The New Nation - Internet Edition

Staff Reporter

Bangladesh Bank Governor Dr Salehuddin Ahmed yesterday cautioned the commercial banks about their lending so that they can avoid situations like present global financial crisis.

He also instructed the banks authorities to go for lending to the productive sectors like agriculture, housing and SMEs for employment generation through reducing credit to the unproductive sectors such as consumer loan.

"I have told the bank executives to maintain required advance-deposit ratio and ensure quality of assets," the central bank Governor told reporters after a meeting with chief executives of commercial banks at Bangladesh Bank conference room.

Managing directors and chief executive officers of commercial banks were present at the regular meeting, reviewing the situation of local banks in view of the global financial crisis.

The Governor congratulated the bankers for consolidating the local banking sector from the possible shock of the global crisis.

Replying to a question, Dr Ahmed said the local banks have already protected their funds held abroad from the shock of the crisis.

"Increase in credit to the productive sectors will help banks reduce their surplus liquidity," Dr Salehuddin said when asked whether the banks would accumulate excess liquidity further due to a possibility of slowing down investments as the fallout of global financial crisis.

About the rapid growth in lending through credit cards, he said it seems a huge growth when one would see the growth as a percentage. But, in terms of amount, it was not too much. He, however, asked the bankers to be cautious about the trend to see of it takes a faster growth.

The Governor also instructed the bankers to improve their services as the central bank in a recent survey found that the banks were providing poor services to their clients.

Association of Bankers Bangladesh (ABB) president and City Bank managing director K Mahmud Sattar told newsmen that the local banks were not in a grave situation in relation to the global financial crisis. There is no reason to relate local banks directly with the global financial crisis, he said.

Sattar, quoting the BB Governor, said the central bank has directed the bankers to remain alert and "watch and see" the consequences in exports and remittance.

Asked about the banking services, he admitted that the banks could not reach the level of international standard and requested the central bank to send their findings, without naming any particular bank, to the banks so they could take measures to improve the situation.