Banks urged to finance long-term big projects

Bangladesh Bank (BB) is working with the government to put in place pension savings schemes for general public including the Non-Resident Bangladeshis (NRBs), besides the existing pension and provident fund schemes for formal sector employees. BB Governor Dr Atiur Rahman disclosed the information on Saturday while inaugurating an international seminar at a local hotel urging the financial institutions to go for financing long-term investments. In view of the scarcity of long-term domestic savings for financing long-term investments, the central bank took the initiative for private sector pension savings schemes, where the beneficiaries will also contribute to develop the fund.

“If an NRB has a pension scheme, he will regularly contribute to his account and get a handsome amount when he will return and find a safe life,” said the BB governor.

Besides small-scale financing for farm and non-farm SMEs (small and medium enterprises), the banks have to be prepared to invest in long-term financing of larger businesses including infrastructure and other big project undertakings to expedite country's infrastructural development.

“But you cannot go for 10-year investments with 5-year savings as it will put you in stress,” said the governor urging the banks to get prepared to invest for big and long-term projects like flyovers, four-lane highways etc.

As an interim measure, the governor said, the World Bank would provide a US$ 300 million fund to support long-term investment initiative. Another $ 200 million longer term lending from BB’s own resources is being lined up to support green transition of the country’s export-oriented textiles and leather sectors.

Besides, The International Finance Corporation (IFC) is expected to issue Taka denominated offshore bonds worth about $ 1.0 billion, the proceeds of which will be used in longer term lending to projects in Bangladesh. “Taken together, these initiatives will mean a massive transformation in access to funds for the country’s financial sector over the near and medium term,” said the governor.

Atiur said the central bank has over the past few years been proactively driving necessary enabling initiatives for the banking sector like leading a countrywide massive modernisation of the payment system and the financial sector IT infrastructure, including BACH, BEFTN, NPS, NID-based e-KYC, and the most recent RTGS.

“Concerted whole-hearted engagement of our financial sector in environmentally sustainable green and inclusive financing will enable the real sector of our economy to uphold export competitiveness, and also to uphold broad-based domestic demand-driven output growth amid persisting sluggishness in the global economy,” said the governor.

The Association of Bankers, Bangladesh Limited (ABB) organised the day-long seminar on “Banking in Bangladesh:  The Leap Forward” to discuss issues on asset and liability management, technology use, and business continuity management in events of breakdowns in the technology infrastructures.

Held at the city’s Radisson Hotel, the inaugural function was also addressed, among others, by ABB Chairman Ali Reza Iftekhar, EXIM Bank Managing Director and CEO Dr Mohammed Haider Ali Miah and MTB CEO Anis A Khan. Regional Head of Business Continuity Management of Standard Chartered Bank Joshua James presented a keynote paper on Effective Crisis Management and Communications just after the inaugural session.

-RMC-