• Wednesday, Dec 08, 2021
  • Last Update : 02:36 pm

Bangladesh Bank to conduct special audits of eight more banks

  • Published at 10:41 pm March 24th, 2019
web-bangladesh bank logo
The Bangladesh Bank logo is seen at its office building in capital Dhaka Mehedi Hasan/ Dhaka Tribune

The eight banks are: One Bank, Eastern Bank, Mercantile Bank, NCC Bank, Shahjalal Islami Bank, BRAC Bank, Southeast Bank and Mutual Trust Bank

As part of the ongoing probe to reform the country's ailing banking sector, Bangladesh Bank will conduct special audits of eight more banks, after Janata Bank, AB Bank, and Al-Arafah Islami Bank. 

The eight banks are: One Bank, Eastern Bank, Mercantile Bank, NCC Bank, Shahjalal Islami Bank, BRAC Bank, Southeast Bank and Mutual Trust Bank.

Early this month, Bangladesh Bank conducted an audit to unearth loan irregularities at Janata, AB, and Al-Arafah.

Separate committees have already been formed last week with officials of the central bank's Inspection Division to conduct special inspections at all eight banks. The committees have been instructed to submit their reports by this month, said a senior Bangladesh Bank official. 

The banks concerned will be audited on a set model that includes identifying each bank's top five lenders, top five bank loan renewals, top five interest waivers, and top five loan defaulters.

Afterwards, the inquiry committees will make specific recommendations to reduce default loans and take action against willful defaulters, the official added.

The process of loan applications, branch evaluation, head office evaluation, board approval or approval of the management authority, project inspection report, evaluation of collateral security, legal opinion, documentation, credit distribution, and other issues will also be scrutinized during the probe, a committee member said.

The combined bad loans of the eight banks concerned stood at Tk 6,873.62 crore as of December 31, 2018.

Former governor of the central bank, Salehuddin Ahmed, said a strong commission is needed to resolve issues plaguing the banking sector.

At the beginning of this month, Bangladesh Bank formed several committees, including a high profile one led by one of its deputy governors, in a bid to reform the country's ailing banking sector.

Furthermore, the committees will also recommend amending the Bank Companies Act, the Artha Rin Adalat (Money Loan Court), the Financial Institutions Act, and other bankruptcy-related legislation.

A policy for compulsory merger of weaker banks and financial institutions will also be drafted by a committee. 

Calls for reform

At the beginning of this year, the government asked Bangladesh Bank to undertake banking sector reforms as part of the ruling Awami League's 13-point election manifesto pledge. 

Prior to elections in December 30, 2018, the Awami League pledged to undertake an effective and sustainable strategy to lower NPLs and implement the Bankruptcy Act. 

According to the manifesto, the central bank would keep interest rates under control without hampering the market system, by adopting specific strategies and taking initiatives to inspect the expertise and skill of banks in approving and disbursing loans.

The manifesto pledged to make the ongoing supervision and regulation of commercial banks and financial institutions more effective and powerful, effectively addressing banking fraud, including loan defaulters.

At the end of December 2018, total NPLs in the banking sector stood at Tk93,911.40 crore, or 10.30% of all disbursed loans. 

61
Facebook 56
blogger sharing button blogger
buffer sharing button buffer
diaspora sharing button diaspora
digg sharing button digg
douban sharing button douban
email sharing button email
evernote sharing button evernote
flipboard sharing button flipboard
pocket sharing button getpocket
github sharing button github
gmail sharing button gmail
googlebookmarks sharing button googlebookmarks
hackernews sharing button hackernews
instapaper sharing button instapaper
line sharing button line
linkedin sharing button linkedin
livejournal sharing button livejournal
mailru sharing button mailru
medium sharing button medium
meneame sharing button meneame
messenger sharing button messenger
odnoklassniki sharing button odnoklassniki
pinterest sharing button pinterest
print sharing button print
qzone sharing button qzone
reddit sharing button reddit
refind sharing button refind
renren sharing button renren
skype sharing button skype
snapchat sharing button snapchat
surfingbird sharing button surfingbird
telegram sharing button telegram
tumblr sharing button tumblr
twitter sharing button twitter
vk sharing button vk
wechat sharing button wechat
weibo sharing button weibo
whatsapp sharing button whatsapp
wordpress sharing button wordpress
xing sharing button xing
yahoomail sharing button yahoomail