Banks asked to expedite lending to agriculture, SMEs, housing
Monday, 17 September 2007
FE Report
The Bangladesh Bank (BB) has advised the commercial banks having surplus liquidity to expedite lending to agriculture, small and medium enterprises (SME) and housing sectors.
The advice was given at a bankers' meeting held at the conference hall of the central bank Sunday with the BB Governor Salehuddin Ahmed in the chair.
The central bank took the move aiming to facilitate the ongoing post-flood rehabilitation programmes across the country and raise investment by the commercial banks in those sectors through utilisation of their excess liquidity.
During the meeting, some bankers drew attention to the suspension of transactions with the clients who remain fugitive or under custody. In reply to the query, the BB governor said the central bank will explain the matter later.
But talking to reporters, the BB governor said that the banks have been given the suggestion to continue businesses, particularly with the profitable concerns, of detained or fugitive businessmen on the basis of 'bank-client' relationship.
"The central bank will act in line with the existing rules and regulations in this connection," Salehuddin said while replying to a query.
The bankers also expressed concern that the volume of default loans would rise further because some large companies were not servicing their loan accounts as owners of the business entities remained fugitive or detained following the government's on going drives against corruption.
Non-performing loans increased to 13.96 per cent of the total outstanding loans by the end of June last, which was 13.80 per cent in March, 2007 and 13.15 per cent in December 2006, according the central bank statistics.
"We are worried about the rising default loans due to non-operation of such accounts," a chief executive of a commercial bank told the FE after the meeting.
Excess liquidity of the scheduled banks stood at Tk 142.79 billion at the end of June last against Tk 95.91 billion of the corresponding period of the previous year, according to the BB's statistics.
"We have suggested to the banks to disburse loan as earlier as possible to the identified sectors to facilitate the on-going post-flood rehabilitation programmes," the BB governor told reporters after the meeting.
He also said the central bank has started a refinancing scheme for the housing sector as a step towards meeting one of the basic needs of the people.
The central bank has already created a Tk 3.0 billion fund initially for three years with Tk 1.0 billion injecting every year under the scheme.
Meanwhile, the BB relaxed its condition relating to the amount of non-performing loan aiming to involve more commercial banks and non-banking financial institutions (NBFIs) in the scheme.
A bank or an NBFI having non-performing loan not beyond 15 per cent will now be eligible to avail themselves of the refinancing facilities. Earlier, the central bank allowed 10 per cent of non-performing loan for participation in the scheme.
"We have suggested that the banks should invest in the housing sector from their own funds along with the BB's refinancing scheme," the central bank chief added.
The BB also suggested the bankers to move forward to investing in the SMEs to help create employment opportunities, Salehuddin noted.
Besides, the central bank asked the banks not to harass their clients by seeking information including that of sources of money for opening letters of credit (LC) against imports.
"We have asked the banks not to harass their clients by asking unnecessary questions," the BB governor said, adding that central bank also asked the chief executives of the banks to instruct the front desk officials, who directly deal with the clients, not to seek any unnecessary information.
The businessmen have already raised allegation about unnecessary harassment by a section of bankers to operate their businesses.
The meeting discussed the overall situation of the banking sector and the role of bankers for promoting the country's economic activities, the sources added.
The Bangladesh Bank (BB) has advised the commercial banks having surplus liquidity to expedite lending to agriculture, small and medium enterprises (SME) and housing sectors.
The advice was given at a bankers' meeting held at the conference hall of the central bank Sunday with the BB Governor Salehuddin Ahmed in the chair.
The central bank took the move aiming to facilitate the ongoing post-flood rehabilitation programmes across the country and raise investment by the commercial banks in those sectors through utilisation of their excess liquidity.
During the meeting, some bankers drew attention to the suspension of transactions with the clients who remain fugitive or under custody. In reply to the query, the BB governor said the central bank will explain the matter later.
But talking to reporters, the BB governor said that the banks have been given the suggestion to continue businesses, particularly with the profitable concerns, of detained or fugitive businessmen on the basis of 'bank-client' relationship.
"The central bank will act in line with the existing rules and regulations in this connection," Salehuddin said while replying to a query.
The bankers also expressed concern that the volume of default loans would rise further because some large companies were not servicing their loan accounts as owners of the business entities remained fugitive or detained following the government's on going drives against corruption.
Non-performing loans increased to 13.96 per cent of the total outstanding loans by the end of June last, which was 13.80 per cent in March, 2007 and 13.15 per cent in December 2006, according the central bank statistics.
"We are worried about the rising default loans due to non-operation of such accounts," a chief executive of a commercial bank told the FE after the meeting.
Excess liquidity of the scheduled banks stood at Tk 142.79 billion at the end of June last against Tk 95.91 billion of the corresponding period of the previous year, according to the BB's statistics.
"We have suggested to the banks to disburse loan as earlier as possible to the identified sectors to facilitate the on-going post-flood rehabilitation programmes," the BB governor told reporters after the meeting.
He also said the central bank has started a refinancing scheme for the housing sector as a step towards meeting one of the basic needs of the people.
The central bank has already created a Tk 3.0 billion fund initially for three years with Tk 1.0 billion injecting every year under the scheme.
Meanwhile, the BB relaxed its condition relating to the amount of non-performing loan aiming to involve more commercial banks and non-banking financial institutions (NBFIs) in the scheme.
A bank or an NBFI having non-performing loan not beyond 15 per cent will now be eligible to avail themselves of the refinancing facilities. Earlier, the central bank allowed 10 per cent of non-performing loan for participation in the scheme.
"We have suggested that the banks should invest in the housing sector from their own funds along with the BB's refinancing scheme," the central bank chief added.
The BB also suggested the bankers to move forward to investing in the SMEs to help create employment opportunities, Salehuddin noted.
Besides, the central bank asked the banks not to harass their clients by seeking information including that of sources of money for opening letters of credit (LC) against imports.
"We have asked the banks not to harass their clients by asking unnecessary questions," the BB governor said, adding that central bank also asked the chief executives of the banks to instruct the front desk officials, who directly deal with the clients, not to seek any unnecessary information.
The businessmen have already raised allegation about unnecessary harassment by a section of bankers to operate their businesses.
The meeting discussed the overall situation of the banking sector and the role of bankers for promoting the country's economic activities, the sources added.