SoBs, FIs reminded about central bank guidelines

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Syful Islam
The government on Tuesday reminded state-owned banks (SoBs) and financial institutions (FIs) about strictly following the central bank guidelines, official sources said.
"Every directives and circulars of Bangladesh Bank (BB) have to be followed compulsorily," chief executive officers (CEOs) of the SoBs and FIs were told at a meeting at the Ministry of Finance (MoF).
In the closed-door meeting, the secretary of the Bank and Financial Institution Division under the MoF, Shafiqur Rahman Patwary, expressed his dismay over the recent developments in the banking sector, especially the loan scam, the sources said.
"The recent developments in different banks, especially the loan scam, are not acceptable to us," the secretary was quoted as saying.
In the meeting, also attended by BB Deputy Governor S K Sur Chowdhury, the CEOs were asked to inspect the authorised dealer branches of state-owned commercial banks by forming special inspection teams and audit teams within a month.
"Administrative and legal actions have to be taken immediately if any irregularity happens in any branch of the SOBs and FIs," the CEOs were told.
They were also directed to take steps for regular monitoring of audit divisions and foreign exchange divisions of the banks' head offices by high officials.
The SoBs were also asked to form special taskforces for settlement of unsettled audit objections within 15 days.
The meeting discussed allegations, such as harassment of genuine businessmen by bank officials over sanctioning of loans.
"None should harass real businessmen and entrepreneurs or indulge in irregularities in sanctioning loans," the CEOs were warned.
The high volume of bad loans in the SOBs and FIs also came up for discussion in the meeting. The CEOs were asked to take special steps to reduce the volume of bad loans and prepare six-month work plans in this connection.
"The SoBs and FIs should take BB's advice, if needed, and take action to reduce the volume of classified loans," the meeting was told.
The CEOs were asked to regularly place important issues before their respective board of directors. "The delegation of financial power of the banks should be strictly followed."
All the banks were directed to establish risk management units with a general manager as head of such unit.
On the other hand, the banks were given three months to reduce at least 5 per cent of unsettled cases. If necessary, the CEOs should take steps for alternative dispute settlement, the meeting directed.
Sources said the banking division secretary also expressed resentment over offering high interest rate by some banks to collect deposit. "The CEOs have been asked to stop such unusual practice."
The meeting also asked the CEOs to maintain the loan-deposit ratio as specified in the BB guidelines.
High officials from the bank and financial institution division also attended the meeting.