Eleven banks have expanded their credit going beyond permissible limit raising questions whether they involved in ‘purposeful lending’ or ‘aggressive banking’ to make profit overnight.
The advance to deposit ratio (ADR) of the banks hovered between over 85 per cent and 90 per cent as of May this year, according to a Bangladesh Bank (BB) data.
These banks are: Rajshahi Krishi Unnayan Bank (RAKUB), BASIC Bank, the National Bank Of Pakistan, Premier Bank, IFIC Bank, One Bank, Standard Bank, AB Bank, Dhaka Bank and Islami Banking window of Agrani Bank and Prime Bank.
General commercial banks are allowed to lend 85 per cent of their deposit after maintaining a statutory liquidity requirement while Islamic banks are allowed to lend 90 per cent of their deposit.
When contacted, Suvankar Saha, executive director and spokesperson of Bangladesh Bank told The New Nation yesterday that the central bank is closely monitoring the lending activities of all the banks so that they can no longer provide any purposeful loans going beyond their credit limit.
“Yes, ADR of some banks have gone beyond limit. They expanded credit to the market ignoring BB’s rules,” he added.
Suvankar Saha also said the central bank will issue warnings to the banks asking to bring down their lending exposure within permissible limit immediately. In case of failure, BB will take punitive action against them.
Replying to a question, he said, “If any bank wants to go for aggressive banking ignoring the central bank’s rules, it will face legal action.”
The BB data show ADR of specialized public bank RAKUB stood at 105.60 per cent and it was 92 per cent for BASIC Bank. Both the banks have expanded their credit crossing their limit by over 20 per cent and 7 per cent respectively.
Similarly, the ADR of Agrani Bank’s Islami Banking window stood at 93.03 per cent, AB Bank at 86.23 per cent, Dhaka Bank at 85.72 per cent, IFIC at 85.56 per cent, One Bank at 86.64, Premier Bank at 88.79 per cent, Prime Bank’s Islamic Banking window at 91.29, Standard Bank at 85.10 and the National Bank of Pakistan at 87.25 per cent.
