Over $50 million in local and foreign import bills of 29 banks was unpaid at the end of September 2020
The Bangladesh Bank has strictly instructed banks to pay the local and foreign import bills on time because delays tarnish the country's image.
A recent report of the central bank found that more than $50 million in local and foreign import bills of 29 banks was unpaid at the end of September last year.
This, the central bank said, damaged the country's image abroad and increases the cost of doing business.
At the bankers' quarterly meeting on Wednesday, the Bangladesh Bank told bankers that this situation could not be allowed to continue under any circumstances.
Syed Mahbubur Rahman, former president of the Association of Bankers Bangladesh and managing director of Mutual Trust Bank, told The Business Standard the central bank had given bankers stern instructions to pay bills on time.
Meeting sources said the central bank would pay the outstanding bills from the accounts of the banks concerned, and the chief executives of banks were informed of this at the meeting.
Requesting anonymity, the chief executive of a bank said many banks make import-related transactions despite their lack of capacity, and the increase in the number of banks and an unhealthy competition were the key reasons behind this.
The central bank lauded the banks that were able to disburse loans as per the target in the cottage, micro, small, and medium enterprise (CMSME) sector.
It advised all banks to be more proactive in implementing the stimulus packages announced to tackle the Covid-19 pandemic impacts.
According to meeting sources, 10-12 banks have been able to disburse loans in the CMSME sector from incentive packages as per their targets. The central bank encouraged them to lend more than their targets.
Incentive packages of Tk20,000 crore were announced in April last year to protect small entrepreneurs from the pandemic shocks. The finance ministry has directed to add another Tk2,700 crore to the amount this year.
Until December last year, banks were able to disburse 54% of the Tk20,000 crore loans. The central bank extended the deadline till 31 March this year as banks could not fully implement the packages on time.
Md Habibur Rahman, executive director of the central bank, presented the monetary policy and the macroeconomic situation of the current financial year at the meeting.
He told The Business Standard the macroeconomic situation of Bangladesh is better than many other countries.
But credit flow to the private sector needs to be increased to accelerate investment, he added.
In December, the private sector credit growth target was 11.5% but 8.47% was achieved.
Habibur said the growth was less than the target but was still better than many countries, including neighbouring India, in the current context.
The meeting also reviewed the implementation progress of the decisions made at the bankers' meeting held in January and March last year.