Documente Academic
Documente Profesional
Documente Cultură
http://print.thefinancialexpress-bd.com/2016/06/25/144994
the transactions involved export of RMG and import of raw materials against the master export LC. Recently, the
inspection team of the Bangladesh Bank (BB) has detected serious breach of banking rules in opening letters of
credit (LCs), creating forced loans to make LC payments, allowing borrowers to use the same account for export
and import transactions and counting interest on overdue loans and showing the same as income in the balance
sheet of the branch.
Forced loans refer to a type of lending which banks make to clients regardless of necessity of the loans in business.
According to the BB inspection team report, one customer was allowed to use the same account, opened with the
local branch of the Rupali Bank, for export-import transactions, which is a gross violation of the banking rules.
Banks now extend forced loan to clients reportedly without their need for loan. This is an allegation against newly
established banks in private sector. In recent times, branch managers of different banks alleged that they were
given a time-bound target to distribute loans, which made them take refuge in forced loans to meet the targets.
"The Bangladesh Bank should impose a bar on such practices to stop forced loan distribution and issue a guideline
to fulfil the target," said a branch manager of a private bank.
The 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 fulfil the loan distribution target
within a deadline to distribute loans. As a result, they have to pursue different ways including offering forced loans
to different corporate houses or individuals from an obligation of fulfilling targets.
The short-term trade finance is a part and parcel of banking business. It should not be converted to NPL as a
regular loan like commercial and agricultural loans. There should be an end to providing 'forced loans' to
entrepreneurs as a lot of big lending as forced loans is becoming classified and increasing the load of nonperforming loans.