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Review Workshop on Credit Operations of Banks held in BIBM


Press Release
Dhaka,08 May 2018
A day long review workshop was held at the Bangladesh Institute of Bank Management (BIBM) on 08 May 2018, in its auditorium. The Workshop was organized simultaneously at BIBM auditorium in Dhaka and  Bangladesh Bank Rajshahi office (through video conferencing). Mr. Abu Hena Mohd. Razee Hassan, Chairman, Executive Committee, BIBM and Deputy Governor, Bangladesh Bank was present in the review workshop as the chief guest. BIBM Director General (current charge) Dr. Shah Md. Ahsan Habib Chaired the Program. He delivered welcome address at BIBM campus, Dhaka.
A paper titled " Credit Operations of Banks " was presented in the workshop by Dr. Prashanta Kumar Banerjee, Professor & Director (R,D&C) of BIBM. Other members of the review workshop team are Mohammed Sohail Mustafa, Associate Professor, BIBM; Atul Chandra Pandit, Associate Professor, BIBM; Tahmina Rahman, Assistant Professor, BIBM; Sadmina Amir,Lecturer, BIBM; and Md. Ismail Hossain, Deputy Managing Director, Janata Bank Limited.
The study identifies the problem areas as well as success factors in Credit Operations of Banks in Bangladesh. A good number of participant’s senior bank executives, academicians, media representatives, faculty members, officers of BIBM participated in the review workshop.
Bangladesh Bank (Rajshahi office) Executive Director A. K.M. Fazlur Rahman,  BIBM Muzaffer Ahmed Chair professor & Former Dhaka University Economics department professor Barkat-e-Khuda, BIBM Supernumerary Professor Yasin Ali, Sonali Bank Limited Managing Director Md Obayed Ullah Al Masud, Former Managing Director of Pubali Bank Limited Helal Ahmed Chowdhury, First Security Islami Bank Limited Managing Director Syed Waseque Md Ali, and NRB Bank Limited Managing Director Md Mehmood Husain spoke among others at the event.
Deputy Governor Abu Hena Mohd. Razee Hassan said, despite sincere efforts of Bangladesh Bank and commitment from banks end some challenges were observed in 2017. Topical issues like non-performing loan, excess credit deposit ratio of banks and excessive trend of converting non-funded facility into funded facility were causes of concern in 2017.

He said, another concern of banks was shortage of liquidity, which surfaced in December 2017 although the banking sector was washed with excess liquidity during the whole year.  The banking sector is trying to come out with smart solution of aforesaid problems. BB has taken various steps to improve supervision to arrest financial frauds and decrease NPL.
Former Dhaka University economics professor Barkat-e-Khuda said, the credit of the banks are being channeled and centralized in two or three areas, while the rural people are not getting credit. That means inclusive banking has not been happening. He requested policymakers to look into the matter seriously.
According to survey by the Bangladesh Institute of Bank Management, Borrowers of large loans crossing Tk 20 crore accounted for 32 percent of the banking sector loans in 2017, posing concentration risk for banks. State-owned commercial banks hold the leading position, delivering 46.57 percent of the loan provided to the large borrowers.
Research data shows, Borrowers with loan amount sizes between Tk 1 crore and Tk 20 crore have taken 39 percent of the loans while 18 percent of the loans range between Tk 10 lakh and Tk 1 crore,  The highest loan growth—28.69 percent— was observed in the Tk 1 crore to Tk 20 crore category.
Concentration of loans among big borrowers and the growing number of fictitious loan, or those given out to unnamed people, are alarming for the banking sector, Obayed Ullah Al Masud, managing director of Sonali Bank, told the workshop.
Big borrowers discovered a new technique of taking unnamed loans on becoming defaulters, the top executive of the country's largest state-owned bank said.  Generation of such fictitious loans can be prevented by going through six months' transaction history of the respective business, he said.
But influential borrowers do not let bankers check the business history, rather they force the officers to approve loans soon after the accounts are opened, he added. He said loan concentration increased in two forms -- one among top borrowers and the other among some sectors.
A significant share of loans belonged to borrowers with accounts of above Tk 20 crore which is risky for the industry, said Mehmood Husain, managing director of NRB Bank.
Syed Waseque Md Ali, managing director of First Security Islami Bank said, banks will have to put more emphasis on knowing their customers to prevent generation of fictitious loans. The amount of default loans was rising due to changes in the behavioural pattern of customers and bankers' tendency of ignoring court stay orders.A stay order raises the flag on a borrower, so bankers should be cautious on providing loans to such a customer.
Borrowers will have to change their mental setup to come out from the culture of becoming defaulters, said Helal Ahmed Chowdhury, supernumerary professor of BIBM.
Customers who showed multiple industries in business cards are mostly fraud and should not be provided finance, he said.
BIBM Director General (current charge) Dr. Shah Md. Ahsan Habib delivered concluding remarks. He emphasized on default loan recovery.
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Written by Manager

Wednesday 9th May 2018