The Bangladesh Bank has instructed all the banks to investigate whether any loan amounting to Tk 10 million or more are being properly used or not. Bank governor Atiur Rahman told bdnews24.com that the instruction was given as part of its continuous process to make sure that the money is not used in the share market. The central bank recently found that some borrowers took loans from different banks to use in productive sectors but they ultimately channelised the money into the stock market. It is illegal to use borrowed money in any purpose other than the proposed one.

The banks have been asked to inform the central bank by Dec 14 whether there is any borrower who is not using the loan properly, Atiur said. "They'll have to coordinate with the central bank such matters by Jan 15." He warned that legal steps would be taken against the chief executive officers (CEOs) of those banks that would fail to comply with the order.

He said a chart was given to every bank to list the names, addresses, lending branch of the banks, and amounts and objectives of the loans of those who have a loan of Tk 10 million or more. "The Bangladesh Bank will visit the banks after the lists are submitted," the governor said.

Regarding steps against CEOs instead of branch managing directors (MDs), he said: "We've experienced that the CEOs blame the branch MDs for such incidents. But actually the loans are distributed as per orders given by the higher authorities."

On Nov 4, the central bank asked the banks to monitor the use of loan of Tk 10 million or more. "But, they didn't properly follow the order. An investigation by the Bangladesh Bank shows that a number of borrowers diverted their loans into the share market instead of using that in industries."

Source: bdnews24.com