Local trade not facing finance problem despite global credit crunch: Atiur
May 31, 2009
Bangladesh Bank Governor Dr Atiur Rahman Saturday called upon the banks and financial institutions not to be unnecessarily overcautious in dealing with trade finances. “It’s better to be cautious in averting a possible collapse, but you should not be unnecessarily overcautious,” he told a dialogue at Bangladesh China Friendship Conference Centre.
“Trade is the engine of growth and trade finance is the lubricant of the engine,” Dr Atiur said, responding to a criticism that the central bank’s expansionary monitory policy might increase default loans, leading to a financial sector collapse in the country like elsewhere in the world.
International Chamber of Commerce, Bangladesh (ICC,B) and International Finance Corporation (IFC) jointly organized the dialogue titled ‘Rethinking Trade Finance 2009: An ICC Global Survey’ to release a survey report by ICC and discuss the possible impact of global credit crunch on the trade sector.
Trade experts, academics, researchers, senior bankers and trade body leaders took part in the discussion as ICC, B president Mahbubur Rahman welcomed them. ICC Banking Commission member Vincent O’Brien from Paris made a presentation on the survey report.
They said the trade sector in Bangladesh are not facing problem in getting access to finance. They, however, cautioned that the banks and financial institutions to take informed decisions on sanctioning loans to avert possible setbacks.
According to the survey ICC conducted among 130 banks in over 60 countries, tight credit conditions across the world might further reduce access to trade finance.
Some 51 percent of respondents indicated that their trade credit lines for financial institutions deceased between the last quarter of 2007 and the last quarter of 2008. The main reasons are more stringent credit criteria and capital allocation restrictions.
Governor Dr Atiur mentioned that Bangladesh Bank has been pursuing a prudent monetary policy and that is the reason the country is doing very well despite the global financial crisis.
“We should not be over complacent, however,” he said, adding that the central bank needs to take a realistic approach to build confidence in the trade sector.
In response to the apprehension of increasing default loans, he said:
“there is nothing to be worried as our net default loan is only 3 percent while we’re acting prudently.”
Dr Atiur said the country is doing well in the area of remittance inflow while the central bank is trying to bring more. He expected that the remittance would increase to US$ 9.5 billion during the current year from US$ 9.0 billion in 2008. “I want to make sure that there will be no barrier to investment by the NRBs in the productive sector. Bangladesh Bank and BOI will work together on the issue.”
He said the central bank would continue to promote domestic demands through the monetary policy, but that does not mean the central bank would undermine export sector (external demand).
The Governor stressed the need for an innovative approach in the coining public-private partnership (PPP) projects. It would help shape up the country in a manner that the international community would cite Bangladesh as a success story as soon as the global recession gets over, he added.
In his presentation, Vincent O’Brien stressed the need for taking care of the trade sectors.
“It’s the time that Bangladesh stands strongly despite the recession, but the country stands on only one sector (RMG),” he said, urging the banks and financial institutions operating here to utilize the maximum facilities they have for the benefit of the trade sector.
ICC, B president Mahbubur Rahman said, “The country needs to take careful decisions so that we don’t run into trouble.”
Source: The Bangladesh Today
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