The central bank has sounded tough against perennial loan defaulters.
“Legal actions will be taken against those borrowers without any bias if they again become defaulters,” - was the response of Bangladesh Bank governor when journalists asked him on Monday about the big banking borrowers, who have become loan defaulters again after receiving central bank’s special concession to reschedule their payments.
Fazle Kabir, the governor, was unveiling Bangladesh Bank’s second half-year (January-June) monetary policy statement (MPS) based at a press conference at Bangladesh Bank while its deputy governors and top officials were present.
“If you ask me about MPS, I’ll say it’s based on employment-focused growth with stability,” he told reporters while responding to questions on different aspects of the unveiled policy.
He 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,” he said.
In the MPS, the domestic credit growth was kept unchanged at 15.8 percent with imposing any contraction measures the while inflation was targeted to maintain below 6 percent.
“We hope, this will help achieve the government targeted 7.4 percent GDP growth in the current fiscal,” said Fazle Kabir.
The private sector credit growth was also kept unchanged at 16.3 percent although it had already touched 18.8 percent in the last six months during the previous MPS.
The central bank expects that the broad money supply (M2) will be maintained at 13.3 percent although it crossed 13.9 percent during the last MPS.
The central bank emphasised 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 percent ADR. But 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 the sending of remittance by expatriate Bangladeshis through banking channel.
“As a result, the remittance inflow has already increased by 12 percent and it will see a 15 percent growth at the end of the current fiscal”, he told reporters.
He mentioned the MPS will give extra focus on the reducing dependency on banking sector for long-term financing in big projects. Instead, efforts will be made to mobilize 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 the move to encourage the non-resident Bangladeshis to buy Bangladeshi bonds to promote the home-bound remittance inflow, said the governor.