Sunday, January 20, 2019 | ePaper
BB asks local banks
Share risks with overseas and multinational banks
The Bangladesh Bank (BB) on Thursday asked local scheduled banks to share risks involve financing procurement of large infrastructure of the country with international bank or a multinational development bank on the basis of dividing profits.
In this case, the central bank also directed all the scheduled banks to keep provisions against payment guarantee to company origin from where supplies come for local client.
While explaining this, General Manager of Banking Regulation and Policy Department Abu Farah Md. Naser said that the step was to minimize risks of local banks in case of financing procurement of big projects.
Â "Otherwise, a bank financing such big projects might be affected seriously if the client fails to pay the company origin generates supplies," Md. Naser said.Â Â Â
He said the country is now developing a series of large infrastructure.
Â "They will need huge procurement involving millions of money. So, provisioning will safeguard banks in this case," he said.
According to BB directives, from now onward, an ordinary schedule bank shall keep one percent provision from its gross amount of investment for facilitating a procurement of a large infrastructure like power plant or construction of bridge and roads or railway.
For the banks with grade-2 in credit rating, the provisioning requirement is 0.50 percentÂ and for banks with grade-3 and 4, the provisioning rate is 0.75 percent, according to a BB circular served on all the scheduled banks on Thursday.Â Â Â
For the banks with grade-1 credit rating requires no provisioning.
Md. Naser said that banks were asked to share risks with international bank or multinational development bank like Asian Development Bank.
Â "To obtain counter guarantee from international bank like ADB against such big financing, local banks will require sharing profits. But, it will save our local banks," he added.