The New Nation - Internet Edition

Staff Reporter

Bangladesh Bank Governor Dr Salehuddin Ahmed yesterday said that the central bank is ready to deposit the siphoned off money to the National Board of Revenue, which was brought back and deposited with them during the massive anti-corruption drive.

NBR has requested the central bank to give the money back so they could adjust the money against due VAT and taxes of the people who deposited the money with the bank.

"We have been asked to do so," Dr Saleh Uddin told reporters, replying to a question, after holding meeting with chief executives of public, private and specialised banks.

He said: "Bangladesh Bank has nothing to do in this regard. We will give the money back if the government wants."

Finance Adviser Dr Mirza Azizul Islam informed in his budget speech for the FY 2008-09 that Tk 1,219 crore has been deposited with the central bank against siphoned off money.

The central bank in the meeting directed the bankers to increase loan in productive purposes by limiting financing in luxury purpose.

The central bank asked the banks to give more credit to the fishermen of Sidr-hit areas, as NGO credits are too expensive for the poor fishermen to afford.

"Bangladesh Bank will issue guidelines in this regard, if necessary," Dr Salehuddin said.

The banks are being directed to make investments in line with the monetary policy of BB that encourages credit flow to create employment by increasing growth.

The Governor pointed out banks often tended to invest large amounts in risky sectors like real estate for higher profits, ignoring more productive sectors.

Dr Salehuddin also said bank executives assured him there was no liquidity crisis in banks.

He said that the majority of banks have narrowed the gap between deposit and lending rates to 5 percentage points, according to the central bank's directive.

But some banks were non-compliant, Governor Dr Salehuddin said, adding: "some were trying to slim the spread by raising the interest rate on deposits and maintaining high interest rates on loans."

He warned those banks of stern action. "Action will also be taken against the banks yet to cut the gap to 5 percentage points," he added.

He said bankers have been asked to explain soon why they could not reduce their lending rates and interest spreads.

Meanwhile Bdnews adds: The central bank has directed banks to cut loans to high-risk sectors, such as real estate, and prioritise more productive sectors to aid economic growth, the Bangladesh Bank governor said yesterday.

After a meeting with chief executives of public, private and specialised banks, BB chief Salehuddin Ahmed told reporters that the quality of bank loans would be supervised to make sure that banks properly complied with the directive.

The Governor said monetary policy for July-December had been designed giving the highest priority to productive sectors.

"Creating employment by increasing growth, achieving expected GDP growth and cuts in poverty have been given emphasis," he said.

"The banks are being directed to make investments in line with such monetary policy."

The Governor pointed out banks often tended to invest large amounts in risky sectors like real estate for higher profits, ignoring more productive sectors.

He lauded the majority of banks for narrowing the spread between deposit and lending rates to 5 percentage points, according to the central bank's directive.

But some banks were non-compliant, he said, adding: "some were trying to slim the spread by raising the interest rate on deposits and maintaining high interest rates on loans."

He warned those banks of stern action. "Action will also be taken against the banks yet to cut the spread to 5 percentage points," he added.

Salehuddin also said bank executives assured him there was no liquidity crisis in banks.