In a press conference yesterday the BB governor said as prices are not adjusted especially in case of oil, the banks are suffering from liquidity crisis.

An amount of more than Tk 8,000 crore has been taken as loan from the state-owned banks, he said, adding that consequently interest rate at the call money market has risen and it has also affected the banks' lending interest.

"I am worried about the increase in the interest rate on lending. It has not happened due to tight monetary policy. The BB thinks its tight monetary policy was correct," the governor claimed.

It is unlikely that the monetary policy will resolve all the problems, the fiscal policy also has a lot to do about it, he further said. There should be a co-ordination between the monetary and fiscal policy, the central bank chief maintained.

It has been a regular exercise on the part of the BB to inform the people about the economic condition and yesterday's press conference was a part of it. Terming the overall economic situation good the governor, however, expressed concern at the trouble in the garment factories. Garment is not only the country's highest foreign exchange earner, but the sector has employed a considerable portion of the total work force of the country, he said, urging the policy makers to resolve the issue immediately.

The BB is going to take a cautious stance to make sure that the balance of payment does not come under extra pressure. Dwelling on foreign direct investment the governor said, ''When we will have FDI proposal we will first see their debt-equity ratio."

It is not acceptable that a foreign company will sell its share and leave the country when it finds out that it can no more make big profit. That's why the FDI proposals will have to be examined thoroughly and the process has already started for telephone companies, he said.

In response to journalists' query the governor said when the government refer the cases to the BB they will see what type of impact the TATA and Asia Energy's investment will have on the BoP.

Regarding CPD's charge of politicising Gross Development Product (GDP) the governor said why would the government temper with the GDP. It is not possible to win elections with GDP growth, he observed.

BB's deputy governors Allah Malik Kazemi, Nazrul Huda and DG Muhammad A Rumi Ali answered various questions of the journalists.

Deputy Governor Nazrul Huda told the press briefing that the central bank has the authority to sack the two new directors of IFIC Bank from Jubok if they do not comply with the BB-set conditions on directorship of a bank board.

Huda said one has to give some declaration if he wants to become a director of a bank's board, which BB examines. "If they do not meet the fit-and-proper criteria, the BB has the authority to cancel their directorship and this applies to any director," he said.

Recently two officials of Jubok Hossain Al Masum and Sabih Ul Alam became directors of IFIC board of directors by purchasing the bank's shares.

Meanwhile, the BB sent a show cause notice to Jubok for its illegal banking. Huda said if complaints against them are proved legal steps will be taken against them.

The BB governor said they will take actions after examining their reply to the BB's show cause notice.