Speakers at a seminar on Sunday observed that an equity and bond market can be an alternative way of financing that can reduce the existing unethical competition in the banking sector. “If government can create an equity and bond market, it would reduce the unethical competition to lend from banking sector,” said Prof Dr Shah Md. Ahsan Habib, director of BIBM (Training). He was speaking at a seminar on “Credit Operations in Banks” at Bangladesh Institute of Bank Management (BIBM).

The daylong programme was also addressed among others by Prof Dr Toufic Ahmad Chowdhury, director general of BIBM, Sk. Harun-ar-Rashid, senior associate professor, Quazi Golam Morshed Farooqi, faculty member, Atul Chandra Pandit, assistant professor of BIBM and Mohammed Mahfuzur Rahman, deputy general manager of Janata Bank Ltd.

Dr. Prashanta Kumar Banerjee, senior associate professor and director and team leader of review team presented a keynote paper at the seminar. Dr Prashanta said, “Credit and investment figure of scheduled bank was Tk 4,625.85 billion as of December 2011.” Of this amount, about 86.69 percent of advances of all the  banks were concentrated in Dhaka and Chittagong division in 2011. It means only 13.31 percent of the advances of all banks were made available to five other divisions, he pointed out.

“Such inequitable distribution of advances by the banks may create regional economic disparity,” he observed.

Dr. Shah Md. Ahsan Habib said the cost of raising funds for loans has increased substantially in the year 2011 and it forced banks to increase the interest rate on loans.

Talking to The Independent Dr. Shah said, slow recovery poised a serious problem to the banks in 2011.
He observed that slow recovery has been observed particularly in the real estate, RMG and commodity sector.

Habib also mentioned that primary dealer banks had been suffering the most because of buying more government securities and absence of the secondary market.

He said, “Financing against local LC, accommodation bill and indiscriminate extension of loan against trust receipt (LTR) facility resulted in fund diversion.”  

S.A. Chowdhury, managing director of Bangladesh Commerce Bank Ltd. expressed concern over increasing classified loans as the credit officers and managers were processing the bad loans. Chowdhury said,“To minimise the classified loan, banks are also rescheduling loan which failed to add  new customers.”  

Mahbubul Alam, managing director of Southeast Bank Ltd observed that Corporate Social Responsibility (CSR) practices by banks have become an integral part of business in recent years.

He said” The status of CSR has not been satisfactory due to lack of awareness, poor enforcement of existing laws and inadequate pressure from civil society and vested groups.”

On the question of alternative sectors of investment he mentioned solar energy, biogas plant, ETPs and energy efficient kilns could be new areas of investment.

It was told in the seminar that although the contribution of agriculture sector to GDP was almost 20 percent
but the flow of credit to this sector was only around 5.59 per cent in 2011.

The Daily Independent/Bangladesh/ 16th July 2012