4:42 pm - Saturday January 18, 8645

BB to continue ‘cautious’ monetary policy for H2  

The Bangladesh Bank (BB) will continue its existing ‘cautious’ monetary policy for the second half (H2) of the ongoing fiscal year (FY) 2014-15 with an aim to maximise economic growth by curbing inflationary pressure on the economy.

“The cautious monetary policy stance of H1 FY 15 will remain unchanged in H2 of FY15 without any new loosening or tightening,” BB Governor Atiur Rahman said while formally announcing the monetary polity statement (MPS) for the January -June period of this fiscal at a press conference held at the central bank headquarters in Dhaka Thursday.

BB governorThe central bank chief also said the BB will also maintain continuity and further strengthen the momentum of investment-friendly reforms in credit and financial policies accompanying the monetary policy in the H2 of FY 15 towards enhancing effectiveness of the financial markets as transmission channels.

The BB is going to introduce a rebate policy for rewarding regular borrowers, the central bank governor said, reports the Financial Express (FE).

“I instructed the BRPD (Banking Regulation and Policy Department) department on Wednesday to formulate a policy in this connection,” he disclosed this while answering a query.

Talking to the FE, a BB senior official said the BRPD is now making preparation to formulate the policy.

“We’re working for all, not for a certain quarter or group,” the BB governor said while replying to another query relating to the new large loan restructuring policy.

He also said no borrower will be eligible for such restructuring facility if he or she is found involved in any forgery or malpractice.

After restructuring, if any borrower fails to repay two consecutive instalments of their loans, then such facility will be cancelled, he added.

“The policy will help increase profitability of banks through reducing their amount of classified loans,” SK Sur Chowdhury, deputy governor of the BB, said, adding that it will also help create employment opportunities.

Regarding monitoring and supervisions, Dr Rahman said the BB’s supervisory oversight on credit disbursement and loan recovery disciplines in banks and financial institutions will intensify.

There will be particular emphasis on risk management, internal audit and internal controls, accountability and transparency, he added.

“Besides firmly discouraging abetting of habitual, wilful repayment default, creating room for helping out recovery of genuine businesses distressed by circumstances beyond their control with realistic debt restructuring in line with best international  practices is under the BB’s careful consideration,” he noted.

The ceiling for private sector credit growth remained unchanged at 15.5 per cent for the H2 of FY 15 while public sector including the government re-fixed it at 25.3 per cent from 24.8 per cent earlier.

Private sector credit will have space for 15.5 per cent growth, a level substantially higher than the 12.7 per cent November 2014 level, according to the BB governor.

“We’re ready to increase the ceiling of private sector credit growth in line with requirement,” Dr Rahman said while replying to a query.

Besides, access to external term financing and input import financing will remain open for industrial manufacturers, he added.