Country Report Bangladesh January 1996 Main report

Banking & Finance: Clampdown on indebted commercial bank directors

As part of its drive to tighten up the regulation of the banking system, the BB has ordered directors of private commercial banks who have not been servicing their outstanding loans to be dismissed. In cases where the loan was greater than the value of the director's shares in the bank (the majority of cases), legal proceedings have been threatened if the credit is not repaid within two months. Of the directors who were implicated, 13 paid off their loans totalling Tk120m ($3m) and a further 13 (owing Tk480m or $12m) applied to the High Court to stay the order. Four other directors resigned; one owed over Tk30m, and the other three together owed Tk800m. However, the scale of these outstanding loans pales beside reports that two of the country's largest business groups (no names were given) have borrowed Tk4.75bn ($118m) from three private commercial banks, IFIC Bank, Uttara Bank and AB Bank "by disregarding banking practice and existing laws". As a result, the managing directors of those banks have been dismissed. The most recent reports indicate that these loans are being serviced.

© 1996 The Economist lntelligence Unit Ltd. All rights reserved
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