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Scheduled banks are finding it very difficult to inform the Bangladesh Bank on whether loans taken from the government’s stimulus packages were being used for its intended purpose or not.
In separate letters sent to managing director and chief executives of all scheduled banks, Bangladesh Bank sought information regarding details of clients of the stimulus packages for large and small industries by August 5.
“It is possible to provide necessary information as per the instructions of Bangladesh Bank for disbursement of incentive loans. However, it will be difficult for the bank to know whether the borrowers are doing business with the loan or not,” said Sohail RK Hussain, managing director and chief executive officer of Meghna Bank.
The central bank came up with the directive after allegations were raised that loans taken from stimulus packages were being used in unproductive sectors.
“Some people took loans to buy necessary raw materials or a commodity. But in this pandemic situation, it will be difficult for bankers to personally inspect and provide the required information to the central bank within the stipulated time,” said Syed Mahbubur Rahman, managing director and chief executive officer of Mutual Trust Bank.
“In other words, it will be difficult for us to answer regularly. We will talk to our association and report the matter to the central bank,” said Rahman, also a former chairman of the Association of Bankers, Bangladesh (ABB).
“We have received a letter from the central bank and we are working to respond to it as soon as possible. However, it will be very tough to do so,” Mamoon Mahmood Shah, managing director of NRB Bank, told The Business Post.
Earlier, Bangladesh Bank introduced a Tk 600-billion worth of financial packages for large and small industries at low interest rates to offset the business losses caused by the coronavirus situation.
“Loans taken from the packages were being invested in unproductive sectors, despite the government detailing various instructions to the banks for proper use of the incentive loans. So, the banks have been asked to inquire on who got received the loans and how did they get it,” Sirajul Islam, executive director and spokesperson of Bangladesh Bank, told The Business Post.
He also added that all banks were asked to send the necessary information to the central bank within 5 working days. Further action will be taken on the basis of the information sent to them.
Meanwhile, the central bank introduced a second financial package of Tk 400-billion for large industries and service sectors to offset the adversities hitting hard their businesses.
The package will be continued for three years from April 14, 2020.
The BB had also announced another stimulus package worth Tk 200 billion for the cottage, micro, small and medium enterprises (CMSMEs) on the same grounds.
