Private bankers want Bangladesh Bank to intervene in clearing the payments made to controversial Hall-Mark Group against the bills that were given acceptance by the state-owned Sonali Bank.

Association of Bankers Bangladesh (ABB) at a meeting yesterday decided to take the issue to the regulator after Sonali declined to settle those payments during the last 4-5 months.

“If Sonali Bank doesn't pay other banks, it will affect the entire system. Other banks' trust on Sonali will go down,” said a top office bearer of the ABB, a forum of chief executive officers of banks.

Hall-Mark Group swindled more than Tk 2,600 crore by selling inland letter of credit accepted by Sonali Bank's Ruposhi Bangla Hotel branch to other banks, mostly the private ones. The bankers said they bought those bills considering Sonali's acceptance.

The other issues the ABB will place before the governor at today's meeting of the bankers include the implementation of the new loan rules relating to rescheduling, provisioning and classification.

The bankers need more time to implement the new rules as those were imposed in the middle of the year and the banks set their business strategies at the beginning of the year.

“We'll request the governor to extend time for implementing the new rules on loan rescheduling and provisioning,” said a chief executive of a private bank.

According to the new rules that became effective from July 1, an ongoing loan operation will be classified in the event of non-repayment of any instalment within three months instead of the six-month timeframe used before.

The base for provisioning has been set at a minimum level of 20 percent of the outstanding balance of the credits, while strictly limiting the rescheduling facility of any default loan up to three times.

“We'll request the central bank to reduce the base for provisioning at 15 percent instead of 20 percent,” said the ABB office bearer. He said banks take mortgage for all loans, so there is no reason why the provisioning would be so high.

According to the new rules, the non-repayment period against a term-loan for more than two months will be treated as a "specially mentioned account" and the non-repayment period between three and six months will be classified as substandard. If the non-repayment period is more than six months, it will be treated as default loan.

News: The Daily Star/Bangladesh/13-Sep-12