BB won't encourage culture of waiving default farm loans
Monday, 3 May 2010
FE Report
Bangladesh Bank (BB) will not encourage the culture of waiving defaulted farm loans, the central bank governor said Sunday.
"We would never encourage the culture of waiving defaulted agriculture loans, nor tolerate this culture," BB Governor Atiur Rahman said while addressing the 'Meet the Reporters' at the Dhaka Reporters Unity (DRU).
He also advised the government to introduce a guarantee scheme in this connection for the disaster-prone areas in the country.
"We've allowed the commercial banks to reschedule their agricultural credits to facilitate farmers across the country," the central bank boss said, adding that the farmers in the country are much more compliant than the other borrowers.
The central bank has sought cooperation from the government to recover non-performing loans from big defaulters, officially known as top 20 defaulters, of each commercial bank.
"We're providing information about the top loan defaulters in Parliament as well as to the government. We seek cooperation from the government to recover such loans," the BB chief said while replying to a query.
Mentioning decreasing trend of default loans, Mr. Rahman said the central bank would give due attention to make sure that the number of loan defaulters doesn't go up again.
The BB governor said the recently approved three rental power plants -where the government would have to provide around Tk 24 billion as subsidy annually - might increase pressure on the government. "This is however a temporary solution."
"The government will return to the mainstream again. The government will have to bear some pressure as they are politically pledged-bound to tackle such pressure," he added.
The BB governor said the central bank would not differentiate between the state-owned banks and private commercial banks (PCBs) for complying with the existing prudential guidelines.
"The chairmen or chief executive officers of state-run banks will be accountable to the central bank like the PCBs if any guideline is violated," Mr Rahman said while replying to another question relating to forming a separate Banking and Financial Institutions Division under the finance ministry.
"In the last one year, we didn't see any interference. We will hold the state-owned banks accountable if there is any irregularity," he noted.
About higher interest rates on micro-credit charged by different micro-finance institutions, he said the central bank would take necessary measures to ensure that the interest rates on micro-credit remain at a rational level.
"A committee is now working in this regard and they will submit their report within a few days," the BB governor said, adding that Micro-finance Regulatory Authority (MRA) will fix a rational interest rate through a transparent process.
The government earlier formed the eight-member MRA, headed by the BB governor, to ensure accountability and transparency of the country's all private micro-finance institutions.
Terming the Public-Private-Partnership (PPP) initiative an incomplete aspect of the current budget, the BB governor hoped some concrete measures would be taken under the PPP in the next budget.
"The government could have taken quick decisions on energy and power crisis which they are taking in the latter part of the fiscal," he said, adding that the government has created a congenial atmosphere for investment in energy and gas sectors.
Mr Rahman also came up with opinion that it would be better not to include the provision for whitening of undisclosed money in the next budget, saying that there has not been much success in legalising of such money and the process is not working well.
DRU President Shamim Ahmad chaired the meet while General Secretary Pathik Saha and Finance Secretary Ashraful Islam were also present.
Bangladesh Bank (BB) will not encourage the culture of waiving defaulted farm loans, the central bank governor said Sunday.
"We would never encourage the culture of waiving defaulted agriculture loans, nor tolerate this culture," BB Governor Atiur Rahman said while addressing the 'Meet the Reporters' at the Dhaka Reporters Unity (DRU).
He also advised the government to introduce a guarantee scheme in this connection for the disaster-prone areas in the country.
"We've allowed the commercial banks to reschedule their agricultural credits to facilitate farmers across the country," the central bank boss said, adding that the farmers in the country are much more compliant than the other borrowers.
The central bank has sought cooperation from the government to recover non-performing loans from big defaulters, officially known as top 20 defaulters, of each commercial bank.
"We're providing information about the top loan defaulters in Parliament as well as to the government. We seek cooperation from the government to recover such loans," the BB chief said while replying to a query.
Mentioning decreasing trend of default loans, Mr. Rahman said the central bank would give due attention to make sure that the number of loan defaulters doesn't go up again.
The BB governor said the recently approved three rental power plants -where the government would have to provide around Tk 24 billion as subsidy annually - might increase pressure on the government. "This is however a temporary solution."
"The government will return to the mainstream again. The government will have to bear some pressure as they are politically pledged-bound to tackle such pressure," he added.
The BB governor said the central bank would not differentiate between the state-owned banks and private commercial banks (PCBs) for complying with the existing prudential guidelines.
"The chairmen or chief executive officers of state-run banks will be accountable to the central bank like the PCBs if any guideline is violated," Mr Rahman said while replying to another question relating to forming a separate Banking and Financial Institutions Division under the finance ministry.
"In the last one year, we didn't see any interference. We will hold the state-owned banks accountable if there is any irregularity," he noted.
About higher interest rates on micro-credit charged by different micro-finance institutions, he said the central bank would take necessary measures to ensure that the interest rates on micro-credit remain at a rational level.
"A committee is now working in this regard and they will submit their report within a few days," the BB governor said, adding that Micro-finance Regulatory Authority (MRA) will fix a rational interest rate through a transparent process.
The government earlier formed the eight-member MRA, headed by the BB governor, to ensure accountability and transparency of the country's all private micro-finance institutions.
Terming the Public-Private-Partnership (PPP) initiative an incomplete aspect of the current budget, the BB governor hoped some concrete measures would be taken under the PPP in the next budget.
"The government could have taken quick decisions on energy and power crisis which they are taking in the latter part of the fiscal," he said, adding that the government has created a congenial atmosphere for investment in energy and gas sectors.
Mr Rahman also came up with opinion that it would be better not to include the provision for whitening of undisclosed money in the next budget, saying that there has not been much success in legalising of such money and the process is not working well.
DRU President Shamim Ahmad chaired the meet while General Secretary Pathik Saha and Finance Secretary Ashraful Islam were also present.