BB asks banks to bring RMG workers under mobile banking

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Siddique Islam The central bank has asked the commercial banks for taking necessary measures to make mobile phone numbers of garment workers as their bank accounts for strengthening the ongoing financial inclusion programme in Bangladesh. The Bangladesh Bank (BB) gave the instruction at a meeting of bankers, held in the central bank Thursday with its Governor Atiur Rahman in the chair. "We've asked the banks, which have already started mobile banking services, to provide such services to the readymade garment (RMG) workers," Deputy Governor of the BB S K Sur Chowdhury told reporters after the meeting. He also said the central bank is also thinking of opening bank accounts for the RMG workers like farmer bank accounts. The country's farmers are allowed to open account with the state-owned banks with a nominal deposit of just Tk 10. The RMG is considered the country's largest foreign currency earner, constituting more than 16 per cent of the gross domestic product (GDP), nearly 80 per cent total export receipts, and providing direct employment to around 4.0 million people, of which 80 per cent are women. "It will be easier and safe to send money if the mobile banking accounts are introduced for the garment workers," Chairman of the Association of Bankers, Bangladesh (ABB) Nurul Amin said. He also urged the BB for taking necessary steps to bring more banks under the mobile banking services. Addressing the bankers' meeting, the Governor said it has been observed recently that the banks in some cases did not properly follow the BB's prudential regulations. "Some banks are providing loans without collecting the updated CIB (Credit Information Bureau) report of the clients although it is mandatory," Dr. Rahman said. Expressing his concern over rising trend of classified loans, the BB chief asked the bankers for taking necessary steps to reduce the amount of default loans. "The banks will have to maintain single borrower exposure limit for avoiding concentrate of loans," Mr. Sur said, adding that the BB has alerted the banks for following strictly the single borrower exposure limit. Under the existing provisions, the total financing facilities by any bank to any single person or enterprise or organisation of a group are not to exceed 35 per cent of the bank's total capital at any point of time, subject to the condition that the maximum fund-based financing facilities (funded facilities) do not exceed 15 per cent of its total capital base. However, the single borrower exposure limit should remain unchanged in the export sector at the existing 50 per cent of a bank's total capital. But funded facilities, in case of export credit, are not also to exceed 15 per cent of a bank's total capital. The BB deputy governor also said the bankers have been asked for taking effective measures to improve their internal control and compliance system for mitigating the risk of fraudulence and forgeries in the country's banking sector. "The bankers are obliged to follow both the single borrower exposure limit and collection of the CIB reports before sanctioning of fresh loans," Mr. Sur noted. He also said the central bank will take actions against the banks if they failed to follow the BB's instructions relating to the single borrower exposure limit and collection of the CIB reports. The meeting also discussed different issues including reduction of classified loans, credit risk grading (CRG) and loan classification, provisioning and rescheduling policies.