The New Nation - Internet Edition

Staff Reporter

Bangladesh Bank Governor Dr Salehuddin Ahmed yesterday said that there was no liquidity crisis in the banking sector and the businessmen are drawing substantial loans from the banks.

"The banking sector as a whole is in a healthy position as both deposits and credits in banks have increased substantially. So the allegation that the private sector is being elbowed out from loan facility is not authentic," the Governor told journalists at his chamber at BB head office in Dhaka.

The Governor's comment came in support of Finance Adviser Dr Mirza AB Azizul Islam who on Saturday at a function debated with President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Annisul Huq over liquidity.

The Finance Adviser opposed the business leader, who said that a liquidity crisis in banks was preventing businessmen from investing in new projects.

"Banks are not disbursing loans. Even a syndicate of banks could not pay a loan of Tk 50 crore," the chief of the country's apex trade body said urging the central bank to open an investigation to find out if banknotes with Tk 500 denomination had been stockpiled in "border areas".

Finance Adviser AB Mirza Azizul Islam rejected the proposal for an investigation and quoted the central bank's figure that said that the banks had an extra liquidity of Tk 12,000 crore two months back.

In this backdrop Dr Salehuddin yesterday said, "The latest figures show that deposits and credits in the banks increased compared to the previous year."

The Governor, however, refused to reveal the exact figure of liquidity saying he needs to have a further look before making them public soon.

"Few banks may have promised before their clients to lend more money than their ability and ultimately faced some shortfall. But it is not the general phenomena of the banking sector," he added.

The Governor said that the private sector credit, including the manufacturing sector, grew over 23 per cent in July-April period of the current fiscal year compared to the same period of the previous fiscal.

"Definitely we'll look at how we can ensure funds for the private sector as we're committed (not to disturb private sector credit)," he said, replying to a question.

He added that the central bank would examine the situation and address the problems, if any, in the half-yearly monetary policy to be released early July.

Replying to a question, the Governor said currency circulation has increased and did not decline in proportion to the deposits. Asked about the progress of issuing notes of Tk 1,000 denomination, he expected that the notes would be issued by October this year.