Four state-owned commercial banks (SoCBs) have been asked to go for small and medium loans for faster execution of stimulus packages to accelerate recovery of the pandemic-hit economy.
The central bank has particularly put thrust on the implementation of the package designed for cottage, micro, small and medium enterprises (CMSMEs).
The advice was given at a meeting at the Bangladesh Bank (BB) headquarters on Thursday to review the memorandums of understanding of Sonali, Janata, Agrani and Rupali banks, officials said.
BB governor Fazle Kabir chaired the meeting.
The latest BB move came against the backdrop of slower progress in loan disbursement under the financial package for CMSMEs until September 30.
Banks and non-banking financial institutions (NBFIs) disbursed Tk 48.23 billion of the package by then.
The disbursed amount is 24.18 per cent of the total Tk 200-billion financial support for the sector.
The support is to help the CMSME sector to offset the adverse impact of the Covid-19 pandemic.
Loans amounting to Tk 58.82 billion were sanctioned for nearly 27,000 CMSMEs during the period, according to the central bank's latest statistics.
"We've also asked the public banks to implement the package in line with the policy to help create employment opportunities countrywide through boosting productive sectors," a senior BB official told the FE after the meeting.
Under the existing policy, banks and NBFIs can lend manufacturing and services 50 per cent and 30 per cent respectively while the remaining 20 per cent for trading purposes.
The SoCBs have also been advised to focus on SME (small and medium enterprise) lending, particularly the manufacturing sector, along with large loans to minimise risk, according to the official.
Senior bankers earlier told the FE that some strict conditions imposed by the BB as well as higher operational costs than those of large industrial and service-sector loans are mainly responsible for slower disbursement of such loans.
The central bank earlier extended the deadline for execution of the stimulus package for CMSMEs by two months to October 31 from August 31, 2020.
At the meeting, top SoCB executives informed the regulator of the measures already taken to expedite execution of the package in line with the BB's advice.
"We've already trained branch managers countrywide to execute the package for CMSMEs," an executive of a leading SoCB told the FE in reply to a query.
At the meeting, the BB also asked the SoCBs for measures to strengthen audit functions to ensure internal control and compliance in public banks.
"We're now trying to strengthen our audit divisions through appointing more efficient people in line with the BB requirements," the SoCB executive said in reply to another query.
The BB asked banks to gear up recovery drive, particularly for top 20 defaulters, soon to improve their financial health, cited the central banker.
The meeting also reviewed issues like recovery of classified loans, particularly from top 20 defaulters, credit growth, liquidity situation, capital position, operating expenses and cost of funds of the SoCBs.
The SoCBs have already been asked to strictly abide by the existing core risk management guideline to improve their efficiency.
The BB earlier identified six core risk areas in the banking sector: credit, asset and liability, foreign exchange, information technology, internal control and compliance, and money laundering.
Chief executive officers-cum-managing directors of the banks and four observers were present at the meeting.
The central bank earlier appointed the observers to the SoCBs for improving financial health through proper implementation of the memorandums.