Banks asked to form special unit to recover defaulted loansStaff Correspondent
Bangladesh Bank on Tuesday asked commercial banks to establish a special unit for recovering the defaulted loans which were rescheduled on political consideration in the last quarter of the 2013, said BB officials.
The BB instruction came in a meeting on the day with managing directors of all scheduled banks presided over by BB governor Atiur Rahman.
The latest BB data showed that defaulted loans in the banking sector came down to Tk 40,583.01 crore in December from that of Tk 56,720.10 crore in September following huge loan rescheduling on political consideration amid political unrest centring national elections.
The BB governor said in the meeting that recent policy relaxation by the central bank might be the key reason for increasing rate of loan rescheduling, said officials present in the meeting.
‘We asked the banks to recover the loans timely which were rescheduled recently and form a recovery unit in this regard. The central bank will monitor and inspect the recovery unit for loan recovering programmes of the banks so that they (banks) will use properly the central bank’s relaxed policy,’ BB deputy governor SK Sur Chowdhury told reporters after the meeting.
Sur said the BB also assured the banks that the disputed acceptance bills for local letters of credit would not be counted in calculation of classified loans.
He, however, said the central bank would make decision in this connection on case-to-case basis after receiving proposals from the banks.
‘The Association of Bankers, Bangladesh proposed that we should not count the disputed acceptance bill in calculation of classified loan. We will consider the matter in case-to-case basis,’ he said.
Sur said the BB also asked the banks to clear the less faulty inland bills in one month.
‘If the respective banks fail to come into consensus, then the aggrieved party can go to the court,’ said Sur.
He also said the BB asked the banks to gradually lower their capital market investment to 25 per cent of the capital by 2016.
‘The banks should start it from now on, otherwise a last-minute rush will make the market volatile,’ he said.
Some of the banks are continuously increasing investment in the capital market, although they have already crossed their investment limit in accordance with the Bank Company Act, he said.
The BB governor in the meeting asked the top officials of the banks to increase their provision against regular and classified loans avoiding showing the higher net profit.
He said the banks would face difficulty in keeping provision in accordance with the regulations in the months to come if they did not secure the provision right now.
The BB will consider taking strict measures against the banks which would count the interest suspense and charged unrealised interest as profit after rescheduling the defaulted loans.
‘The central bank has recently received a number of allegations that some banks have not settled their bank guarantee timely. Against the backdrop, the clients concerned face financial loss due to the cause. The BB will take punitive measures against the banks which will not settle their bank guarantee accurately’, Atiur said.
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