Craving for issuing loans to same client by multiple banks rose by 4.39 percentage points in 2018 compared with that in the previous year, resulting in an increased risk for the banks, according to a Bangladesh Institute of Bank Management research paper released on Tuesday.
BIBM presented the research paper at a seminar on ‘Credit Operations of Banks’ held at the BIBM auditorium in Dhaka.
Bangladesh Bank’s Chattagram office was also connected to the seminar through videoconferencing.
The report was prepared based on replies of 32 banks. Of the banks, 90.60 per cent expressed their interest in providing loans to such clients who had already received loans from other banks.
In 2017, it was 86.21 per cent, said the BIBM report, which was presented by its director Prashanta Kumar Banerjee along with others.
Bangladesh Bank deputy governor SM Moniruzzaman, BB executive director and BIBM director general Md Abdur Rahim, and BIBM chair professors Barkat-e-Khuda and Muzaffer Ahmad attended the seminar, among others.
Addressing the discussion, Md Abdur Rahim asked all the banks to be more cautious in issuing loans to their clients.
BIBM supernumerary professor and former Pubali Bank managing director Helal Ahmed Chowdhury said that the risk of loans becoming defaulted would decrease if the loan applications were scrutinised properly before approval.
He stressed the need for formation of a taskforce for defaulted loan recovery.
BIBM supernumerary professor Md Yasin Ali said that the majority of the bank directors received anonymous loans from banks and such trend should be stopped.
The volume of defaulted loans would decrease if the trend could be stopped, he said.
Sonali Bank chief executive director and managing director Md Obayed Ullah Al Masud mentioned excessive financing tendency of the banks as a reason for the huge amount of defaulted loans.
Anonymous loans would pose a major threat to the country’s banking sector in future, said Masud, adding that non-payment of loans had become a trend in recent times.
He also recommended formation of separate court in Dhaka and Chattagram with adequate number of benches to expedite defaulted loan recovery.
Former Sonali Bank managing director SA Chowdhury said that the banks should keep highest level of cautiousness in granting loans.
He also emphasised training of the bankers.
Barkat-e-Khuda said that the financial inclusion had been hampered due to low volume of loan disbursement in the rural areas.
Policymakers should study how everyone could be brought under the banking service, he said.
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