New finance minister sounds tough on loan defaulters

Asks bankers to bring down NPL to 7.0-8.0pc

FE Report | Published: January 08, 2019 09:48:24 | Updated: January 13, 2019 16:54:42

A H M Mustafa Kamal

Newly-appointed Finance Minister AHM Mustafa Kamal asked the bankers on Monday to go tough on delinquent borrowers to help lower the size of non-performing loans (NPL).

He told them to bring down the (ratio of) NPL to 7.0-8.0 per cent from the existing 13 per cent which, he said, is quite high.

Mr Kamal said loans should be given to right kind of people only, and urged the bankers not to spare even 'relatives' in the case of loan recovery.

The minister said these while talking to bankers and officials at Bangladesh Secretariat soon after taking the oath of office as the finance minister.

"We won't send anyone to jail. But we have to take back public money from the defaulters," he said.

The minister further said the spread between lending and deposit rates is still very high, which needs to be lowered.

Mr Kamal expressed the hope that in the current fiscal year, 2018-19, the gross domestic product (GDP) growth rate will be close to 8.5 per cent.

The minister also talked about reform in the banking and other sectors.

He underscored the need for expediting revenue collection and exploring new arenas for raising revenue.

"In revenue sector, if we maintain the present trend, our achievement will be in arithmetic proportion. But we have to turn it into geometric proportion, which is not a tough job."

Mr Kamal said some 400 million people (in the country) are now in the middle-income category, each of whom can pay Tk 20,000 as income tax every year.

"But they don't pay the tax. Only 1.5 million people submit income tax returns annually."

"We couldn't penetrate the sector properly. We have to be rough and tough on people who dodge taxes," he added.

The finance minister said in some cases soil is being exported instead of manufactured goods. "But showing the export receipt those unscrupulous people are taking away cash incentives from the government. It has to be stopped."

He also said the rate of value added tax (VAT) has to be bearable. Otherwise people would not pay it.

"And whatever rate we decide, the collection has to be cent per cent. For that we have to provide electronic cash register machines to businesses, and also appoint more revenue collectors."

The minister said resources are limited in Bangladesh, and that has to be mobilised properly.

"We also have to ensure maximum utilisation of resources," he noted.

Earlier on the day, former finance minister AMA Muhith was given a farewell reception at the conference room of the finance ministry.

He said the country had seen tremendous economic development during the last ten years.

Now none can brand Bangladesh as a beggar's place, Mr Muhith opined.

"In the next five years the country's economy will reach such a position that none will be able to obstruct its development," he added.


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