BB likely to invest idle money in micro sector

Abu Sazzad :Bangladesh Bank is likely going to invest the idle money in micro, small and medium-scale industries and in agriculture sector. The banking sector of the country is holding over Tk1,00,000 crore idle money, according to the sources.Top executives of the scheduled banks have said excess liquidity is still a matter of concern in the banking sector as the country’s entrepreneurs are now reluctant to expand their business by taking credit from the banks.The raised the issue at a quarterly bankers’ meeting with Bangladesh Bank at the central bank headquarters in the city recently.BB governor Dr. Atiur Rahman presided over the meeting while Senior Officials of the central bank and Managing Directors of the banks were present.Anis A Khan, President of the Association of Bankers, Bangladesh, an organisation of top executives of the bank, told reporters after the meeting that the entrepreneurs would have to come forward to mitigate the crisis of excess liquidity in the banking sector.The crisis will be resolved if the businesspeople take loan from the banks to expand their business, he said.When asked why the businesspeople were reluctant to take credit from the banks, Anis said that the country’s infrastructure, mainly transport and land, was not good enough for operating the business. Besides, political instability fuels up at times, which also discourage the entrepreneurs for expansion of their business, he said.The ABB has recently taken an initiative to speed up the recovery of defaulted loans through the arbitration system instead of going to court, said Anis A Khan, Managing Director and Chief Executive Officer of Mutual Trust Bank Limited.The banks have to face huge time to recover the defaulted loans if they go for resolving the issue through the court, he said.The banks have to now provide Tk 2 to Election commission for using its database when they (banks) verify any client information of the national identity card, Anis said.’The charge is too much, so we proposed the central bank to take initiative in this regard. We request the central bank to talk to the EC so that it decreases the charge to Tk 0.50.’The central bank asked the ABB to write a formal letter about the matter after which the BB would propose the EC to decrease the charge, he said.BB Deputy Governor SK Sur Chowdhury told reporters that the central bank asked the banks to disburse more loans to SME, MSME and agriculture sectors so that they could use their excess liquidity.The banks were asked to disburse loans to the small sectors along with distributing the large loans to the industrial sector to resolve the crisis of excess liquidity, he said.Atiur at the meeting asked the top executives of the banks to improve in corporate governance, internal control and risk management.’We need to make significant improvement in operational costs and non-performing loans. The BB remains vigilant that private interests do not overwhelm the public role of the financial system and the board empowers the best practices’ he said.Meanwhile, the lending rate in the banking sector has been continuously declining in the recent months due to sluggish credit demand.The traders are reluctant to expand their business paying interest at the existing rate. According to the business people, the bank loan is still high compared with the neighbouring countries. The banking loan rate should be single digit. Already, the business expenditure has become double within the last few years. The large corporate houses are now enjoying foreign loan facilities at low interest rate, which is more affordable for them. Finding no other alternatives, the scheduled banks should consider reducing their lending rate for operating their banking business.The country’s commercial banks have begun reducing their lending rates for excess liquidity in the money market.