‘Weak banks to be rescued by all means’

Staff Reporter :

The government will use all available tools to rescue the weak banks, assured Bangladesh Bank Governor Ahsan H Mansur on Tuesday.

Correspondingly, Mansur urged the depositors of weak banks to hold faith and confidence as central bank’s recovery initiatives is proceeding.

Speaking as the chief guest at a workshop on ‘Microfinance in Bangladesh’ organised by the Microcredit Regulatory Authority (MRA) at the CIRDAP Auditorium in the capital, the governor also said “Any banks unable to return customers’ money, I assure you that the money will either be refunded or paid through bonds.”

Dr. Mansur said this in reply to a query from a top official of a Micro Finance Institution (MFI), who made FDR in S Alam Group-owned bank but did not return the money despite matured the tenure.

Mansur replayed, he had repeatedly warned against depositing funds in certain banks over the past decade.

He stated that the next five years will be increasingly challenging for microfinance institutions.

“Currently, there are 24,000 branches of microfinance institutions across the country, while banks have around 24,000 agent banking outlets. In the next five years, banks are expected to increase their agent banking outlets to around 60,000.”

He highlighted the growing competition for microcredit institutions, noting that mobile financial service (MFS) providers are now offering loans and collecting deposits. Additionally, the emergence of digital banks will pose a new challenge for microfinance institutions.

He noted that donor agency grants have dwindled to almost zero, emphasising the need for MFIs to become self-reliant and compete with banks, which are now more aggressive in offering financial services.

The event was presided over by MRA Executive Vice Chairman Mohammad Helal Uddin and was attended by Financial Institutions Division Secretary Nazma Mobarek and Palli Karma Sahayak Foundation (PKSF) Managing Director Md. Fazlul Kader.