The bank and financial institutions division has imposed restriction on sanctioning and disbursing new commercial and trade loans by the two state-owned specialised agriculture banks, officials said. The banks are Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank.
Bank and financial institutions division secretary M Aslam Alam said they had already instructed the banks’ executive boards in this regard after getting green signal from finance minister AMA Muhith.
BKB was established in 1973 and RAKUB in 1986 with the sole purpose of helping the agriculture sector where more than 50 per cent of the country’s workforce were engaged.
But both the banks are now in bad shape after they deviated from their main objective and showed interest in giving loans for trade and commerce, most of which have now turned into bad loans, said Aslam.
They are now facing growing default loans and capital shortfall, according to a probe carried out by Bangladesh Bank early this year.
Aslam Alam said tough measures would be taken against officials of the two banks in case of failure in maintaining the restriction. Bangladesh Bank had been asked to intensify monitoring in this regard, he said.
BKB’s default loan stood at more than Tk 4,000 crore and its capital shortfall reached Tk 6,000 crore. The bank’s bad loans rose by 30.90 per cent in last year because of its growing tendency to lend money to non-agricultural sector.
The BB probe found that the amount of RAKUB loan to marginalised farmers was very small although its main purpose was to give loan to farmers who owned less than half acre of arable land.
The bank’s default loan climbed to Tk 1,460.48 crore and capital shortfall grew to Tk 650 crore, said the officials.
Former Bangladesh Bank governor Salehuddin Ahmed welcomed the move although it was already delayed.
He said almost all the state-owned specialised and commercial banks under the present government were in bad shape due to loan scandals.
The swindling of more than Tk 3,500 crore from Sonali Bank in 2012 by little known Hallmark Group, embezzlement of Tk 1,200 crore from Janata and others banks by Bismillah Group and disbursement of suspected loans worth several thousand crore of Takas by BASIC Bank’s board of directors led by former chairman Abdul Hai Bachchu pushed the banking sector to almost the brink, he added.
The BB probe report recommended that the government should discourage loans by the BKB and RAKUB to non-agricultural sectors. The banks should be directed to distribute certain amount of loans to the marginalised farmers.
The restriction on credit to non-agricultural purpose by the BKB should be continued. The central bank also suggested that the government should employ mechanism so that BKB’s credit to businesses could remain confined within the import of agricultural materials only.
-With New Age input
