The central bank has asked four state-owned commercial banks (SoCBs) to go for small and medium-scale loans instead of large ones for minimising risks, officials said.
The instruction came at a meeting held at the central bank headquarters in Dhaka Monday to review the memorandum of understanding (MoUs) of the four SoCBs -- Sonali Bank, Janata Bank, Agrani Bank and Rupali Bank -- with Bangladesh Bank (BB) Governor Dr Atiur Rahman in the chair.
The BB also asked the SoCBs for taking effective measures to improve their financial health immediately through expediting classified loan recovery drives.
The SoCBs have been advised to be more careful in case of selecting borrowers. Proper due diligence should be given when sanctioning fresh loans.
"We've asked the SoCBs to provide proper disclosure relating to various issues in their financials to ensure transparency," SK Sur Chowdhury, deputy governor of the BB, told the FE after the meeting.
He also said the SoCBs have also been asked to follow different prudential and regulatory limits properly.
"We've asked the SoCBs to improve internal control and compliance in line with the BB's advice to check fraud and forgeries," the BB deputy governor revealed.
The central bank also instructed the SoCBs for taking necessary measures to properly implement the existing core risk guidelines to minimise their financial risks, the deputy governor added.
The central bank earlier identified six core risk areas in the country's banking sector. The risk factors are credit, asset and liability, foreign exchange, information technology, internal control and compliance, and money laundering.
"We've also asked the SoCBs to complete their automation process by the end of 2016," Mr. Chowdhury said.
The chief executive officers (CEOs)-cum-managing directors (MDs) of the banks were present in the meeting.
The deputy governor also said the CEOs of the SoCBs will be rewarded for their good performances; otherwise they (CEOs) will be fired. "We've already given their jobs protection through issuing a directive."
Talking to the FE, a BB senior official said the SoCBs have been asked to expedite their credit flow to small and medium enterprises (SMEs) instead of large ones to minimise risk.
"We've advised the SoCBs to expand their businesses in line with the existing credit growth ceiling, set by the BB earlier," the central banker said while replying to a query.
The central bank earlier re-fixed the loan growth ceiling for Sonali and Rupali at 6.0 per cent and 12 per cent respectively while Janata's and Agrani's credit growth limits were revised at 10 per cent for each.
The meeting also reviewed various issues, including recovery position of default loans, liquidity situation, credit growth, operating expenses and cost of funds of the SoCBs.
The BB earlier signed the MoUs with the managements of the SoCBs to improve their financial performance by providing policy support.
siddique.islam@gmail.com
BB asks 4 SoCBs to go for small, medium loans to minimise risks
Siddique Islam | Published: April 07, 2015 00:00:00 | Updated: November 30, 2024 06:01:00
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