JS body endorses BB circular asking banks to submit reports

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FE Report
The parliamentary standing committee on finance endorsed on Tuesday the Bangladesh Bank circular asking banks to submit reports on their investments in stock market.
"The central bank did the right thing by asking the banks to submit reports on their share market investment," said the chairman of the committee AHN Mustafa Kamal.
As a regulatory authority, the central bank can ask any information from any bank to protect the interest of depositors, he said after a meeting of the standing committee with managing directors of private commercial banks (PCB).
"If any bank violates any regulation related to stock market investment, the central bank will take action against it," Mr Kamal said.
The parliament watchdog body told the bank executives that the body would have meeting with law ministry to ensure quick disposal of default loan cases.
The cases have been pending for years due to shortage of judges and benches, he said.
"We have met the prime minister and she assured us that judges and benches will be provided to dispose of the cases," he added.
There are many good laws related to default loan, but the main problem is their implementation, Mr Kamal said.
"There are loopholes in the system and they should be plugged to recover the bad loans," he said.
The meeting recommended that the cash reserve ratio (CRR) should be reduced to increase investible funds, he added.
"If the funds are available, the banks will have to cut the interest rate," Mr Kamal.
When his attention is drawn about the current excess liquidity position, he said the investors lack confidence due to global recession.
"But it is a temporary phenomena and when the economy will pick up there should be enough liquidity to meet the investors' demand," he said.
The banks should reduce the lending rate to single digit level and they should explore new avenues to generate more income, he added.
"It will be better if they become less dependent on interest income and earn more from other activities," Mr Kamal said.
The central bank has instructed the banks to increase their capital base to Tk 4.0 billion by 2011 to meet the Basel II requirement and the committee asked the PCB officials to meet the deadline, he said.
The committee suggested that the banks should increase its managerial efficiency for more competitiveness, he added.