Banks’ over-cautious steps suffocating credit flow: ICCB
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Over-cautious steps by the commercial banks are hampering the much needed credit flow to the private sector, ICCB President Mahbubur Rahman said yesterday.
To gain from trade facilitation opportunities and become a middle income country in the next few years, Bangladesh must create a congenial environment for development of a sustainable private sector, he said.
For this, credit to the private sector as well as investment to the infrastructure is of utmost importance to those ends, Rahman said.
He spoke at the inauguration of a workshop on credit risk management and trade finance, organised by the International Chamber of Commerce (ICC) – Bangladesh at a local hotel in Dhaka.
However, the commercial banks and financial institutions must develop proper credit management systems to avoid risks and to provide credit to the private sector, Rahman warned.
A number of state-owned and private commercial banks are faced with huge loan defaults due to fraudulent practices by some officials of a few commercial banks (both public and private) in connivance with some ill-motivated unscrupulous clients, he said.
More than Tk 4,000 crore was siphoned off from two state-owned banks, which left the possibility open for such disasters at any commercial banks, he said.
The scandals raised serious question on the efficiency of the bank managements and their boards, as well as the central bank’s failure to take drastic and timely action to stop such practices, he added.
Because of the interference, one of the pioneers of the non-commercial banks Janata Bank is fighting for its survival, said Mamun Rashid, chairman of ICCB standing committee on banking, technique and practices.
Toufic Ahmad Choudhury, director general of Bangladesh Institute of Bank Management; Johnson Chang, chief risk officer of HSBC Bangladesh; and Mohammed Hossain, former chief executive and managing director of Sonali Bank, were also present.
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