FIs see multiple loan-taking trend

Staff Correspondent

24 April, 2019 12:00 AM printer

The trend of taking multiple loans by a single borrower from various financial institutions has increased in the country in recent years, said a study report.

Bangladesh Institute of Bank Management (BIBM), a banking sector think tank, claimed that this kind of mal practice increased by about 4 percent year-on-year when non-performing loans in banking sector constitute 10.3 percent of the total disbursed credit.

The study claimed that the credit flow mostly remains city centric which has also become a major barrier to the financial inclusion.

Central bank officials unveiled the study report at a workshop titled ‘Credit Operations of Banks’ at BIBM head office in the capital on Tuesday. The meeting was simultaneously connected to the Bangladesh Bank, Chattogram office, through video linkage.

Some 32 banks provided information to the study report while the researchers considered several circulars and publications of central bank as secondary data.

BB Executive Director Abdur Rahim inaugurated the workshop while Dhaka University former Prof Barkat-e-Khuda presided over the meeting. BIBM Director Shah Mohammad Ahsan Habib made the address of welcome.

Among others, BB Chattogram Executive Director Abu Farah Mohammad Naser, Sonali Bank former Managing Director SA Chowdhury, Managing Director Obayed Ullah Al Masud, Pubali Bank former Managing Director Helal Ahmed Chowdhury, BIBM Supernumerary Prof Yasin Ali was present on the occasion.

BIBM Chair Prof Barkat-e-Khuda said that the objective of financial inclusion remains in dream as rural people are not getting required credit as compared to urban customers. Sonali Bank former Managing Director SA Chowdhury recommended for establishing specialised task force for recovering the defaulted loans.

BB former Executive Director Yasin Ali claimed most of the board directors take credit anonymously which creates risk for default loans. SBL Managing Director Obayed Ullah Al Masud mentioned that the increased cash flow from banks is responsible for the default culture while anonymous credit makes the sector vulnerable. Masud also recommended for separate court in Dhaka and Chattogram to recover bad loans.

At the end of December 2018, total NPLs in the banking sector stood at Tk93, 911.40 crore, or 10.30 percent of total disbursed loans.