Bangladesh Bank has instructed banks to provide detailed accounts of those who availed funds from the stimulus package, to investigate whether the funds were properly allocated to those in need.
The central bank issued letters to the respective banks on Sunday, giving them five days to submit their reports.
It also asked them to provide information about the subsidy on the interest.
According to Bangladesh Bank, strict action will be taken against banks that are found to have misused the stimulus package.
Earlier, in a primary observation, they found that low-cost loans had been invested in stocks.
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It also found that after stimulus loans were disbursed as working capital, the money was withdrawn at once in some cases, not gradually, indicating diversion of the funds.
While announcing the monetary policy for fiscal year 2021-22, central bank governor Fazle Kabir said that a special inquiry would be conducted to look into whether there was any misuse of incentive loans.
Md Serajul Islam, spokesperson and executive director of Bangladesh Bank, said that although several media reported discrepancies during stimulus disbursement, they did not receive any formal complaint per se.
Nevertheless the letter sent to banks is an obligation from the central bank to monitor the process. A checklist has also been issued with each letter, which the banks have to fill up whether those were followed during the disbursement process or not, he added.
Speaking to Dhaka Tribune, Prof Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue (CPD), said that the diversion of funds into the stock market has led to artificial inflation or bubbles that will have dire consequences when it bursts.
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“The artificial bubble that has been induced by the diversion of funds is neither good for the economy nor the consumer. Stocks do not reflect the health of the economy,” he also said.
“The stimulus package was introduced for businesses that have been adversely impacted by the Covid-19 pandemic. If working capital from the package was invested in stocks, then this means those businesses did not even need it in the first place,” Rahman further said.
Rizwan Rahman, president of the Dhaka Chamber of Commerce and Industry (DCCI), said there is a lack of accountability in the disbursement of stimulus funds.
“Bangladesh Bank should have a monitoring cell independent of all others only to check with compliance of stimulus usage. Many businesses took a stimulus for wages, yet they fired their employees,” he said.
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The DCCI president suggested that once a company receives stimulus, it must give a report on how it has spent the money.
“If guilty, the companies can be made examples out of by the government by heavily penalizing them. The rest will automatically fall in line,” he added.
Salehuddin Ahmed, former governor of the Bangladesh Bank, told Dhaka Tribune that there are issues with the banking sector with loan disbursement. “There needs to be monitoring protocols and enforcement of the law for punishing and penalizing banks that have enabled corruption in the sector.”