Seven banks pandering to clients’ desire for luxury goods
Staff Correspondent
Bangladesh Bank’s governor Salehuddin Ahmed on Tuesday expressed his dissatisfaction with the pattern of commercial banks’ loan disbursement, saying that most of their loans are going to the non-productive sectors like real estate.
‘All that the banks seem to be interested in is lending to real estate and housing businessmen, many of whom are buying lands outside Dhaka, and those speculative investments are not contributing to the country’s Gross Domestic Product,’ Salehuddin told newsmen after chairing the banker’s meeting at the Bangladesh Bank’s auditorium.
‘We have directed all the commercial banks to reduce their credit to non-productive sectors,’ he added.
He also said seven commercial banks have given loans to their clients for purchasing luxury goods and have exceeded their credit limit, thus putting their assets at risk.
‘The commercial banks have provided loans to their client in the 2007-2008 financial year whose amount exceeded their deposit amount,’ he further said.
In reply to a question, he said he has asked the banks to increase their incomes by attracting remittances against the backdrop of the ongoing global recession.
‘The central bank is planning to give incentives to the small savers among Bangladeshi expatriates who are sending their hard-earned remittance to our county,’ he added.
Referring to the reduction of the lending rate, Salehuddin Ahmed said the rate of credit growth is much higher than the rate of deposit growth, resulting in mismatch of the credit and deposit rate.
‘We have asked the banks to reduce the interest rate for loans given to entrepreneurs owning small and medium industries,’ he added.
Mahmood Sattar, president of the Association of Bankers Bangladesh, told reporters that the real estate businesspersons provide their own equities for taking loans from the commercial banks, and claimed that the banks are not providing most of their loans to the non-productive sector.
‘We cannot drastically reduce our spending because that will have a negative impact on the GDP,’ he added.
He maintained that ‘zero spending’ in the Western countries is reducing their future GDP growth. ‘We have decided in the meeting that the definition of non-productive goods is those goods which do not contribute to the country’s GDP,’ he added.
He also said the spread between credit and deposit rate declined last year in response to the central bank’s directive.
Courtesy: newagebd.com
