Banks gave more loans than deposits; something sinister afoot?

Banks are disbursing more loans compared to deposits. In the last one year, banks handed out Tk 1333.43 billion against a total deposit of Tk 904.22 billion. This means banks disbursed Tk 429.21 billion more than what they took as deposit, a Bangladesh Bank report states.
According to rule, general banks can give Tk 85 at the most as loan if the deposit is Tk 100. Islamic banks can give loans up to Tk 90.
At a bankers’ meet, held in January last, Bangladesh Bank governor, Fazle Kabir, gave explicit orders against aggressive investment.
In the last two years, (from June, 2016 till June, 2018) banks disbursed Tk 2402.61 billion against a deposit of Tk 1739.52 billion.
In the two years, an additional Tk 663.09 billion was disbursed. There is a feeling that loan fraud; uncontrolled corruptions are behind this discrepancy.
Executive director of SANEM, a non-government research agency, told Bangla Tribune, “We do not see a rise in investment though loan disbursement has increased recklessly.”
There must be vigilance to find where the loaned money is going, especially during an election year. For disbursing more loan than the limit, banks are failing to maintain the deposit amount as stipulated by the central bank.
To increase deposit, banks have raised interest which has also affected the interest rate for loans.
Many banks are facing liquidity crisis. Dhaka Bank’s MD, Syed Mahbubur Rahman, told Bangla Tribune, “Those which gave loans exceeding the limit cannot give out big loans anymore.”
According to information, Basic Bank’s deposit fell but loan has risen by 9 per cent. Around thirty banks are disbursing more loans than the specified limit.
The Rajshahi Krishi Unnayan Bank disbursed 100.32 per cent loan from its total deposit with funds loaned from government; on the other hand, Farmers’ Bank is now failing to pay back its clients.