BB, commercial banks differ on how to invest excess liquidity

Bangladesh Bank wants this ‘idle money’ be invested in micro, small and medium-scale industries and in agriculture sector.

Commercial banks, on the other hand, are demanding that more opportunities be created for investing in ‘real’ industrial sector.

They are saying “real entrepreneurs” need to come forward; or else, it will not be possible to invest excess liquidity that the banks have.

Top executives of the banks are of the view that to encourage entrepreneurs to invest, the problem of getting land for the industry and energy crisis should be resolved.

Development of road infrastructure and political stability are the two other criteria they have emphasised.

The opinions were expressed at the bankers’ meet on Tuesday.

Commercial banks claim they have an excess liquidity of over Tk 1,000 billion.  But, Bangladesh Bank disagrees with the figure.

The Association of Bankers, Bangladesh (ABB) Chairman and Managing Director of Mutual Trust Bank Anis A Khan told journalists after the meeting that the surplus liquidity was a matter of concern for them.

“We are saying, for utilising the excess liquidity, entrepreneurs should be encouraged to invest. But for that to happen, the entrepreneurs should be given opportunities.

“Land should be made available for industry. Though fuel supply has increased, it is still not adequate. This has to be solved.  Road condition needs to be improved,” he said.

He also said there was some unrest despite political stability.

Deputy Governor of Bangladesh Bank SK Sur Chowdhury said, “We have suggested that with the excess liquidity investment in micro, small and medium-scale industries and agriculture sector be increased.

“This will end the investment drought and help reach investment to the common people,” he added.

At the meeting, the central bank also suggested that instead of giving honorarium, freedom fighters should be given housing loan.

Commercial banks, however, have some reservations about the proposal. They pointed out that since most of the freedom fighters are sexagenarian, it would be difficult to recover the loan. 

Sur Chowdhury said they also suggested giving loan to the girl students in remote areas.

“Apart from that, we have noticed a significant difference in the number of import letter credit opening and settlement. We have asked the banks to examine why this is happening,” he said.

The ABB also proposed that opportunities be given for out-of-the-court settlement of cases pertaining to loan default.

It also demanded that the fee charged on verification of customers’ information from Election Commission’s data bank be reduced to fifty paisa from Tk 2 per click.