Rupali Bank suggested for disbursing more credits

Expert people of banking sector opined that the state-owned Rupali Bank Limited should disburse more credit and advances to prospective borrowers in a bid to avert any long-term crisis.

They also advised the bank authority for attracting prospective entrepreneurs for taking loans from the bank.They feared that the bank will face long-term crisis if its rate of loan disbursement slows down.To make-up the banks’ growing costs for paying interests against higher deposits as well as increased salaries for new recruitment and also for expanding network by opening new branches, there is no alternative but to sanction new loans among potential borrowers, experts opined.The credit growth of Rupali Bnak was 14.90 percent in December 2012 while in 2010 and 2011, the rate were 15.71 percent and 16.01 percent respectively.

In an official order in May 2013, the Bangladesh Bank limited the bank’s credit growth to 10 percent from previous rate of 15 percent. Later on September last year, the central bank, in a letter, advised the bank to reduce credit growth to 2.50 percent (on quarterly basis).Senior banking sector experts recommend that the government should allocate the budget for credit disbursement by any bank ahead of the beginning of the year because the bank’s loan distribution activities are operated on the basis of field level target.

Besides missing the yearly credit disbursement target, then banks fail to fulfill the quarterly disbursement targets, they said adding, the similar problem arouse in case of Rupali Bank.The credit of Rupali Bank grew in 2012 as non-funded liabilities of some reputed customers against letter of credit (L/C) turned into funded liabilities for non-compliance.

As a result,

 A forced loan amounting to Tk 708 crore was created. For the forced loan amount and also for increased interest payments against credit accounts resulted in huge credit balance, enhancing credit growth as well.

News Source: Daily Sun
Date: 28-Mar-2014

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