Dhaka, 28 Jan – With less than a year to the national election, Finance Minister AMA Muhith has warned banks and the regulator of a widespread use of ‘black money’.Speaking at a conference of state-owned Rupali Bank on Sunday, he said the advance to deposit ratio ( ADR) in the banks is higher, which needs to be contained.
ADR measures loans as a percentage of deposits.ADR rose to 78.9 per cent in September from 78.2 per cent in June 2017, according to Bangladesh Bank (BB) data.
“BB is responsible for monitoring it. This year, they need to be extra-cautious, as this an election year. The cash flow will increase and a good amount of black money will circulate,” Muhith.
About criticisms over the ‘weak’ banking sector, the minister claimed it was somewhat better now. “Economic development will not be possible with a weak banking system.”
However he said as our economy is doing well, the performance of banking sector is also well.
“Everyone accepts that the Bangladesh economy is developing. There is also a contribution of banking sector to the development of economy,” he added.
Underscoring default loans as the biggest problem, finance minister said the situation has “significantly improved” as default loans have come down to 11.5 per cent in the state-owned banks from more than 50 per cent earlier.
He added also that some funds will be allocated in the next budget to allow public banks to recover from the capital crisis that they are facing. Muhit said that the entire banking system faces a crisis if any of the banks face difficulty.
Responding to Rupali Bank’s plea to raise its paid-up capital to Tk 900 crore from the Tk 300 now, Muhith said ‘good news’ could be expected in the next budget.
“A significant amount is allocated for banks in the budget every year. Some say that should not be the case, but I don’t agree. We cannot afford a catastrophe in banking.”
He asked the banks to focus more on SMEs, as they account for 75 per cent of the manufacturing sector.
“SME development means more jobs will be created, which means development of the people.” – Staff Reporter
