More than two dozens of recommendations, including regular disclosure of identity of big loan defaulters, made by Financial Institutions Division for quickening the recovery bad loans have remained almost unheeded by the state-owned banks and the Bangladesh Bank.
On April 3, the division recommended 26 short-term, medium-term and long-term measures, to be implemented in three months, six months and more than six months, for state-owned commercial banks and the central bank to quicken the bad loan recovery.
It made the recommendations after examining those for seven months as widespread loan scams, growing bad loans and hostile takeover of private banks sent the banking sector into worst-ever situation.
The defaulted loans of eight state-owned banks, 40 private sector banks and nine foreign banks rose to Tk 74,303 crore in 2017 from Tk 62,172 crore in 2016.
Neither the state-owned banks nor the central bank gave any feedback to the Financial Institutions Division about the recommendations given more than three months ago, officials said.
Division secretary Eunusur Rahman told New Age on Saturday that they would ask for feedback soon from the banks especially on the implementation of the short-term measures.
‘The banks should have already informed us about the actions or plans they have taken,’ he noted.
Among the short term recommendations, the division said that the state-owned banks would publish the identity of the defaulters on their web page, notice boards and or any visible place like newspapers in line with the suggestions so that general people could know them.
It recommended introduction of punishment for failure to recover bad loans and reward for realising bad loans.
It had also said that the state-owned banks would introduce quarterly performance-based indicators for its officers and reflect those in the annual confidential report and bring about changes to promotional guideline of the banks’ employees.
The state-owned banks were also asked to strengthen the internal committee and enable them to work independently and expand agent banking instead of opening new branches.
The division recommended that the central bank would create a separate cell to monitor the borrowers with bad loan over Tk 100 crore and ministry of law would establish a separate bench for speedy disposal of writ petitions against loan recovery.
Bangladesh Bank deputy governor Abu Hena Mohd Razee Hassan said that a cell to monitor big loan defaulters already existed at the central bank.
‘Now we have to see whether the FID wanted another cell or strengthening the present one,’ he said.
The deputy governor, however, showed reservation about the disclosure of identity of big loan defaulters by the state-owned banks.
Certain criteria of the central bank have to be maintained by the banks in disclosing the identity of loan defaulters, he said.
On April 11, finance minister AMA Muhith told parliament that the government might publish the names, addresses and identities of the bank loan defaulters periodically in the media.
Former central bank deputy governor Ibrahim Khaled alleged that the provision for publication of identity of defaulted borrowers stipulated in the Bank Company Act 1991 was never enforced by the central bank.
He said that the constitution of a separate High Court bench for speedy disposal of cases against loan recovery had long been due, but the law ministry had been rejecting the proposal.
Recovery of credit of Tk 45,135 crore by state-owned banks remained blocked for decades because of 4,250 writ petitions filed by the borrowers against cases filed by state-owned Sonali Bank, Agrani Bank, Janata Bank and Rupali Bank until 2016.
Centre for Policy Dialogue distinguished fellow Mustafizur Rahman said that the series of loan scams in the state-owned banks, including embezzlement of Tk 1,200 crore by Bismillah Group from Janata Bank, Tk 3,500 crore loan scam by Hallmark Group in Sonali Bank and Tk 6,000 crore fictitious loan extended by previous board of directors led by politically appointed chairman Sheikh Abdul Hye Bacchu of BASIC Bank, raised question about the government commitments to discipline the undisciplined banking sector.
He lamented that the government rejected appointment of a commission despite agreeing on a number of occasions in the past four years.
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