Banks asked to go by BB strategies in dealing with entrepreneurs
Friday, 19 October 2007
Shakhawat Hossain
The Bangladesh Bank has advised the commercial banks to follow the strategies it has devised to deal with the entrepreneurs in maintaining the growth of private sector credit, sources said.
The central bank has devised mechanism to encourage the private entrepreneurs to come forward to utilise a huge amount of excess liquidity against the backdrop of a decline of private sector credit growth by 3.0 percentage points to 15 per cent in the last fiscal and a poor trend in the first quarter of the current fiscal.
Currently, the commercial banks have nearly Tk 150 billion in excess liquidity.
The commercial banks have been asked to give priority to the small and medium enterprises (SME) and the industries and the manufacturing units affected by the on-going anti-corruption drive, sources added.
The BB also advised the commercial banks not to treat certain loans of the affected industries and manufacturing units as default ones and cooperate with such units for release of new credit.
Besides, the process of disbursing two of the central bank special credit schemes -- Tk 3.0 billion credit for women and Tk 3.0 billion housing loan - has to be speeded up.
The suggestions have been given following a dismal private sector credit growth of 0.46 per cent in July last, which is a worry for the caretaker government, said a senior BB official.
The BB high officials are optimistic that the private sector credit growth will revive with the execution of the suggestions.
"The central bank wants to see the private sector credit growth reaching 16 per cent in the middle of the current fiscal," added the official.
The official said the banks should come forward to cooperate with the private entrepreneurs for maintaining good performance and healthy profit margin.
He pointed out that poor private sector credit flow would also affect the performance of the banking sector.
Last month, the Ministry of Finance (MoF) instructed the central bank to devise a mechanism so that the commercial banks maintain relationship with their clients neutrally.
The MoF observed that commercial banks did not abide by standard banking rules while dealing with many business houses because of the ongoing anti-corruption drive.
The central bank sent such instructions to protect the industries and employment there to sustain the pace of economic growth.
More than 30 leading business groups and houses have already been badly affected due to the rigorous anti-corruption drive that has reportedly shaken the confidence of the private entrepreneurs throughout the country.
The Bangladesh Bank has advised the commercial banks to follow the strategies it has devised to deal with the entrepreneurs in maintaining the growth of private sector credit, sources said.
The central bank has devised mechanism to encourage the private entrepreneurs to come forward to utilise a huge amount of excess liquidity against the backdrop of a decline of private sector credit growth by 3.0 percentage points to 15 per cent in the last fiscal and a poor trend in the first quarter of the current fiscal.
Currently, the commercial banks have nearly Tk 150 billion in excess liquidity.
The commercial banks have been asked to give priority to the small and medium enterprises (SME) and the industries and the manufacturing units affected by the on-going anti-corruption drive, sources added.
The BB also advised the commercial banks not to treat certain loans of the affected industries and manufacturing units as default ones and cooperate with such units for release of new credit.
Besides, the process of disbursing two of the central bank special credit schemes -- Tk 3.0 billion credit for women and Tk 3.0 billion housing loan - has to be speeded up.
The suggestions have been given following a dismal private sector credit growth of 0.46 per cent in July last, which is a worry for the caretaker government, said a senior BB official.
The BB high officials are optimistic that the private sector credit growth will revive with the execution of the suggestions.
"The central bank wants to see the private sector credit growth reaching 16 per cent in the middle of the current fiscal," added the official.
The official said the banks should come forward to cooperate with the private entrepreneurs for maintaining good performance and healthy profit margin.
He pointed out that poor private sector credit flow would also affect the performance of the banking sector.
Last month, the Ministry of Finance (MoF) instructed the central bank to devise a mechanism so that the commercial banks maintain relationship with their clients neutrally.
The MoF observed that commercial banks did not abide by standard banking rules while dealing with many business houses because of the ongoing anti-corruption drive.
The central bank sent such instructions to protect the industries and employment there to sustain the pace of economic growth.
More than 30 leading business groups and houses have already been badly affected due to the rigorous anti-corruption drive that has reportedly shaken the confidence of the private entrepreneurs throughout the country.