Staff Correspondent

The central bank has directed banks to cut investment in high-risk unproductive sectors, including real estate, to prioritise economic growth, the Bangladesh Bank governor said Wednesday.

After a meeting with chief executives of public, private and specialised banks, central bank chief Salehuddin Ahmed told reporters that the quality of bank loans would be specially supervised to make sure that banks properly complied with the directive.
 
The governor said monetary policy for July-December had been designed giving the highest priority to productive sectors.
 
"Creating employment by increasing growth, achieving expected GDP growth and cuts in poverty have been given emphasis in the monetary policy," he said.
 
"The banks are being directed to make investments in line with that monetary policy."
 
The governor pointed out banks often tended to invest large amounts in risky sectors like real estate for higher profits, ignoring more productive sectors.
 
He lauded the majority of banks for narrowing the spread between deposit and lending rates to 5 percentage points, according to the central bank's directive.
 
But some banks were non-compliant, he said, adding: "some were trying to slim the spread by raising the interest rate on deposits and maintaining high interest rates on loans."
 
He warned those banks of stern action. "Action will also be taken against the banks yet to cut the spread to 5 percentage points," he added.
 
Salehuddin also said bank executives assured him there was no liquidity crisis in banks.

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