Loan from the reserve is an ominous sign for economy
FOR the first time, the central bank has taken initiative to lend to the private sector at low-interest rates from foreign currency reserve. Though Rupali Bank initially agreed to act as an agent in this lending initiative, later the bank withdrew the offer. Experts have been wondered the initiative to lend from the reserve can override the credit inflow inside and outside the central bank. When due to the culture of non-performing loans, default loans are on the rise in general and if the number of reserves defaulted, the entire economy will be collapsed with breakdown of restoration valve. During this pandemic, if the lend from reserve implemented, subsequent loan defaulters would be multiplied.
Amid the ongoing financial anomalies, suppliers or buyers who are taking credit in foreign currency from abroad are also becoming defaulters, banks and non-bank financial institutions will also be defaulters. If the reserve loan is not repaid, the country's notoriety will be worse. Money has also been drain out from the stock market. Reserve is the last hope of a state. If the loan is not repaid for any reason, it will be ruined.
Neither the central bank nor commercial banks have experienced in this regard. Experts opined that before taking such an initiative, there was a need for a review detailed of the risks and possibilities by discussing it at the policy-making level. But, the matter was not well communicated even at the highest level of the central bank. Even the Board did not discuss or decide on this issue. Many have been surprised when such a proposal came from a commercial bank to the central bank without any discussion, policy or decision.
Loans from the reserve cannot be given directly to any customer as there is no direct transaction of the central bank with the customers. For this, the central bank will give loans to customers through banks or financial institutions. Now the situation is normal in the country. In such a situation, it is not reasonable to give a loan from the reserve. If the loan from the reserve is not repaid for any reason, the image of the country will severely be tarnished and the country will be in grave danger.