More than thirty commercial banks in the country are facing cash crunch while other banks are not willing to give any loans prior to the national elections. Consequently, loan distribution in the banking sector has come to a halt.
A chief executive of a private bank, says, “Banks are acting cautiously for two reasons, firstly, those without enough money to disburse are idle while the ones with money to hand out are observing the pre poll situation cautiously.”
Bangladesh Bank information says, the loan growth has fallen to its lowest in the last 31 months. At the end of last August, loan growth fell by 14.95 percent, which was 19 percent at the beginning of the year.
Talking on the matter, FBCCI president, Shafiul Islam Mohiduddin, told Bangla Tribune, “Bangladesh will not face any volatility over election but the banks are now adopting a conservative stance.”
Also, the banks did not implement the plan to offer loans at single digit interest rate, he said and added, “That is why banks are unwilling to invest by taking high interest loans.”
Pubali Bank MD, M A Halim Chowdhury, told Bangla Tribune, “In an election year, banks are cautious about handing out loans and due to the lowering of loan ratio, an extra pressure has been created on the banking sector.”
“Banks which are above the defined ceiling of ADR cannot give loans.”
The largest private bank, Islami Bank, has also reduced loan disbursements while other banks have promised to hand out loans after election.
In this regard, owner of KPC industry, Kazi Sajedur Rahman, says, “The bank was supposed to give me Tk 110 million but after delaying for about a year, they gave me less than half of what I applied for.”
Few top officials of a private bank say that they are not investing in any new project for some time. According to rules, general banks can give 80.50 percent of their deposit as loan which is 85 percent for Islamic banks.
However, as percentral bank’s latest information, 16 commercial banks handed out excess loans with Farmers’ Bank in jeopardy after giving 106.88 percent loan.
Government owned Basic Bank has also given 105.32 percent loan but punitive measures were taken only against One Bank and Premier Bank while the others were given warnings.
Former Deputy Governor of Bangladesh Bank, Ibrahim Khaled, told Bangla Tribune, “Banks which gave excess loans against deposits need to be investigated.”
Within certain time limits, these should be brought in track, he added.
“The culture of using people’s fund for tackling capital deficit has to stop.”
The government can take loans from banks and divert them to other banks which have capital deficiency, he suggested.
