The Grameen Bank was expanding rapidly, planning to have branches throughout the country by the late s. About 70 percent of the borrowers were women, who were otherwise not much represented in institutional finance.
In addition, the incentive system for the banks stressed disbursements rather than recoveries, and the accounting and debt collection systems were inadequate to deal with the problems of loan recovery.
Lending institutions did not have adequate autonomy to choose borrowers and projects and were often instructed by the political authorities. Repayment terms were 4 percent for rural housing and 8.
Net credit to the government actually declined in FY As a result of this poor showing, major donors applied pressure to induce the government and banks to take firmer action to strengthen internal bank management and credit discipline. This represented a percent increase of reserves over the previous year, largely the result of higher remittances by Bangladeshi workers abroad.
The problem of credit recovery remained a threat to monetary stability, responsible for serious resource misallocation and harsh inequities. The rate of recovery on agricultural loans was only 27 percent in FYand the rate on industrial loans was even worse.
The bank had from the outset applied a specialised system of intensive credit supervision that set it apart from others. The most remarkable accomplishment was the phenomenal recovery rate; amid the prevailing pattern of bad debts throughout the Bangladeshi banking system, only 4 percent of Grameen Bank loans were overdue.
Managed by the Bangladesh Krishi Bank, a specialised agricultural banking institution, lending to farmers and fishermen dramatically expanded. Collective rural enterprises also could borrow from the Grameen Bank for investments in tube wells, rice and oil mills, and power looms and for leasing land for joint cultivation.
In the late s, the bank continued to provide financial resources to the poor on reasonable terms and to generate productive self-employment without external assistance. As a consequence, recovery rates began to improve in The policy was largely successful in reducing the growth of the money supply and total domestic credit.
Most of its customers had never dealt with formal lending institutions before. Denationalisation and private industrial growth led the Bangladesh Bank and the World Bank to focus their lending on the emerging private manufacturing sector. Although the government had begun effective measures to improve financial discipline, the draconian contraction of credit availability contained the risk of inadvertently discouraging new economic activity.
The number of rural bank branches doubled between andto more than 3, Its success, though still on a rather small scale, provided hope that it could continue to grow and that it could be replicated or adapted to other development-related priorities.
No sound project-appraisal system was in place to identify viable borrowers and projects. Its customers were landless persons who took small loans for all types of economic activities, including housing.Bangladesh - Current trends and development issues (English) Abstract This report provides a brief update on current developments in Bangladesh and contributes to the discussion of rural development, industrial development.
Banking sector in Bangladesh, according to Wikipedia, Bangladesh is a third world country with an under developed banking system, particularly in terms of the services and customer care provided by the government run banks. Recently the private banks are trying to imitate the banking structure of the more developed countries, but this attempt.
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governance practices in the banking sector of Bangladesh. The study targets to identify the practices in different CG issues e.g. level of commitment to good corporate governance, effective board practices, control environment and processes, information disclosure and transparency, and shareholders rights.
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The writer is an economist and columnist.9/6/ The banking sector suffers from discipline deficit killarney10mile.comancialexpressbd. Political connections must not block justice.
The foundation of our economy is eroded for lack of transparency.Download