Central bank asks banks to give more loans to housing sector

The Bangladesh Bank has asked the banks to increase loan flow to the housing sector to help it overcome the current crisis.

Bangladesh Bank Governor Atiur Rahman issued the directive in a meeting with the chief executives of the banks on Thursday.

The central bank organises the meeting of top bankers every three months. But this time it was held after four and a half months.

Deputy Governor SK Sur Chowdhury and Change Management Adviser Allah Malik Kazemi were also present at the meeting.

Chowdhury told reporters about the directive after the meeting.

“But it should not be overexposed. The order was to disburse loans maintaining highest level of alertness,” he said.

The central bank also asked the chief executives of the banks to consider giving wholesale loans to the housing sector alongside retail loans.

“It means that one bank or more gives money to House Building Finance Corporation and the corporation distributes the money among good clients. The banks and the corporation can sign an MoU on this,” Chowdhury said.

Real Estate and Housing Association of Bangladesh (REHAB) appealed to the governor on Mar 9 to extend loans to the housing sector.

The organisation reasoned depression, rise in prices of land and building materials, political instability and no bank loan for buyers.

Earlier, the central bank extended the ceiling of loans to the housing sector from Tk 10 million to Tk 12 million.

The ratio between loan and property was fixed at 70:30.

The Bangladesh Bank also warned the banks over sacking officials by threatening them.

The governor said he had received many such complaints.

“After review, it was seen that in many cases the bank officials were facing unlawful administrative steps or in a planned manner.

These are destroying the career of many good executives,” Governor Rahman told the

bankers in the meeting.

Deputy Governor Chowdhury said they had received complaints that some banks were firing 200 to 300 officials in one go.

“The banks are axing them saying that they are nonperformers. But how did they get appointed if they were nonperformers?” he asked.

He said the top bankers were asked to set realistic targets for deposit mobilisation and profits.

They were also asked to avoid keeping women officials at work beyond their normal working hours.

The banks were not to sanction loans without risks assessment and to follow proper rules in rescheduling loans.

The banks were also told to strengthen security at their branches in order to prevent robbery.