Saturday, September 22, 2018 | ePaper

BREAKING NEWS:

More benefits for private banks likely

Sponsors now demand to transfer govt fund as SND

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Special Correspondent :
The government is likely to announce its deposits with private banks as special notice deposits (SNDs) for the benefit of private banks.
It is going to take the decision under pressure of Bangladesh Association of Banks  (BAB) and the Association of Bankers' Association (ABB).
Bankers said SNDs are low yielding short-term deposit maintained with banks and financial institutions, which have to pay three to five percent interest on such deposits whereas the normal rate of interest on fixed term-deposits varies from 8 to 10 per cent.
"The government in principal decided to name its deposit as SNDs to ensure the access of low cost fund to the private banks. A circular in this regard may be issued soon," a finance ministry official told The New Nation yesterday, asking not to be named.
He said, the private banks will largely get the benefit from the move, however, depriving the state agencies of acquiring a higher interest earnings.
When asked, BAB Chairman Md Nazrul Islam Majumdar said they had placed the demand to the Prime Minister and the Finance Minister for channeling low cost fund for banking sector.
"Sourcing low cost fund is necessary to bring down to single digit," he added.
Nazrul Islam also said that Prime Minister Sheikh Hasina earlier gave us the order to bring down the interest rate to single digit to accelerate private sector investment. 
"We're working collectively for that purpose. Mobilizing low cost deposits is a must bring down the lending to single digit. So, the BAB demanded channeling of deposits in the private banks as SNDs to reduce cost of fund. We also got the government assurances in this regard," he added.
Under pressure of the bank sponsors, the government already slashed cash reserve requirement (CRR) and decided to deposit 50 percent of its liquid fund in the private banks to help tackle their liquidity crisis.
Protesting the government move, banking analysts fear fresh anarchy in banking sector and security of public funds.
"The government is providing undue facility to private banks one after another under pressure of the bank sponsors. It will invite long-term pain on the banking industry economy banking sector and destabilize the national economy," former Bangladesh Bank Governor Dr Salehuddin Ahmed told The New Nation.
Opposing the BAB's demand, Agrani Bank chairman Dr Zaid Bakht said that private banks would be benefited from this. The Finance Ministry should not order the transfer of government fund as SND.
According to the Bangladesh Bank, the total amount deposited in the country's banking sector is about Tk 10 lakh crore. Of this, Tk 2.0 lakh crores are government deposits and the remaining Tk 8.0 lakh crores are private deposits

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