BB to scrutinise corporate credit before approving large loans
Bangladesh Bank governor Mostakur Rahman has announced a plan to scrutinize corporate loans before approving them.
Officials concerned said that this initiative may be taken to curb defaulted loans in the banking sector.
The governor said this at a meeting with the business editors of private televisions last week.
Bangladesh Bank spokesperson and executive director Arif Hossain Khan gave details to reporters after the meeting.
He said that commercial banks usually approve large loans of corporate companies. However, it is being thought that Bangladesh Bank may also scrutinize them before approving large loans.
Arif Hossain Khan said: “No final decision has been made yet on how this scrutiny process will be launched, what its policies will be, or whether expert manpower will be appointed to scrutinize loan projects. The matter is still at the policy thinking stage.”
He said that the purpose of informing the banks in advance is to warn them. Once the policy is finalized, it will be officially communicated to the banks.
Bangladesh Bank officials say that in many cases, bankers already understand that a loan may default in the future. But due to various influences and interests, they are often forced to distribute that loan.
As a result, the central bank is considering this initiative to identify the risk before distributing the loan and bring it under control.
However, a specific time frame has not yet been set for when this system will be effective.
At the meeting, the governor said that although the country’s foreign exchange reserves are currently in a relatively good position, inflation has not yet reached a satisfactory level.
At the same time, there is also an employment crisis. This is compounded by the ongoing tension in the Middle East.
The meeting was attended by journalists who suggested controlling inflation, adjusting fuel prices, being frugal in dollar spending to maintain reserves, and adopting short and long-term economic plans.
