FE Today Logo

Muhith fears entry of black money into economy ahead of election

Alerts BB, backs re-capitalisation of cash-strapped state banks

FE Report | January 29, 2018 00:00:00

Finance Minister AMA Muhith on Sunday raised an alarm for the bankers, saying that black money might start rolling into the mainstream economy ahead of the upcoming parliamentary polls.

To stem the entry of the tainted money, he asked the Bangladesh Bank (BB) to remain more cautious about spreading the unaccounted for money in the economy.

He also said the advance-deposit ratio has gone beyond the limit, which needs to be controlled by the central bank. But it (BB) is worried a bit this time because this is the year of holding the general elections, he added.

"So, the trend in money circulation would go up and black money might start rolling in the market. The central bank has to be careful about it," he told the Annual Business Conference-2018 of Rupali Bank Limited (RBL) at Osmani Auditorium in the capital.

State Minister for Finance and Planning M A Mannan and senior secretary of the Bank and Financial Institutions Division Md Eunusur Rahman were present at the conference.

About capital inadequacy in some state-owned banks, the minister brushed aside the criticism over the re-capitalisation initiatives by the government with public money, and said he would again keep provision for re-capitalisation of the banks in the next budget.

"No, it's right. We can't allow any disaster in the banking sector. Even a little disaster can destroy the whole banking system. So, the government will continue it (re-capitalisation)," said Mr Muhith.

At the same time, he assured the RBL of resolving their liquidity problem in the upcoming budget to be placed in parliament in June next.

He, however, suggested the bankers to focus more on financing the SMEs (Small and Medium Enterprises) as they contribute nearly 75 per cent of the industrial production.

"We've to assist the SMEs. General people will be benefited through proper development of the community because SMEs can create more employment," he said.

Explaining the RBL's turnaround, its managing director Md. Ataur Rahman Prodhan said the bank had made a commitment of bouncing back two years ago and made a profit of Tk 5.37 billion in 2017 against a loss of Tk 870 million in 2016.

"Profit has gone up while deposit and investment increased by 17 and 88 per cent respectively," he said.

He said there were also some weaknesses in the bank as the rate of non-performing assets has increased by 1.0 per cent than that of the previous year due mainly to a BB circular that withdrew our cases. "That's why Tk 10 billion became non-performing assets overnight," he added.

Mr Prodhan said it is unfortunate that the 46-year-old RBL has paid up capital of only Tk 3.46 billion while Sonali Bank Limited has over Tk 30 billion.

Announcing the bank's plan to become a top public financial institution within the ongoing year, the RBL managing director has sought Tk 9.0 billion from the government's bank re-capitalisation fund.

In the conference, the bank awarded top 10 managers for their outstanding performances in 2017. Members of RBL board of directors, senior officials and managers from RBL 563 branches were present in the function.

[email protected]

Share if you like