BB chief urges banks to shun aggressive lending

Focuses on improving corporate governance

FE Report | Wednesday, 3 April 2019

The Bangladesh Bank (BB) Governor Fazle Kabir has advised the country's banks to avoid aggressive lending to prevent accumulation of bad loans in the financial sector.
"The banks should avoid aggressive lending, and should concentrate more on loan recovery," he said while speaking at the Annual Business Conference of Padma Bank Limited (PBL) in the capital on Tuesday.
The BB governor also emphasised improving corporate governance in the banking sector.
"Corporate governance is not something that can be imposed by the central bank. It is a culture that has to be developed in house by the banks themselves."
Finance Minister A H M Mustafa Kamal was present in the event as the chief guest.
Noting that Bangladesh will graduate from the least developed country (LDC) status by 2024, the central bank chief also stressed on enhancing the private sector credit growth.
"Currently, our private sector credit growth is around 23 percent. But it has to be increased to 27 percent by 2024 to cope with the upcoming transition."
"The banking sector can play a significant role in increasing the private sector credit growth," he added.
Speaking on the occasion, Finance Minister A H M Mustafa Kamal said economic emancipation of the marginalised people is the major target of economic development.
The minister also said Bangladesh is set to emerge as the next 'Asian Tiger' according to various international projections.
"Padma Bank, as a relatively new bank, has a bright future in the years to come," he added.
Other speakers at the event also called for taking stern actions against loan defaulters.
"The culture of loan default is a major drawback for the image of the country," said Benazir Ahmed, Director General of Rapid Action Battalion (RAB).
"The National Board of Revenue (NBR) has already taken action against at least one such organisation for extortion of money," said NBR Chairman Md. Mosharraf Hossain Bhuiyan.
"Meanwhile, a number of money laundering cases against many individuals and organisations are currently pending. We need to bring all of them to justice gradually," he added.
Speaking on the occasion, PBL high officials informed that the state-owned commercial bank (SoCB) has taken various steps to check the amount of non-performing loans (NPL).
The fourth generation bank, which started its operation as Farmers Bank Limited in 2013, was entwined in a deep crisis within four years of its inception.
In May 2018, the government-owned entities - Sonali Bank, Janata Bank, Rupali Bank, Agrani Bank, and Investment Corporation of Bangladesh (ICB) - provided the bank Tk 7.15 billion capital, to salvage it out of troubled waters.
Recently, the bank renamed itself Padma Bank Limited in an effort to recover its image, tarnished by various irregularities and loan scams.
"Since forming the partnership with other SoCBs, PBL has significantly turned around," said its Managing Director and CEO Md. Ehsan Khasru.
"We have plans to reduce our NPL by 40 percent by using effective debt management tools," he added.
Secretary of the Financial Institutions Division Md. Ashadul Islam, Chairman of the Insurance Development and Regulatory Authority (IDRA) Md. Shafiqur Rahman Patwari, and PBL Chairman Chowdhury Nafeez Sarafat, among others, also spoke on the occasion.

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