so that awareness can be raised among people regarding the benefits of opening insurance policies.

“There is a lack of awareness among people regarding the utilities of insurance. I hope that those involved in the insurance sector will take initiative so that awareness among people could be raised,” she said.

The Prime Minister said this while addressing the National Insurance Day 2021 programme held at Bangabandhu International Conference Center (BICC). She joined the programme virtually from her official residence Gono Bhaban.

The theme of this year’s National Insurance Day is ‘Mujib Borsher Ongikar, Bima Hok Sobar’.

She said if awareness can be generated then people would opt for opening various types of insurance policies.

“For this purpose, huge publicity is urgently needed,” she said.

Sheikh Hasina also elaborated the government’s initiatives for developing the insurance industry and noted that the Insurance Act 2010 and National Insurance Policy 2014 were formulated to replace the old law of 1938.

Besides, the government also constituted the Insurance Development and Regulatory Authority in 2010 to give the industry an institutional shape, she added.

Referring to a project of Tk 632 crore for the development of the country’s insurance sector, she mentioned that the government in collaboration with the World Bank is implementing it to bring all insurance companies under automation.

Finance Minister AHM Mustafa Kamal, Bangladesh Insurance Association president Sheikh Kabir Hossain and senior secretary of Financial Institutions Division of Finance Ministry Mohammad Asadul Islam also spoke on the occasion.

Earlier, Finance Minister AHM Mustafa Kamal, on behalf of the Prime Minister, gave away Bima Padak among recipients for their contribution in the insurance sector of the country, and Bangabandhu Education Insurance Certificates among the students.