Sunday, May 19, 2024

Govt agrees with IMF condition on new BB MoUs with SOBs

A new memorandum of understanding between Bangladesh Bank and state-owned banks will be signed soon in line with conditions prescribed by the International Monetary Fund, banking division officials said.
IMF has tagged the condition with the disbursement of next tranche of its current credit programme called the extended credit facility it signed last year with the government.
BB is preparing the new MoU and its criteria, said the officials.
The central bank has been holding special meetings in every three months to review operational performances of the state-owned commercial banks—Sonali Bank, Janata Bank, Agrani Bank and Rupali Bank—as per the existing MoUs singed in 2004.
But monitoring by the BB could not prevent Sonali to avert the country’s biggest financial forgery case of Tk 3,600 crore by the little-known Hallmark Group last year.
The scam was followed by other financial forgeries including Tk 1,200 crore in a number of Banks including state-owned Janata Bank by Bismillah Group.
An IMF team visiting the capital expressed worry with the functioning of the SCBs.
It recommended the banking division and the central bank for the new MOUs saying the existing MoUs were inadequate to plug loopholes.
At the last review meeting held a couple of days ago, the BB officials expressed worries over the increasing trend of classified loans in the four SCBs
BB data showed the total classified loans in the four banks had increased to Tk 11,772.27 crore as of June 2012 from Tk 10,120.45 crore as of March 31, 2012. The data showed that the classified loans in the SCBs shared 13.54 per cent of their total disbursed loans while the overall classified loans in the 47 banks were 7.17 per cent of the total loans in the banking sector as of June 2012.
BB deputy governor SK Sur Chowdhury, however, said they were revising the MoUs with the four SCBs to improve their overall financial health.
He said the revised MoUs which are likely to come into force in next month will be target-oriented.
The BB is giving focus on a recent diagnostic report on the banks to prepare the
criteria of the new MoUs under which quality of asset, liquidity position, credit growth, efficiency of the management and internal control and compliance will be monitored.
Due to illegal loan disbursement by the four banks, they are facing severe liquidity crisis and borrowed from the BB in the form of Special Repo and liquidity support facility and from the call money market.
The BB recommended them to recover the classified loans to mitigate the liquidity crisis.

-With New Age input

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