No liquidity crisis in banking sector: governor

The banking sector has enough liquidity now, which is a matter of great comfort for the financial sector, Bangladesh Bank Governor Fazle Kabir said yesterday.

Now the banks need to concentrate more on establishing a better corporate culture, which is a continuous process, he said.

“The banking regulator cannot develop a corporate culture in banks through rules and regulations. Banks have to practise it.”

Kabir made the comments at a ceremony in Officers Club Dhaka where Al-Arafah Islami Bank started a stipend programme under its corporate social responsibility with 200 talented students.

The bank announced that it had allotted Tk 4 crore for distribution among 800 students in total, each receiving Tk 44,000 a year for three to five years. Any student can apply for the stipend after passing higher secondary education, according to the bank.

The banking sector will always run well if banks develop a corporate culture by themselves, said Kabir.

The relaxation of the cash reserve requirement by Bangladesh Bank in April pumped up Tk 20,600 crore in the banking system in June, according to data from the banking watchdog.

Banks were sitting on an additional liquidity of Tk 97,500 crore at the end of June, up from Tk 76,900 crore in March.

The governor asked the banks to disburse and closely monitor loans to ensure that the funds are properly utilised. He expressed satisfaction over the performance indicators of Al-Arafah.

He said the bank has kept its default loan rate at 5 percent, which is satisfactory compared with the industry average of above 10.4 percent. But the bank's credit growth is higher than those of deposits, which should be balanced, he suggested.

Proper macroeconomic management helps the macroeconomy to remain stable, he said.

The banking sector's CSR expenditure increased around 20 times to Tk 1,049 crore in June this year, up from Tk 55 crore in 2009, the governor said. “It's a good sign for the banking sector.”

Banks should come out from traditional banking activities and invest in human resource development, he said.

Abdus Samad, chairman of the bank, and Farman R Chowdhury, managing director, were also present.