Palli Sanchay Bank seeks 10-yr tax, VAT exemption

State-owned Palli Sanchay Bank (PSB) has sought a 10-year exemption from income tax and Value Added Tax (VAT) to facilitate investments aimed at socio-economic development of poor rural people.

The bank's Managing Director (MD) Salma Banu recently requested the government to take necessary steps to grant the benefit for the period from fiscal year 2017-18 to 2026-27.

The then Prime Minister's Office gave instruction to implement an 11-point suggestion, including offering 10-year tax and VAT exemption on all income of the bank following a bilateral meeting between the Financial Institutions Division (FID) and Rural Development and Co-operatives Division.

The MD argued that the exemption would enable the rural-centric bank to increase its investment in the countryside. As rich people do not deposit or invest in PSB like in commercial banks, the state-run bank conducts investment operation mainly with the re-financing fund. So, the bank would benefit significantly if the government grants tax and VAT exemption.

Currently, PSB has more than 3.08 million clients. Of them, about 0.63 million are involved in small and medium enterprises, 0.606 million in milk production, 0.49 million in cow fattening, 0.35 million in agricultural activities, and around 1.0 million in other sectors. The bank has been providing services through the formation of 0.12 million village associations across the country.

At present, PSB's authorised capital stands at Tk 10 billion, while its paid-up capital is Tk 3.17 billion. Each share is valued at Tk 100, with 51 per cent owned by the government and 49 per cent by the village associations, according to bank data.

rezamumu@gmail.com