Bangladesh Bank Governor Md Mostaqur Rahman has revealed that Tk5 lakh crore has been stolen in the name of loans from the banking sector, with most of the amount laundered abroad.
“We are reaching a situation where Tk 5 lakh crore has been stolen. One-third of the money in the banking system is gone, which we politely call defaulted loans. Part of it has been stolen, and there is no collateral against it,” he said on Saturday.
Speaking at the central bank’s Jahangir Alam auditorium, the governor announced a special loan package of Tk60,000 crore to revive the stagnant economy and reopen closed factories.
From this package, a refinance fund of Tk41,000 crore will be formed from excess liquidity in commercial banks, while the remaining Tk19,000 crore will be provided by Bangladesh Bank from its own income.
Of the total, Tk40,000 crore will be used to activate the economy, and Tk20,000 crore will be for closed factories.
The governor clarified that the government would provide a 6 per cent interest subsidy on these loans, and no extra money will be printed.
“This is money from the banking sector; it will be provided from the banks themselves. Some banks have excess liquidity; that will be lent out and then brought back into the banks,” he said.
Stating that efforts are underway to recover defaulted and laundered money, the governor said, “The person who took Tk100 does not have Tk100. We are now working on how to recover this money.”
Private sector credit growth has fallen below 5 per cent, and the economy has become stagnant. The governor believes there is no alternative to this loan package.
“The working capital of businesses has dried up. They have no money. Given the state of the economy, at this moment we have no other choice. It had to be done to boost the economy,” he said.
When asked whether increasing such a large amount of loan facilities would increase inflation, the governor noted that the Taka has depreciated by about 40 per cent against foreign currency, increasing the price of imported raw materials and reducing the borrowing capacity of large borrowers.
“For this reason, it seemed reasonable to us to increase their limit. This does not mean that banks will just give out loans. We expect banks to lend to good borrowers,” he said.
From the Tk41,000 crore refinance fund, Tk20,000 crore will go to closed factories and the service sector, Tk5,000 crore to CMSMEs, Tk10,000 crore to agriculture and the rural economy, Tk3,000 crore to export diversification, and Tk3,000 crore to agricultural financing in North Bengal.
From Bangladesh Bank’s Tk19,000 crore fund, loans will be allocated to pre-shipment credit refinance, cottage and micro industries, leather goods and footwear exports, youth employment, the rural economy, frozen shrimp and fish exports, green financing, foreign employment, startups, and the innovation economy.
