Bangladesh Bank Governor Says Tk 5 Trillion Stolen Through Loans, Announces Stimulus Package

Bangladesh Bank Governor Mostakur Rahman has said that around Tk 5 trillion (500,000 crore) was stolen from the country’s banking sector in the name of loans, with most of the money allegedly laundered abroad.

Speaking at an event held at the Jahangir Alam Auditorium of the central bank on Saturday, the governor said nearly one-third of the banking system’s money is effectively missing, which is “politely described as non-performing loans.”

Earlier at the same event, he announced a special loan package worth Tk 60,000 crore aimed at reopening closed factories and revitalizing the economy.

Referring to efforts to reduce defaulted loans, the governor said the central bank is working on asset recovery. “A person who borrowed Tk 100 does not necessarily still have that Tk 100. We are now working on how to recover the money,” he said.

To facilitate larger financing, the central bank has increased the single borrower exposure limit. In addition, a separate loan package has been introduced to stimulate the rural economy.

Responding to concerns that expanding large-scale credit facilities could increase inflation, the governor said authorities are aware of where major loan exposures exist. “That is why we considered it reasonable to increase the limit for borrowers. It does not mean banks will lend indiscriminately. We expect banks to provide loans to good clients,” he added.

The governor also said the government will provide a 6 percent interest subsidy on the loans.

He clarified that no additional money would be printed for the package. “This is money from the banking sector and will be disbursed through banks. Some banks currently have excess liquidity, and the funds will be circulated back into the banking system through lending,” he said.

According to the governor, the central bank will issue circulars to address loopholes in the system.

Private sector credit growth has now fallen below 5 percent, and the economy is experiencing stagnation, he noted. “Businesses have run out of working capital. They do not have cash in hand. Given the current economic situation, we had no other option but to introduce this package to boost the economy,” he said.