A file photo shows people walking past a branch of The Farmers Bank in Dhaka. Bangladesh Bank on Monday warned nine new commercial banks against rising defaulted loans at the banks and asked them (banks) to speed up the recovery of the defaulted loans.
Bangladesh Bank on Monday warned nine new commercial banks against rising defaulted loans at the banks and asked them (banks) to speed up the recovery of the defaulted loans.
The defaulted loans in the nine newly-established banks increased by 1,155.62 per cent to Tk 558 crore as of September 30, 2016 from Tk 44.44 crore as of December 31, 2015 as the banks disbursed loans aggressively violating central bank rules, BB officials said.
The central bank asked the banks to reduce their defaulted loans by December of this year, otherwise they will have to face strict BB measures.
The directives came from a meeting between BB high ups and the managing directors of the nine banks.
BB governor Fazle Kabir presided over the meeting held at the central bank headquarters in the capital.
The nine banks are: Meghna Bank, Midland Bank, Modhumoti Bank, NRB Bank, NRB Commercial Bank, NRB Global Bank, South Bangla Agriculture and Commerce Bank, The Farmers Bank and Union Bank.
A BB official told New Age on Monday that the central bank had strictly asked the banks not to go for aggressive lending as the central bank’s inspection teams had recently unearthed that some banks disbursed huge amount of loans violating rules and regulations.
The BB will arrange meetings on one-to-one basis after December with the banks which will fail to reduce their classified loans, he said.
The BB will take fresh measures considering the performance of the banks, he said.
The central bank asked the banks to ensure corporate governance as some new banks have recently got involved in irregularities and corruption, the BB official said.
The BB asked the new banks to appoint independent directors as some of them are yet to take the initiative, he said.
The independent directors usually play a role in preventing violation of rules and regulations in the meetings of board of directors, he said.
The BB has recently detected huge anomalies in disbursing loans by The Farmers Bank and the classified loans in the bank increased massively as a result of the wrongdoings.
The central bank appointed observer at the bank to save it from any further corruption.
‘NRB Commercial Bank is also facing conflicts among its directors. The directors of the bank have recently submitted allegations against each other to the BB and the finance ministry,’ he said.
The central bank has already conducted an inspection at the bank in this regard, he said.
‘The BB asked the banks to strengthen its capital position. The BB has recently observed capital base of some new banks decreased significantly,’ he said.
At Monday’s meeting, top officials of the new banks demanded that the BB increase the farm loan disbursement through the non-government organisation linkage as they have no branches available in the rural areas.
A bank has to disburse at least 30 per cent of its farm loans through its branches in line with the central bank directives.
The central bank provided licences to the nine banks in 2012 on political consideration despite severe criticisms from different corners, a BB official told New Age on Sunday.
Most of the directors and chairmen of the nine new banks are directly involved with either the politics of the ruling Awami League or those of its allies.
Source: New Age
