Banks cautious over lending to recession-hit ventures
Saturday, 25 April 2009
FHM Humayan Kabir
Commercial banks in the country have taken cautious approach in lending to the commercial ventures, especially those affected by the global meltdown, bankers said Friday.
"We are very careful in providing credit to such areas amid recession. Usually, we suggest new entrepreneurs or those affected industrial manufacturers to wait for some more time to get loan," Ali Reza Iftekhar, chief executive officer (CEO) of the Eastern Bank Ltd told the FE.
Since the global economic downturn has hit the financial sector in the developed world, the country's banks are also careful about credit disbursement to weather the possible impact, he said.
"At this moment we are much interested to extend our financial support to the newly emerged sectors like gas, power and telecommunications," Mr. Iftekhar said.
His bank will be able to go for normal banking when the recession will start diminishing, he said adding: "I am very much hopeful about the recession easing from the third quarter of 2010."
The credit flow to the country's private sector has already been affected and started shrinking since October last year against the backdrop of the global financial crisis, central bank said.
The credit growth in the sector declined to 19.84 per cent in February from 20.94 per cent in January this year, Bangladesh Bank statistics said.
The credit flow to the private sector has declined in the last five months because of a 'go-slow' policy adopted by the businessmen and the bankers to avoid any financial risk against the global economic recession, a senior BB official said.
"Due to prevailing global downturn, we have taken cautious approach in lending to protect our bank from the impact of the global economic crisis," chairman of the Janata Bank Ltd. Suhel Ahmed Choudhury said.
"At this moment, we are not giving loan to the affected sectors like jute, spinning, leather and frozen food," he said adding: "We are advising the investors to wait for some more days to borrow from our bank."
Syed Abu Naser Bakhtiar, CEO of the Agrani Bank Ltd. said his bank is careful about disbursement of loan to new entrepreneurs at this time of amid the global financial meltdown.
"We are not much interested to give loan to some sectors like jute, leather, frozen foods and spinning as those have already been affected by the meltdown," he said.
"But we are ready to lend those industrial sectors whose products have adequate demand at home. Gas, power, IT and agro-based industry, especially the wood processing industry, are being given loan now," Mr. Bakhtiar said.
The Bangladesh Bank (BB) said the private sector credit growth came down to 24.72 per cent in October from 26.55 per cent in September 2008.
The private sector credit growth will come down to 18.50 per cent by the end of June this year, according to the BB's latest monetary policy, announced on January 14 last.
Commercial banks in the country have taken cautious approach in lending to the commercial ventures, especially those affected by the global meltdown, bankers said Friday.
"We are very careful in providing credit to such areas amid recession. Usually, we suggest new entrepreneurs or those affected industrial manufacturers to wait for some more time to get loan," Ali Reza Iftekhar, chief executive officer (CEO) of the Eastern Bank Ltd told the FE.
Since the global economic downturn has hit the financial sector in the developed world, the country's banks are also careful about credit disbursement to weather the possible impact, he said.
"At this moment we are much interested to extend our financial support to the newly emerged sectors like gas, power and telecommunications," Mr. Iftekhar said.
His bank will be able to go for normal banking when the recession will start diminishing, he said adding: "I am very much hopeful about the recession easing from the third quarter of 2010."
The credit flow to the country's private sector has already been affected and started shrinking since October last year against the backdrop of the global financial crisis, central bank said.
The credit growth in the sector declined to 19.84 per cent in February from 20.94 per cent in January this year, Bangladesh Bank statistics said.
The credit flow to the private sector has declined in the last five months because of a 'go-slow' policy adopted by the businessmen and the bankers to avoid any financial risk against the global economic recession, a senior BB official said.
"Due to prevailing global downturn, we have taken cautious approach in lending to protect our bank from the impact of the global economic crisis," chairman of the Janata Bank Ltd. Suhel Ahmed Choudhury said.
"At this moment, we are not giving loan to the affected sectors like jute, spinning, leather and frozen food," he said adding: "We are advising the investors to wait for some more days to borrow from our bank."
Syed Abu Naser Bakhtiar, CEO of the Agrani Bank Ltd. said his bank is careful about disbursement of loan to new entrepreneurs at this time of amid the global financial meltdown.
"We are not much interested to give loan to some sectors like jute, leather, frozen foods and spinning as those have already been affected by the meltdown," he said.
"But we are ready to lend those industrial sectors whose products have adequate demand at home. Gas, power, IT and agro-based industry, especially the wood processing industry, are being given loan now," Mr. Bakhtiar said.
The Bangladesh Bank (BB) said the private sector credit growth came down to 24.72 per cent in October from 26.55 per cent in September 2008.
The private sector credit growth will come down to 18.50 per cent by the end of June this year, according to the BB's latest monetary policy, announced on January 14 last.