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Roundtable Discussion on ‘Corporate Guarantee: Does It Work in Recovery of Loan?’ held at BIBM


Written by Manager

Thursday 18th July 2019

Press Release
Dhaka, 17 July, 2019:
A half day long roundtable discussion was held at the Bangladesh Institute of Bank Management (BIBM) on 17 July, 2019, in its auditorium.  Md. Nazimuddin, Executive Director of Bangladesh Bank and Director General of BIBM Chaired the Program. Dr. Prashanta Kumar Banerjee, Professor  & Director (R, D&C and Admn.& Acct.) of BIBM delivered the inaugural speech.
A paper titled ‘Corporate Guarantee: Does It Work in Recovery of Loan?’  was presented in the Roundtable Discussion by  Dr. Md. Mosharref Hossain, Assistant Professor of BIBM. Other members of the team are Dr. Md. Mahabbat Hossain, Assistant Professor of BIBM; Maksuda Khatun, Lecturer of BIBM; Reefat Zaman Shourov, Lecturer of BIBM and Mohammad Shahidul Islam, Senior Assistant Vice President of Dhaka Bank Limited. 
A good number of participants including senior bank executives, academicians, media representatives, faculty members of BIBM took part in the roundtable discussion. 
The broad objective of the discussion is to identify whether corporate guarantee works for recovering loan in Bangladesh. The study recommend that proper assessment by the bank before accepting the guarantee is crucial. Banks should accept the guarantee provided by a credible and solvent entity only. In absence of these, the guarantee will not be an effective in recovery of loan in case of non-repayment by the principal borrower.

S.M. Moniruzzaman,  Chairman of BIBM Executive Committee and Deputy Governor of Bangladesh Bank was present in the roundtable as the chief guest. Professor Barkat-e-Khuda, BIBM Muzaffer Ahmed Chair Professor & Former  Professor of Dhaka University; Helal Ahmed Chowdhury, Supernumerary Professor of BIBM & Former Managing Director of Pubali Bank Limited; Yasin Ali, Former Supernumerary Professor of BIBM spoke among others at the event.
Deputy Governor said, it is a harsh reality that the growing trend of NPL in the banking industry in Bangladesh is a major concern for policymakers and the stakeholders. The NPL has adverse effect on the bank’s day to day operations and profitability. Banks have to keep excess provision against defaulted loan which directly affects the net profit. Similarly, with increasing NPLs, Risk-weighted Assets (RWA) would increase; which, in turn, would create pressure on maintaining the regulatory capital.
He also said, as part of the credit risk management practices, banks usually accept securities in different forms to mitigate the potential credit risk. Obtaining security for loans is one of the safeguards that banks exercise to secure their interests. Commercial banks consider both tangible and intangible securities in this respect. With many other securities, giving a corporate guarantee to banks/lenders by a company, other than the borrower, is a usual practice in the normal course of financing trade and commerce he added.
Director General of BIBM said, this study will help to explore the enforceability and effectiveness of corporate guarantee in recovery of loan in Bangladesh. The paper will also help the regulators as it delineated the regulatory aspects of corporate guarantee in detail.
Barkat-e-Khuda, BIBM Muzaffer Ahmed Chair Professor & Former  Professor of Dhaka University said, Guarantees- whether issued by individuals or corporates, form an essential feature of doing business and creating or receiving credit. In this connection, the current study of BIBM on Corporate Guarantee may give us some key points for thinking further. 
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Members of the Institute

  • Bangladesh Bank
  • Sonali Bank Limited
  • Janata Bank Limited
  • Agrani Bank Limited
  • Rupali Bank Limited
  • Pubali Bank Limited
  • Uttara Bank Limited
  • Bangladesh Krishi Bank
  • Bangladesh Development Bank Limited
  • AB Bank Limited
  • National Bank Limited
  • Eastern Bank Limited
  • United Commercial Bank Limited
  • Islami Bank Bangladesh Limited
  • IFIC Bank Limited
  • Rajshahi Krishi Unnayan Bank
  • Standard Chartered Bank
  • Dutch-Bangla Bank Limited
  • Mercantile Bank Limited
  • ONE Bank Limited
  • Al-Arafah Islami Bank Limited
  • National Credit and Commerce Bank Limited
  • Trust Bank Limited
  • Southeast Bank Limited
  • Social Islami Bank Limited
  • The Hongkong and Shanghai Banking Corporation Limited
  • Standard Bank Limited
  • Export Import Bank of Bangladesh Limited
  • Mutual Trust Bank Limited
  • BASIC Bank Limited
  • Jamuna Bank Limited
  • Bank Asia Limited
  • First Security Islami Bank Limited
  • The City Bank Limited
  • Prime Bank Limited
  • Dhaka Bank Limited
  • Investment Corporation of Bangladesh
  • Bangladesh Commerce Bank Limited
  • BRAC Bank Limited
  • The Premier Bank Limited
  • Shahjalal Islami Bank Limited
  • State Bank of India
  • Habib Bank Limited
  • Commercial Bank of Ceylon PLC
  • Bank Alfalah Limited
  • Citibank, N.A.
  • National Bank of Pakistan
  • South Bangla Agriculture and Commerce  Bank Limited
  • Meghna Bank Limited
  • Woori Bank
  • NRB Commercial Bank Limited
  • Union Bank Limited
  • The Farmers Bank Limited
  • NRB Bank Limited
  • Shimanto Bank Limited
  • Bangladesh House Building Finance Corporation
  • Non Member NBFI
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