Muhith, Atiur defend latest action on loan rescheduling

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The finance minister said business confidence would come back following the move that allowed businessmen harmed during the interim government to reschedule their overdue loans without down payment, reports bdnews24.com.
Speaking to the media at the Economic Relations Division in Sher-e-Bangla Nagar Tuesday, AMA Muhith said the latest measure would not upset the discipline in terms of loan in the banking sector.
"Those (businessmen and industrialists) who could not do anything during the caretaker government's tenure should be given scope to work."
Bangladesh Bank Monday issued a circular that asked banks to let the 'harmed' businessmen reschedule their loan without down payment and on the basis of their relations with clients.
The minister said those businessmen and industrialists who were detained or who fled the country, who had their bank accounts frozen and arrest warrant out on them, leading to losses, would get the latest facility.
The central bank had been asked to issue the circular to help them offset losses and restore full confidence among the businesses, Muhith added.
He claimed that the economy was already shrugging off sluggishness in investment and that the move was in no way aimed at boosting investment.
The finance minister expressed the hope that the decision would help the affected industries get back on stream and drive the economy.
He attributed the flagging investment to the military-backed interim government's repression, global recession and problems in the infrastructure sectors like gas and electricity.
"After our (Awami League) government took office, the problems are veering off," he said.
A sweeping anti-corruption drive under the state of emergency in 2007-'08 had stuffed the jails with some of country's most influential business leaders, while many others fled the country, leading to stagnation in new investment.
Meanwhile, an FE report adds: Playing down the breach of banking discipline, Bangladesh Bank top boss defended Tuesday a new step to grant the detained and fleeing businessmen loan rescheduling facility, saying it would help foster investment.
"We're not offering any concessions … It's part of the bailout," central bank governor Dr Atiur Rahman said about the latest move.
"It's not that we're exempting businessmen from repaying loans. The objective is to offer them a sort of leeway to start afresh," he said after the opening ceremony of an international conference in the city.
The central bank issued Monday a circular, asking commercial banks to allow business persons, also political leaders, arraigned of corruption during the military-backed caretaker regime, to reschedule their loans without any down payment.
The privilege, to be valid until June next year, will be applicable to three dozen-odd businessmen who were either arrested or fled the country to avert legal action, leaving their business firms in limbo.
Dr Atiur said the move would facilitate business activities across the country and unclog the flow of investment that slowed to a crawl during the two-year interim regime, thanks in part to the anti-graft clampdown.
He said that the monetary policy to be unveiled in mid-January would be formulated in a way so it can promote what he called "inclusive growth."
"The monetary policy will support inclusive growth and help boost internal demand," he told reporters.
The robust domestic demand has saved Bangladesh from the worst effect of the global recession and the central bank head said he would refocus his attention to stimulate internal demand.
Defying the global crisis, Bangladesh economy managed to grow 5.9 per cent in 2009 financial year, aided by double-digit export growth and healthy flow of remittances.
If the global recovery doesn't lose steam, he hoped that the real GDP (Gross Domestic Product) growth in 2010 fiscal could match the last year's growth or even exceed.
Dr Atiur said banks would dole out more than 25 per cent of their lending portfolio to the farm sector next year to drive agricultural growth.
He added that the central bank will open a new SME (small and medium enterprises) division to promote and increase lending flowing to smaller firms.
"It's a new strategy to tackle the impact of global recession," he said.
Stressing on sustainable development, the central bank chief said businesses should do business in a socially responsible manner, taking care of both consumers and environment.
"The recession has changed the dynamics of business and added new dimension. Only finance and profits shouldn't be the main goal of business," the development economist-turned central bank boss said.
"It will be important how we do business," he added.
Department of Finance of Dhaka University organised the seminar on world financial crisis and global business challenges with chairman of Finance Department Prof Mahmood Osman Imam presiding.
While presenting the keynote speech, Dr Atiur said the global economy is recovering, supported by government bailouts and stimulus on a truly massive scale, but the effects of the crisis on businesses and other economic activities would probably linger in the days to come.
He said Bangladesh also made ample allocations in the national budgets to uphold domestic demand by expanding the social safety net for the poor and to provide temporary support to sectors, hurt by the global crisis.
"Broad-based, inclusive, socially and environmentally responsible economic growth is viewed by Bangladesh Bank as the way forward in strengthening domestic demand and intra-regional trade," he said.
Vice chancellor of Dhaka University AAMS Arefin Siddique, Professor of University of Nebraska, USA, Ziaul Huq, Professor of Finance of Dhaka University Jamal Uddin Ahmed and Professor of East West University Nazrul Islam, among others, spoke at the opening session of the two-day conference.