Uneven disbursement of bank loans

Dhaka division where the country's administrative capital is located, naturally, gets precedence over other places as far as allocation of resources by the government is concerned. Chittagong division, which accommodates the business capital, comes next. These two important cities and their adjacent districts, do always get priority attention of policymakers in all matters. The country's banks are apparently more eager to finance the economic and other activities in these two divisions. At least, their loans and credit disbursement figures amply indicate this.

Dhaka and Chittagong divisions, according to a report published in this paper, received nearly 90 per cent of loans and advances -- Dhaka alone got 70 per cent -- disbursed by the scheduled banks during the first nine months of the last financial year. It is assumed that the overwhelming part of the loans disbursed in the administrative divisions went to the borrowers mainly from two cities -- Dhaka and Chittagong. The credit disbursement figures as such tend to give an impression that banks are not that much interested to offer loans and advances to prospective borrowers from other administrative divisions or the real demand for funding support for economic activities from those places is depressingly low.

Whatever may be the case, there is hardly any denying that the current approach of the banks is very much in line with the skewed development strategy and resource allocation of the government. Such a faulty strategy pursued over a long time has given rise to regional disparities. Some regions have grown faster than others and they have better communications facilities, access to energy, skilled workforce etc. Naturally, banks would be more interested to make investments in the localities that have the potential to offer better return on the same. The central bank statistics show that the less developed regions such as Barisal and Sylhet have got fewer bank loans.

The government recognises the fact that its resource allocation and development efforts over the past decades having been skewed, have given rise to regional disparities. Though it has expressed its intention to reverse the situation, the real effect is yet to be seen in the less-developed areas. In fact, the highly inadequate availability of bank loans and advances in regions other than Dhaka and Chittagong has been adding to the regional disparities. Such poor disbursement of advances could as well be due to the banks' concern about the safety of their fund.  

Furthermore, an unusually large concentration of bank funds in two administrative divisions might be due to the emergence of a large number of private banks and consequent decline in the dominance of the state-owned banks. The private banks have been spreading out, albeit, slowly across the country. Their most branches are located in urban areas, mainly in Dhaka and Chittagong. Another important reason for large concentration of banks loans in two cities is thought to be the presence of major industries and business houses there. But the private banks need to establish their branches in most other districts that are now better connected than before because of a tangible improvement in road network.