The central bank yesterday strictly warned off all bank chiefs from pandering to irregularities at their institutions or else they would be removed from their posts.
Without mentioning any name, Bangladesh Bank Governor Atiur Rahman said: “We have done exactly that to a certain managing director recently.”
BB in May fired BASIC Bank Managing Director Kazi Faqurul Islam for presiding over a period of serious irregularities at the state-run bank.
“The recurrence of irregularities can't be forestalled if you sit idle after breaking rules and wait for Bangladesh Bank to step in and detect the anomalies,” Rahman said at the bankers' committee at the BB headquarters, attended by the managing directors of all banks.
“All irregularities -- big or small -- must be mentioned in your audit report. Bangladesh Bank has beefed up its monitoring and has employed IT for its monitoring. Thus, you will not be able to get away by committing irregularities.”
Once the central bank has decided to remove the chief executive officers or managing directors, it would not give in to any lobbying from influential quarters.
Rahman advised the bankers to stand tall to unjust pressures from the banks' boards. “You must learn the tactics to resist them.”
Rahman went on to criticise the media for creating much ado when it came to irregularities but not mentioning anything about the stern steps that the BB has taken to prevent them.
As the regulator of the financial sector, upholding the public's faith is the main responsibility for BB. “The central bank will exercise its highest power to maintain the faith.”
Meanwhile, the rate of interest on credit, the unpaid bills of some private banks by Sonali Bank pertaining to the Hall-Mark Group, the implementation of the Banking Companies Act, the harassment of customers by banks were also discussed at the meeting.
In connection with the Hall-Mark scam, Sonali Bank still owes Tk 1,754 crore to different banks, despite the several commitments it has made. Subsequently at the meeting, the banks expressed their annoyance with Sonali for not paying the bills.
The BB set a deadline of September 2016 for Sonali to pay the bills in phases; otherwise, it threatened to take legal action.
The state-run bank has been ordered to pay Tk 354 crore this year, Tk 700 crore in 2015 and the rest in 2016, according to SK Sur Chowdhury, BB deputy governor.
The new banking law came into effect in July last year, the provision for which was supposed to be implemented within one year of the act coming into effect.
The amended act stated that more than two directors from a family cannot be on the board of any bank, while the number of directors would be 20 and in every bank there will be two to three independent directors. At the meeting, the banks were instructed to imply it right away.
In yesterday's meeting the central bank issued a directive to inform it after complying with the orders.
While the private sector credit growth is way below the central bank's target of 16.5 percent, the BB governor cautioned banks from giving loans on ill considerations and to more risky and unproductive sectors.
Rahman also said some banks have been purchasing bad loans from other banks, which is of much concern. The central bank will strictly monitor the situation, he added.
BB also instructed the banks to remain careful so that industrial lending remains within their earlier promise of 15 percent.
If the customer clears off his/her debt before the repayment period expires, he/she should be given a rebate, the central bank said. At present, instead of giving a rebate, the customers are charged more.