Banks want to publish names of top loan defaulters on newspapers

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Eight state-owned banks are mulling to reveal the names of top loan defaulters by publishing advertisements in daily newspapers, aiming to curb the upward trend of default loans.

This is just one of the recommendations from the banks, which might be finalized in a meeting on Tuesday by the Financial Institutions Division.

Total of 63 recommendations were tabled to revive the state-run banks in a workshop held at Dhaka’s CIRDAP auditorium last month.

The workshop was titled “How to Meet the Challenges of State-Owned Banks.”

Finance Minister AMA Muhith attended the workshop, which was organised by the Banking Division of the finance ministry.

Banking division Secretary Md Eunusur Rahman told reporters that they will finalize the recommendations on Tuesday’s meeting in a bid to resolve several problems that have been marring the state-owned banks.

“Several members of parliament engaged in a heated debate during a recent parliamentary session over the publishing of loan defaulter’s names. As such, there has been some uncertainty regarding this issue,” the secretary added.

He said that they have been trying their best to incorporate all of the major recommendations.

The recommendations also include calls to reduce the number of stages for loan approval in state-run banks and provision of more authority of bank officials at all levels so they can take instant decisions to take required action against loan defaulters and written off loans.

In addition to that, the technological capacity in remote branches of state-run banks will be increased for smooth operation.

The state-owned bank authority will reward regular borrowers and take legal action against loan defaulters, one of the recommendations read.

Default loans at state-owned banks accounts for 27% of total default loans in Bangladesh’s banking sector. Earlier in September this year, participants at a conference organised by the banking division raised questions about the activities of the managing directors of state-run banks, who draw monthly salaries of Tk.4 lakh but do not take any stern action against those who default on loans.

The government has disbursed a total of Tk. 9,639cr to meet the capital shortfall in the eight state-owned banks in the last four years.

The majority of this amount was channeled to Sonali and Basic bank. The top 20 loan defaulters with state-run banks are the clients of Sonali Bank.