Banks fail to synchronise term loan with working capital, says Muhith
Monday, 4 January 2010
FE Report
The government is planning to formulate a policy under which term loan as well as working capital will be provided to entrepreneurs, said finance minister AMA Muhith on Sunday.
"The banking sector has failed to synchronise term loan with working capital and for that reason many business units have been closed down," he said at the inaugural ceremony of Bangladesh Development Bank Limited (BDBL) in the city.
Board of directors of banks have failed to perform efficiently to protect industries in trouble many a times, he said.
The minister said the culture of sick industry should be eradicated and the government is going to formulate a guideline to help them out.
"There are many sick industries which cannot be brought back to life and those have to be winded up," he said.
The minister said the private sector banks are capturing the market share at a rapid pace and contributing to the society.
"The capital market in the country is shallow and the business has to resort to the banks for funding support," he added.
In the 70s, the government had to nationalise the financial sector as it had no other option but gradually started to open up the market to the private sector since the 80s, Mr Muhith said at the BDBL inaugural ceremony.
"The BDBL has been formed with the merger of two sick specialised banks - Bangladesh Shilpa Bank and Bangladesh Shilpa Rin Sangstha," the minister said.
The government will provide allout support to the new institution to make it an efficient and profitable one, he said.
"The new bank will develop new and innovative products for its clients," he added.
The minister thanked the former adviser Mirza Azizul Islam for initiating the BSB and BSRS merger process.
"There was a proposal in 1982 to merge the two banks but at that time as a minister I could not dare to do it but he (Mirza Aziz) had done it when he was in power," he said.
BDBL chairman Nazem Ahmed Choudhury said the investible fund of the bank is very limited.
"The bank can sell some of its assets or float shares in the market to mobilise the required capital," he said.
The government and the Bangladesh Bank can provide funds at a lower rate for the time being as selling of assets or share floatation is a time consuming process, he added.
The chairman urged the government to allow direct recruitment and appointment of experienced bankers on deputation to the new institution.
"Many skilled officials left the dissolved banks due to poor compensation package," he said.
Mohammad Shafiqur Rahman Patwari, additional secretary, and BDBL managing director Mohammad Mizanur Rahman also spoke on the occasion.
The government is planning to formulate a policy under which term loan as well as working capital will be provided to entrepreneurs, said finance minister AMA Muhith on Sunday.
"The banking sector has failed to synchronise term loan with working capital and for that reason many business units have been closed down," he said at the inaugural ceremony of Bangladesh Development Bank Limited (BDBL) in the city.
Board of directors of banks have failed to perform efficiently to protect industries in trouble many a times, he said.
The minister said the culture of sick industry should be eradicated and the government is going to formulate a guideline to help them out.
"There are many sick industries which cannot be brought back to life and those have to be winded up," he said.
The minister said the private sector banks are capturing the market share at a rapid pace and contributing to the society.
"The capital market in the country is shallow and the business has to resort to the banks for funding support," he added.
In the 70s, the government had to nationalise the financial sector as it had no other option but gradually started to open up the market to the private sector since the 80s, Mr Muhith said at the BDBL inaugural ceremony.
"The BDBL has been formed with the merger of two sick specialised banks - Bangladesh Shilpa Bank and Bangladesh Shilpa Rin Sangstha," the minister said.
The government will provide allout support to the new institution to make it an efficient and profitable one, he said.
"The new bank will develop new and innovative products for its clients," he added.
The minister thanked the former adviser Mirza Azizul Islam for initiating the BSB and BSRS merger process.
"There was a proposal in 1982 to merge the two banks but at that time as a minister I could not dare to do it but he (Mirza Aziz) had done it when he was in power," he said.
BDBL chairman Nazem Ahmed Choudhury said the investible fund of the bank is very limited.
"The bank can sell some of its assets or float shares in the market to mobilise the required capital," he said.
The government and the Bangladesh Bank can provide funds at a lower rate for the time being as selling of assets or share floatation is a time consuming process, he added.
The chairman urged the government to allow direct recruitment and appointment of experienced bankers on deputation to the new institution.
"Many skilled officials left the dissolved banks due to poor compensation package," he said.
Mohammad Shafiqur Rahman Patwari, additional secretary, and BDBL managing director Mohammad Mizanur Rahman also spoke on the occasion.