WB, IMF advise restricting big loans from state-run banks:Daily Sun

  The World Bank (WB) and International Monetary Fund (IMF) have advised the government not to grant any big loan amounting Tk 1 billion and above from state-owned banks to borrowers except for well-reputed clients having genuine capacity to repay loans timely, a highly placed source said on Saturday. The global lenders gave the advice amid widespread loan-scams in some state-run banks including t
he Sonali and Basic Bank that put the capital base of those banks at risk as many loans were not securitized properly. Between 2011 and 2013, swindlers have taken away Tk 45.50 billion from state-owned Basic Bank and Tk 35.40 billion from state-owned Sonali Bank on forged documents in connivance with some corrupt bank officials. Insiders say politicization of boards and weak internal governance due to grouping at the upper managements has caused repeated incidents of loan-forgeries in the state-run banks. “The key concern of the WB and IMF is granting big loans from state-owned banks. They are against approval of any more big-loan, amounting to Tk 1 billion and above, to borrowers except for capable clients,” said the source. Political influences were said to be involved in the loans scams in Sonali Bank and Basic Bank in separate investigations carried out by Anti-Corruption Commission and Bangladesh Bank. Source say the WB and IMF investigation found that political influences can still take away huge amount from state-owned banks in the name of loans. According to BB report, the capital deficit of four state-run banks amounted to Tk 241 crore up to March 31 this year mainly due to loan scams. However, sources said the WB and IMF want the state-owned banks strictly follow the regulatory guidelines issued by Bangladesh Bank to ensure prudent banking operations. “Proper implementation of the WB and IMF advice will strengthen banks’ capital base, minimize risks and ensure loans to genuine clients,” sources said. BB Governor Dr Atiur Rahman also expressed his stance against irregularities recently. “Leave greed. Ensure credit to genuine entrepreneurs so that the people could be benefited, economy can grow and your bank gets return of assets timely,” Dr Rahman told top bankers. The BB governor said the central bank has been monitoring state-owned banks very closely by strengthening its oversight divisions.