Kazi Zahidul Hasan :
When the spillovers from the political turmoil are dampening performances of key sectors, such as agriculture, export, services and tourism, it is nothing exception for the banking sector, bankers said.
They said nonstop blockade is seriously hampering banking business as businesses cannot carry on their normal business activities leading to a fall in the demand for loans.
“The renewed political turmoil and slow economic growth have curtailed banking sector lending opportunity, asset growth and profitability,” former Bangladesh Bank (BB) governor Dr Salehuddin Ahmed told The New Nation on Friday.
He added that as political unrest is spoiling the investment environment, no body is ready to invest even banks ready to provide loan to them. So, banks should be concentrated on loan recovery rather disbursement of fresh loan, he said.
“Domestic banks continue to use a wait and see policy, slowing down their deposit collection and lending business which will help lowering their profit by the end of the current year,” said the former BB governor.
It would also helve private sector credit growth that was 12.67 per cent in November last year from the BB’s target of 16.5 per cent.
“Political uncertainty has posed a serious threat to not only the banking sector but also the overall economy,” said M Mahfuzur Rahman, an Executive Director of BB.
He said that ongoing volatility in the country’s political arena has cast doubt on banks’ ability to disburse loan to the private sector. “A prolonged political uncertainty could erode investors’ confidence, eventually affecting the lending business of banks,” he added.
“Political instability has affected the disbursement of loan, deposit collection and trade financing,” said M Farid Uddin, Managing Director of Rupali Bank Ltd.
He said: The current situation also forced most banks to put hold their investment decision in mega projects fearing credit risk. Businessmen and big borrowers are also reluctant to take loans due to sluggish business environment amid political unrest.
If the political turmoil continues, it will be very difficult to regain the momentum of the banking business by healing the wounds it suffered in 2013. And this will hit banking business severely in the days to come, he feared.
“The banking sector has been facing excess liquidity problem due to poor private sector credit growth resulted from infrastructure bottleneck, energy crisis and political uncertainty,” said a senior executive of a private commercial bank.
When an investment stagnancy prevailing in the country, a fresh political unrest is likely to further lowering the private sector credit growth as well as burdening the banks by further excess liquidity, he noted.
According to him, the banking sector’s excess liquidity now stands at Tk 100,700 crore.
He also said that the adverse business climate could also lead to the increase in the amount of non-performing loans in the banking sector because businessmen may not repay their loans due to political uncertainty.
When asked, he said, “Everything is subject to collapse or setback, with no exception of the banking sector.”
When the spillovers from the political turmoil are dampening performances of key sectors, such as agriculture, export, services and tourism, it is nothing exception for the banking sector, bankers said.
They said nonstop blockade is seriously hampering banking business as businesses cannot carry on their normal business activities leading to a fall in the demand for loans.
“The renewed political turmoil and slow economic growth have curtailed banking sector lending opportunity, asset growth and profitability,” former Bangladesh Bank (BB) governor Dr Salehuddin Ahmed told The New Nation on Friday.
He added that as political unrest is spoiling the investment environment, no body is ready to invest even banks ready to provide loan to them. So, banks should be concentrated on loan recovery rather disbursement of fresh loan, he said.
“Domestic banks continue to use a wait and see policy, slowing down their deposit collection and lending business which will help lowering their profit by the end of the current year,” said the former BB governor.
It would also helve private sector credit growth that was 12.67 per cent in November last year from the BB’s target of 16.5 per cent.
“Political uncertainty has posed a serious threat to not only the banking sector but also the overall economy,” said M Mahfuzur Rahman, an Executive Director of BB.
He said that ongoing volatility in the country’s political arena has cast doubt on banks’ ability to disburse loan to the private sector. “A prolonged political uncertainty could erode investors’ confidence, eventually affecting the lending business of banks,” he added.
“Political instability has affected the disbursement of loan, deposit collection and trade financing,” said M Farid Uddin, Managing Director of Rupali Bank Ltd.
He said: The current situation also forced most banks to put hold their investment decision in mega projects fearing credit risk. Businessmen and big borrowers are also reluctant to take loans due to sluggish business environment amid political unrest.
If the political turmoil continues, it will be very difficult to regain the momentum of the banking business by healing the wounds it suffered in 2013. And this will hit banking business severely in the days to come, he feared.
“The banking sector has been facing excess liquidity problem due to poor private sector credit growth resulted from infrastructure bottleneck, energy crisis and political uncertainty,” said a senior executive of a private commercial bank.
When an investment stagnancy prevailing in the country, a fresh political unrest is likely to further lowering the private sector credit growth as well as burdening the banks by further excess liquidity, he noted.
According to him, the banking sector’s excess liquidity now stands at Tk 100,700 crore.
He also said that the adverse business climate could also lead to the increase in the amount of non-performing loans in the banking sector because businessmen may not repay their loans due to political uncertainty.
When asked, he said, “Everything is subject to collapse or setback, with no exception of the banking sector.”
