UNB, Dhaka :
Speakers at a seminar on Thursday suggested putting an end to the ongoing practice at banks to offer “forced loan” to entrepreneurs, saying that many large loans given as forced loans are becoming classified.
“Forced loan is unnatural, thus it becomes classified from the day one,” said Khondkar Irbahim Khaled, a former deputy governor Bangladesh Bank, at the seminar, titled ‘Large Loan Financing by Banks in Bangladesh: Implications and Challenges’.
Forced loan is a kind of loan which banks provide to their clients without judging the actual need of the business. The banks’ main intention behind such loans is to make good return and fulfill the loan distribution target.
Bangladesh Institute of Bank Management (BIBM) organized the seminar with its director general Dr. Toufiq Ahmed Chowdhury in the chair.
Deputy Governor of Bangladesh Bank Abul Quasem, managing director of Islami Bank of Bangladesh Ltd Mohammad Abdul Mannan, managing director & CEO of NCC Bank Golam Hafiz Ahmed, and former managing director of AB Bank Kaiser A Chowdhury spoke at the seminar.
Prof. SA Chowdhury of BIBM and his team presented a keynote paper at the seminar on the issue. A good number of bank professionals of different banks also attended the function.
At the seminar, branch managers of different banks alleged that they are given a time-bound target to distribute loans. As a result, they have to pursue different ways including offering forced loan to different corporate houses or individuals from an obligation of fulfilling target.
“BangladeshBbank should impose a bar on such practices to stop forced loan distribution and issue a guideline to fulfill the target,” said Jyotirmoy Goswami, branch manager of a private bank.
Khondkar Ibrahim Khaled, who also served as managing director and chairman of different state-owned banks, said that when banks offer large loan, they go for forming syndicate. But when they go for realizing that loan, there is no syndicated approach.
“Banks should form recovery club or recovery syndicate for realizing their loan amount,” he added.
Islami Bank’s managing director Mohammad Abdul Mannan said that in many cases, large loans are concentrated on certain people in certain cities. There should be a change in the approach of large bank financing keeping in view the benefit of large group of common people, he added.
NCC Bank’s CEO Golam Hafiz Ahmed said it is true that entrepreneurs sometimes divert their loans from one project to another project to make more profit. Until the loan is not classified, it is okay. But when it becomes classified, it’s difficult to realize.
He, however, said that now there are many third generation businessmen who finally become successful in their business through taking large loan.
Dr. Toufic Ahmed Chowdhury said many entrepreneurs go for buying land and flats through the money diverted from their loans.
