Banks alert in disbursing loans before polls

Golam Mowla
Published : 07:30, Nov 07, 2018 | Updated : 17:36, Nov 07, 2018

This undated file photo shows a official serves a client at a bank.Prior to the eleventh national elections, banks have adopted a cautious approach in disbursing loans. This alertness is also seen in handing out agro loans. As a result, the government’s growth fell in both August and September, says a Bangladesh Bank report.
Bank officials say that in the past 33 months, the lowest loan disbursement was last October. They fear that loan disbursement will fall further in November and December of the running year. On the other hand, more than thirty banks in the country are facing liquidity crisis, while others are not interested to give loans before election.
Businessmen are playing it safe and not taking any new loans. Old businesses are under vigilance as new ones are not emerging at the moment.
Bangladesh Bank report says growth rate fell by 14.67 per cent in September, the lowest since December 2015.
MD of Pubali Bank, M A Halim Chowdhury says, “Election time wariness has coupled with the fall in ADR, creating extra pressure on banks.”
Several officials of private banks say that their respective institutions are refraining from investing in projects.
Caution is exercised in disbursing money for projects which were approved earlier, they added.
However, president of Federation of Bangladesh Chamber of Commerce and Industries, FBCCI, Shafiul Islam Mahiuddin, blamed high rate of interest for the fall of loans.
Banks are maintaining a conservative attitude now which has caused growth of loan to slide, he added.
First joint president of Bangladesh Knitwear Manufacturers’ and Exporters Association, BKMEA, Mohammad Hatem, told Bangla Tribune: “the garment sector is moving with the possibility of election time turbulence.”
People are monitoring the situation, said Hatem.
According to Bangladesh Bank information, compared to August 2017, import fell this August by 5.17 per cent.
Research director of Bangladesh Development Research Institute and chairman of Agrani Bank, Dr. Zaed Bakht, says: “with elections forthcoming many business houses are not going into production.”
With a reduction in investment, loan has also fallen.