MoF decides to go tough on loan irregularities in SoCBs

The government has decided to take tough action against irregularities in loan approval and sanctioning process in the state-owned commercial banks (SoCBs), officials said.
A decision to this effect was taken at a meeting of the Bank and Financial Institutions Division of the Ministry of Finance (MoF) held to review the state of affairs with classified loans in the SoCBs.
The Bank and Financial Institutions Division (BFID) has already conveyed its decision to the central bank for further review.
"The decision has been sent to the Bangladesh Bank (BB) for further scrutiny, if needed," a senior MoF official close to the initiative told the FE Monday.
The proposed measure has been taken to increase the level of accountability and transparency in the entire loan approval process in the SoCBs, he said.
The move is mainly to arrest the rising trend of classified loans of the SoCBs, he said.
A BB official said, "We have got the decision of the meeting from the BFID on default loans last week."
The government is considering taking stringent action against the officials of the SoCBs if they are found deliberately involved in recommending and approving loans of questionable quality, according to the minutes of the meeting held at the BFID.
Any bank official found guilty would face punishment as per the service rules of the respective bank. Action will be taken against those who are involved in the processing of loans that would turn classified after six months, according to meeting sources.
A SoCBs top official said Monday the move will be very appropriate to ensure discipline in the loan sanctioning process.
Over the last couple of years, a large amount of loans became classified due to irregularities indulged in by a section of dishonest officials of the SoCBs.