Sunday, April 14, 2024

Worried BB asks banks to curb defaulted loans

Mulls low-cost bank accounts for RMG workers
The Bangladesh Bank on Thursday expressed concern over the increasing trend in classified loan in the banking sector and asked the scheduled banks to take steps to check the trend.
At a meeting between high officials of the central bank and managing directors and chief executive officers of the scheduled banks, BB governor Atiur Rahman expressed concern over the trend and came up with the instruction.
The meeting was held at the BB headquarters in the capital.
Atiur said the classified loan in the banking sector stood at 11.90 per cent of the total outstanding loans and advances after the end of the first quarter of this year which created a worrisome situation.
He asked the banks to take necessary measures in this regard.
The BB data showed that the amount of defaulted loan in the banking sector increased by 19.41 per cent from Tk 42,725.51 crore as of December 31, 2012 to Tk 51,019.91 crore as of March 31, 2013.
BB governor said, ‘Some banks are giving loans to their clients without examining the latest Credit Information Bureau report, violating rules.’
‘Besides, some loan defaulters have obtained “stay order” from the court to get temporary release from the defaulter list and they have taken fresh loans from the banks. The banks concerned have not played positive role in settling the case. Such trend is risky for the banking sector.’
Atiur urged the banks to take steps to open bank accounts for the garments workers with a minimum deposit like ‘Tk-10 farmers’ account’.
The Savar tragedy victims could have easily received their salary and assistant if they had banks accounts, he said.
He asked the banks which have already introduced the mobile financial service to open accounts for the garment workers with their MFS in the quickest possible time.
The BB governor said that some banks had disbursed loan to the clients despite a lower credit risk rating.
He asked the banks’ MDs and CEOs to follow the CRG in disbursing loans.
‘Banks will have to exercise the prudential regulations issued by the central bank in the interest of a stable financial sector, otherwise the BB won’t hesitate to expand its strong regulatory hands. I think you’re already feeling the pressure,’ Atiur said.
BB deputy governor SK Sur Chowdhury told the reporters after the meeting that the central bank had asked the MDs and CEOs of the scheduled banks to maintain the single borrower exposure limit set by the BB.
According to the single borrower exposure limit set by the BB, a bank can disburse maximum 10 per cent loan of its paid up capital to clients.
Sur said that some banks had violated the rule resulting that the marginal clients failed to get its expected credit from the banks.
‘The BB warned the banks and asked them to maintain the single borrower exposure limit. Otherwise punitive action will be taken against them,’ he said.
Association of Bankers, Bangladesh chairman Md Nurul Amin said that the BB had asked the banks to maintain the rule relating to the CIB report and the single borrower exposure limit.
Nurul, also MD and CEO of the NCC Bank, said that more banks should come forward to introduce the mobile financing service so that the garment workers would able to open accounts with the banks, he said.
Asked whether the commercial banks would take steps to open accounts of garment workers with a minimum deposit, he told reporters that more discussion would be required in this connection.

-With New Age input

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