Sunday , 19 September 2021
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BB Governor warns banks on loan guidelines

Banking Desk
Bangladesh Bank Governor  Dr Atiur Rahman has said that strict measures will be taken against scheduled banks for not following the guidelines set by the apex bank over disbursing loans.
  The governor of the apex bank issued the note of caution at a meeting of the bank chief executives on Thursday.

In a written speech, the governor said that in some cases banks were giving loans to high risk clients. Some banks are giving loans beyond the limit in case of big lending.Some banks were not following the existing guidelines while writing off loans, he said.

The apex bank governor expressed his dissatisfaction on reiteration of such incidents despite repeated warnings.

“To maintain discipline in the banking sector, alleviate risks and keep the trust of the people and for a stable economic sector, the guidelines of the Bangladesh Bank must be followed,” he said.

“Otherwise, the apex bank will not hesitate to extend its grip,” he added.

The meeting, at the Jahangir Alam Conference Hall at the head office of Bangladesh Bank, was attended by the chief executives of all banks and top officials of the apex bank.

“Our investigation shows some banks disbursed over-limit loans for single loan holders,” Bangladesh Bank Deputy Governor SK Sur Chowdhury said after the meeting.

This might result in one person getting excessive loans, he said. “A defaulter might also get loans.”

“This is against law and equally risky for banks. That is why chief executives of the banks were cautioned.”

He called upon the bankers to be more active in reducing group loans. “In March-end, group loans have increased a bit in both numbers and rates. It rose to 11.90 percent – its worrisome.”

The official also was concerned on the reduction in loan growth in the private sector. “It can be that it is happening due to overall political instability, strikes and global depression.”

He asked the bankers to keep a tab so that the defaulters do not come up with excuses on the new loan classification policies.

For the ready-made and knit garments, those loans which were not paid purely for stock-lot reasons, rescheduling them and giving new loans have to be considered, he said.

“Assistance to the actually affected businessmen will have to continue.”

NCC Bank Managing Director and chief of the Association of Chief Executives of All Banks (ABB) – Nurul Amin said they had requested changes to the term loan section of the credit classification policy.

Default loans were increasing, he said. “We sought an overall directive from the central bank regarding the upcoming elections.”

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