Credit disbursement has gone down to 9.57 per cent in the rural area in 2014 despite mobilisation of low-cost deposit from this area, posing a threat to growing rise of the urban-rural disparity in the country.
According to a study, the rural area received 10.07 per cent credit in 2013 (as of September).
"Such financing pattern may create urban rural disparity," said the review paper on "Credit Operations of Banks 2014," conducted by a team of Bangladesh Institute of Bank Management (BIBM).
Citing the practice as unethical and deprivation to the rural people from their rights to get credit, the study recommended to take necessary initiatives to remove the barriers for balanced development.
Dr Prashanta Kumar Banerjee, professor and director (RD&C) of BIBM and the team leader, presented the study report at a review workshop at its office Sunday.
S.A. Chowdhury, A.K. Gangopadhaya chair professor of BIBM and former chairman of Bangladesh Krishi Bank, and Helal Ahmed Chowdhury, former managing director of Pubali Bank and BIBM supernumerary professor, among others, were panelists at the programme conducted by Dr Shah Md. Ahsan Habib, professor and director (training) of BIBM.
Around 150 senior officials of different banks participated in the workshop and gave opinions from their practical experiences to further enrich the paper.
After incorporating their valuable suggestions, BIBM is likely to finalise and formally publish the report at the end of this year.
In the rural credit, disbursed in 2014, the foreign commercial banks (FCBs) had no contribution while private commercial banks gave 5.0 per cent of their total loan, state-owned commercial banks (SoCBs) gave 19.11 per cent and specialised commercial banks 37.43 per cent.
Identifying 15 challenges in credit operations in 2014, the study also recommended possible solutions against each of the challenges.
Though the private sector credit registered a steady growth rate of 12.7 per cent in 2014, the growth rate was below the central bank's target of 14 per cent, it said.
Banks are heavily associated to the real estate market directly or indirectly, posing a potential threat for them, it said, adding that the falling real estate price resulted in deterioration of collateral security coverage against most of the loans.
It further said that financing by multiple banks to a client leads to over-financing and as a result many clients are frequently repaying to one bank from another bank's fund.
They also divert the excess fund to other purposes mainly in speculative business or in purchasing properties.
Other challenges include lack of knowledgeable and skilled credit professionals, absence of accurate financial and industrial data, insufficient provision against non-performing loan (NPL) and overstatement of profit, and clients' reluctance in conducting ECAI ratings.
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Credit disbursement declines to 9.57pc
FE Report | Published: June 08, 2015 00:00:00 | Updated: November 30, 2026 06:01:00
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