Strict monitoring, stern actions needed to reduce loan defaults

To reduce the increasing amount of defaulted loans, authorities should identify underlying reasons through strict monitoring and take exemplary actions against the borrowers, said Dr Salehuddin Ahmed, former governor of the Bangladesh Bank.

His remarks came during a event on Saturday on the banking sector's readiness for post-covid economic recovery, organized by the law firm The Lawyers and Jurists at the capital.    

Dr Salehuddin said, "The central bank is providing many facilities to banks that are failing to maintain cash reserve ratio (CRR) statutory liquidity ratio (SLR). This is not good for the banking sector."

Addressing irregularities in the e-commerce sector, he said, "The nature of problems we are experiencing in this sector suggests that we lack expertise in computer and IT literacy."   

He also said that small-scale entrepreneurs were deprived of financial support during the pandemic.

"Small-scale entrepreneurs didn't receive much from the central bank's covid-time stimulus packages," he said, adding that he had personally spoken with several entrepreneurs who didn't manage to receive support when they needed it the most.

"Loans should be given to small and medium-sized enterprises (SMEs) of small sectors including agriculture at the marginal level," Dr Salehuddin recommends.

Dr Mashiur Rahman, the economic affairs adviser to the prime minister said in his keynote speech, instead of creating obstacles authorities concerned need to formulate appropriate policies for the growth of the country's e-commerce industry.

"In this era of technology, when Bangladesh's ICT sector is expanding incrementally, let's not hinder the progress of the e-commerce business," he added.

Dr Mashiur said, "Several e-commerce companies have illegally taken money from their customers. But those who gave money in hope of extra profit should've had a better understanding of things.

"I advise them to be more careful. Besides, it is not right for the government to give compensation. I hope that the central bank will address the weaknesses regarding regulating e-commerce sites."

Bangladesh Bank's Deputy Governor Abu Farah Md Naser said, "The government, in a bid to keep the country's economy afloat, announced stimulus packages for businesses on 5 April last year. As of 20 June 2021, we have distributed around 80% of all the packages announced."

"We are also giving more attention to the SME. Women entrepreneurs can now take loans at 5% interest. Meanwhile, microfinance institutions are getting loans at 7% interest," he added.

Mutual Trust Bank Ltd (MTB) MD and CEO Mahbubur Rahman Syed said, "We are trying to provide loans to the microfinance institutions that are suffering due to the ongoing pandemic."

"Many people were conned by some e-commerce companies. There was a lack of awareness among the officials of BB and other banks who were related to this sector. The scams could've been averted if these companies were monitored properly," observed Supreme Court (SC) lawyer Barrister AM Masum.

The discussion meeting titled "Post-Covid Economic Recovery: How Prepared Is The Banking Sector"' was moderated by Mahmud Hosain FCA.