BB governor asks banks to create forced loans

Governor of the Bangladesh Bank (BB) Dr Ahsan H Mansur has asked commercial banks to create forced loans against importers who have failed to make letter of credit (LC) payment on maturity dates.

He gave the instruction at the bankers' meeting held on Tuesday in light of reports that some banks are not complying with the directive to create forced loans to cover LC payments, which may cause the country to lose its reputation overseas, according to meeting insiders.

The central bank high-ups also asked the top executives of commercial lenders to be careful so that no exporter can get the opportunity of money laundering through under-invoicing.

Seeking anonymity, a central bank official who attended the meeting said a circular issued earlier instructed banks to craft forced loans against importers for failing to fulfil LC payment obligations.

But there are a few banks that do not follow the directive and try to clear LC payments in other ways. Thus the country may lose its reputation abroad due to payment delays, he said.

"That is why the governor emphasised it," he added.

Emerging from the meeting, Managing Director and Chief Executive Officer of Mutual Trust Bank Syed Mahbubur Rahman said the central bank asked bankers to remain alert to avert any possible incident of money laundering through under-invoicing during exports.

The experienced banker said the regulator also suggested that bankers create awareness among the people to popularise digital payment tools in order to discourage cash usage and achieve the greater objective of creating a cashless society.

He also said the central bank informed them that the inflationary pressure had started easing in recent months, though the target has not been achieved.

"But the Bangladesh Bank is confident about bringing down inflation to its targeted levels in the coming months," added Rahman.

Commercial banks' over-reliance on government securities was also discussed at the meeting. The banking regulator advised bankers to spread the holdings of treasury bills and bonds to the retail level to reduce liquidity pressure on banks.

Meeting sources also said the central bank shared its initiative to create a special fund of Tk 250 million for the families of those killed in the 2024 July-August mass uprising and also the treatment of the injured victims.

Of the total fund, the central bank alone will contribute Tk 140 million from its own resources, while banks have been asked to provide the rest.

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