The condition of Bangladesh Development Bank did not improve much after it was formed by the merger of two troubled financial institutions
Finance Minister AHM Mustafa Kamal yesterday asked the management of Bangladesh Development Bank to punish its corrupt officials.
"Not everyone is bad. Only a few [officials] are corrupt. Don't give them the power to disburse loans. They will misuse it again. Take action before the central bank or the ministry steps in," said Kamal while addressing a conference of the state-run bank's managers at its headquarters.
The Bangladesh Development Bank managed to cut its classified loans to 38 percent in December last year from 50 percent three months ago.
Kamal, who is a charted accountant, said: "There were so many mismatches on lending. The borrowers did not do any market analysis, and set-up industries on impulse. So, you must finance the diversified sectors."
The finance minister also talked about the present state of the economic indicators. "Many countries are facing a fall in export and import. I believe our export and import will bounce back and become positive at the end of the year. All other sectors of the economy are doing well except for these two."
But data shows that other than remittance, the indicators for most other economic sectors are showing a downtrend. Private sector credit growth fell to 9.83 percent in December, the lowest in a decade.
Also, the gap between actual revenue collection and the target is getting bigger every month. So the government is turning to banks for money.
Fazle Kabir, the governor of Bangladesh Bank, asked bank officials to disburse loans carefully so that the number of loan defaulters does not increase in the future. "The Bangladesh Development Bank needs to perform well. It should increase deposits."
"Private sector credit growth will increase after April when the single-digit interest rate comes into effect."
The chairman of Bangladesh Development Bank, Mohammad Mejbahuddin, Managing Director and CEO Kazi Alamgir, and Director Kazi Tariqul Islam were also present at the event.
The Bangladesh Shilpa Bank and Bangladesh Shilpa Rin Sangstha – two troubled financial institutions – merged to become the Bangladesh Development Bank on 16 November 2009. Yet, the condition of the lender has not improved much.
At a different programme the same day, Kamal said, "The government passed the 'Deposition of the Surplus Money of Self-Governed Agencies including Autonomous, Semi-Autonomous, Statutory Government Authorities and Public Non-Financial Corporations into the Government Exchequer Bill, 2020' to discipline financial institutions.
"Government organisations should be accountable for the money they receive. The new act will positively impact the economy."