The New Nation - Internet Edition

UNB, Dhaka

Bangladesh Bank is considering easing the 'limitations' of newly transformed Government-Owned Commercial Banks (GCBs) to help them become competitive with other commercial banks operating in the country. "We've given them (GCBs) a positive gesture in this regard," Governor Dr Salehuddin Ahmed told reporters after a meeting with the chief executive officers of the banks at the central bank today (Monday).

He said the banks namely Sonali, Janata and Agrani have caps in paid-up capital, annual credit growth and single borrower limit, as well as shortage of manpower, restricting them to come up as commercial banks in the present competitive banking industry.

The governor, who chaired the meeting, added that the caps were imposed in 2003 on the state-owned banks at the context of that time under separate Memorandum of Understandings (MoUs), but the context has now changed with their conversion into public limited companies (PLCs).

"The Bangladesh Bank would ease the limitations as soon as possible to make the banks commercial ones," he said, adding that the central bank would review the MoUs. It would, however, require some time. The CEOs of the GCBs pointed out the limitations at the meeting, seeking Bangladesh Bank's intervention to remove the bottlenecks and help the banks run commercially. They also pointed out the manpower shortage in the GCBs.

Dr Salehuddin said the GCBs would undertake a process to recruit manpower on their own while they have already applied to the government for their recapitalisation. The meeting was told that the banks were running short of capital due to government borrowing.

He said the government would send the recapitalisation proposals back to the Bangladesh Bank for its review and then the government would take decision in this regard. The process would be completed within a month, he added. The Governor said he would request the Ministry of Law to look into the legal complexities the banks were facing to recover particularly the large loans. He said the meeting, however, observed that the recovery of small and medium overdue loans was taking place to some extent. The Governor asked the GCBs to make their field officers more active to successfully disburse agriculture loans as they have major role in this regard.

They were also asked to pump some more funds from the excess liquidity into the banking system in addition to their agriculture credit target of Tk 1,400 crore in the Sidr-hit areas to help rejuvenate the battered economy of the region.