Central bank sounds tough against perennial defaulters

Bangladesh Bank (BB) has warned the people who have become loan defaulters again after receiving the central bank’s special concession to reschedule their payments.

“Legal actions will be taken against the perennial borrowers without any bias if they again become defaulters,” said the BB governor in response to queries of newsmen about the big banking borrowers on Monday.

Fazle Kabir, the governor, was unveiling Bangladesh Bank's second half-year (January-June) monetary policy statement (MPS) at a press conference at the bank , reports UNB.

“If you ask me about MPS, I'll say it's based on employment-focused growth with stability,” he said while responding to questions on different aspects of the unveiled policy.

Kabir said the central bank always takes a policy to support initiatives of the government to achieve its targeted GDP growth. “We're supporting the growth objective and guarding inflation.”

In the MPS, the domestic credit growth was kept unchanged at 15.8 per cent with imposing any contraction measures while inflation was targeted to maintain below 6 per cent.

“We hope, this will help achieve the government targeted 7.4 per cent GDP growth in the current fiscal,” said Fazle Kabir.

The private sector credit growth was also kept unchanged at 16.3 per cent although it had already touched 18.8 per cent in the last six months during the previous MPS.

The central bank expects that the broad money supply (M2) will be maintaining at 13.3 per cent although it crossed 13.9 per cent during the last MPS.

The central bank put emphasis on lowering the Advance to Deposit Ratio (ADR) in the second monetary policy to control inflation in the second half of the current fiscal.

Many banks have over 85 per cent ADR. But the Bangladesh Bank will soon issue circular to bring it down, said the governor without specifying the targeted percentage.

Fazle Kabir mentioned that central bank has taken a number of measures to contain the illegal money transaction through mobile banking and encourage expatriate Bangladeshis to send remittance through banking channel.

“As a result, the remittance inflow has already increased by 12 per cent and it will see a 15 per cent growth at the end of the current fiscal,” he told reporters.

The BB governor mentioned that the MPS will give extra focus on reducing dependency on banking sector for long term financing in big projects. Instead, efforts will be made to mobilise financing though capital market by issuing bonds.

Secondly, measures will be taken to ease the process to bring the remittance being earned from export of goods and services through using e-commerce platform.

The central bank will initiate move to encourage the non-resident Bangladeshis to buy Bangladeshi bonds to promote the home-bound remittance inflow, said the governor.