Most banks in dire loan traps
Most of the commercial banks of the country have fallen into deep monetary traps by disbursing excessively high amounts of loans surpassing the loan delivery ceiling of Bangladesh Bank. As a result these banks are not being able to pay any further loans of big sums. The central bank has instructed these banks to bring down the percentage of disbursed loans within the limits of security deposits.
Economic analysts have said that unabated corruption, mountainous irregularities and loan scams in various banks are responsible for this situation. Lack of accountability and absence of good governance in the banking sector have put financial and banking systems on the verge of devastation, economists have commented.
Prominent citizens have said that exemplary actions should have been taken against loan scammers long ago to save banks and to safeguard Bangladesh's economy. Bangladesh Bank's spokesman and Executive Director Debashish Chakrabarty has said that banks which would fail to properly reorganize the loan disbursement process within a certain timeframe would face strong measures.
However, financial experts have expressed doubts about Bangladesh Bank's warning. Most of the esteemed economists have slammed Bangla-desh Bank for its utter failure to keep banks on the right track.
Reportedly the owners of several private banks are now on the driving seat of the whole country's banking arena. Even these bank owners have held Bangladesh Bank under stringent influence, relevant sources have informed. According to banking administration, conventional banks can lend 80.50% of their total deposits and Islami banks can pay 85% of their deposits as loans. If monetary status is sound then conventional banks can issue 85% loans from their deposits and Islami banks can disburse 89% loans from their deposits, not more than these percentages. But 32 banks have dipped into financial damages because of exceeding these loan distribution limits.
These banks are now borrowing call money for security deposits. These banks have also raised deposit interest rates to cope with their crisis leading to rise in loan interest rate too. All these negative circumstances have started hitting hard investments with widely detrimental effects on national economy.
Liquidity shortage in banks has glaringly aggravated and the entire banking system has become restless for the same reasons, reliable sources have stated.
Among the state-owned banks, Basic Bank has distributed 105.32% of their total deposits and Rajshahi Krishi Unnayan Bank has disbursed 100.32% loans from their total deposits, financial sources have reported. Among the private banks, AB Bank has delivered 92.47% loans from their total deposits.
AB Bank's Islami wing has distributed 99.68% loans; Bank Asia has distributed 87.16% loans; Bank Asia's Islami wing has disbursed 93.35% loans; City Bank has paid 85.98% loans; Dhaka Bank has lent 87.58%; Exim Bank has distributed 95.93% loans; Farmers Bank has disbursed 106.88% loans; First Security Islami Bank has distributed 91.65% loans; IFIC Bank has paid 87.29% loans from their full deposits reportedly.
According to information from the central bank, Jamuna Bank's Islami wing has distributed 128.93% loans from its total deposits; Mutual Trust Bank has disbursed 87.17% loans; National Bank has disbursed 92.25% loans; NRB Bank has delivered 87.39% loans; NRB Commercial Bank has distributed 89.95% loans; NRB Global Bank has disbursed 85.83% loans; Premier Bank has distributed 86.89% loans; Premier Bank's Islami wing has disbursed 103.38% loans; Prime Bank's Islami wing has distributed 89.29% loans and South Bangla Agricultural Commercial Bank has delivered 86.73% loans from their whole deposits.
Besides, Standard Bank's Islami wing has distributed 92.54% loans; Social Islami Bank has disbursed 95.77% loans; Shahjalal Bank has delivered 93.3% loans and Union Bank has distributed 92.41% loans from their deposits.
Trust Bank's Islami wing has disbursed 95.22% loans and Shimanto Bank has distributed 88.29% loans from their total deposits. Earlier on Bangladesh Bank seized the funds of One Bank and Premier Bank for issuing excessive figures of loans.
Reportedly the central bank has placed National Bank and Jamuna Bank under observation due to broad deficit between the percentages of disbursed loans and deposits of these banks while Mutual Trust Bank, NRB Bank and Premier Bank have been warned.
Bangladesh Association of Banks (BAB), which is run by the owners of the country's private banks, has not complied with their commitment to reduce loan interest rate to single digit despite directives from the Prime Minister. Banking sources have complained that BAB Chairman Nazrul Islam Mazumder's Exim Bank has been disbursing loans at double digit interest rate defying the decision to curb this rate to single digit.
Credible sources have reported that a number of BAB leaders are explicitly connected with the increase of dollar prices in the country which has fatally elevated import costs and widened trade deficit to the highest degree breaking all past records. Sums of defaulted loans have also soared insurmountably.
The astounding escalation in the number of letters of credit (LC) is a lucid sign of extensive money laundering from Bangladesh to overseas addresses. People holding top posts in some private banks who are BAB members are allied with infamous money launderers according to financial sources.
Bangladesh Bank's former Governor Dr. Salehuddin Ahmed told The Asian Age, "Most of the banks are disbursing loans without precisely judging the loan applicants. Political intervention prevents many bankers from working properly. Banks cannot overcome crisis if they cannot recover defaulted loans and combat anomalies."
Dr. Zahid Hossain, Lead Economist, World Bank, Bangladesh Office said to The Asian Age, "Different banks' loan disbursement process has been going through immense irregularities for a long time. It is very alarming. It is extremely difficult to fight corruption and disorder in banks without accountability and firm regulatory authorities."
Source: https://dailyasianage.com