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Dhaka Tribune

Muhith to take stock of big credit scams

Update : 13 Aug 2013, 04:23 PM

Finance Minister AMA Muhith is scheduled to hold meetings with the state-owned commercial banks on Sunday next to review the present status of the big credit scams took place recently.

It is for the first time the minister is going to meet the chairmen and managing directors of the banks at the ministry after three big banking industry scandals involving Hall-mark, Bismillah Group and Basic Bank.

Muhith is expected to review the financial status of the banks too to understand the damages caused by the credit scams, said a senior official of the Banking and Financial Institutions Division.

“He will ask for detail account of the activities along with the status of the large-scale scams.”

The official said a recent World Bank Mission expressed concern about the financial status of the banks, which the meeting would also discuss.

“We’re looking into the issues,” Banking Division Secretary Dr Aslam Alam told the Dhaka Tribune about the concern the World Bank Mission expressed last week.

He said the state-owned commercial banks need recapitalisation to become competitive with the private banks.

In early July, an IMF mission expressed concern over the financial condition of six state-owned banks for their failure in mitigating credit scams that plunged them into severe financial risks.

“Why have state owned commercial banks given loan to the persons that they failed to recover,” it observed. The banks include Sonali , Janata , Agrani , Rupali , BASIC and Bangladesh Development Bank.

Sources in the banking division said a rough estimate of embezzlement of the money and forgeries of loan amounted to around Tk87bn for the three big scams.

In the first quarter of 2013, the four state-owned commercial banks, which account for almost half of the banking sector’s total loan defaults, have managed to recover only 16% of their year’s target from their top 20 defaulters , according to Bangladesh Bank .

The central bank report disclosed top 50 defaulters – 18 are of Sonali Bank and this year, the Hall-mark Group, which swindled Tk26bn from Sonali Bank is tipped to top the list.

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