Bad loans worrisome for economy: ICC,B

International Chamber of Commerce, Bangladesh (ICC,B) President Mahbubur Rahman has said continuous increase in bad loans is very alarming for the banking sector as well as the economy.

"Because of bad loans banks are faced with capital deficit. We've observed that the government has been providing recapitalisation funds to the nationalised banks to meet capital adequacy ratio set by the Bangladesh Bank," said he.

The ICC,B President said it while addressing a workshop titled 'Capital and Credit Risk Distribution', organised by ICC,B.

He also said banks do not have enough technical expertise to properly analyse the loan files, reports UNB on Monday.

Besides, the defaulters were not being punished as the bankruptcy court is out of commission and this encouraged people to become debt dodgers, said Rahman.

Non-performing loans (NPL) in Bangladesh's banking sector, according to reports published by the Bangladesh bank, have surged over Tk 800-billion.

The figure would have been much higher if bad loans had not been written off, which is around Tk. 450 billion said the ICC,B on Monday.

As a result, the banks are having difficulties in providing credit to those who are good borrowers for the expansion of their business or to new entrepreneurs.

"Besides, the situation is similar in the state-run specialised banks," Rahman added.

ICC, B Banking Commission Chairman & CEO Bangladesh International Arbitration Centre Muhammad A. (Rumee) Ali said Bangladesh is going forward to achieve middle-income status by 2021 which created huge need for capital requirement in infrastructure sector.

"But because of bad loans banks are suffering from capital adequacy," he said.

He told the participants (bankers) that to manage your capital is your utmost important duty. He also mentioned that alternative dispute resolution and mediation will be very much useful to reduce the bad debt of the commercial banks.

Chairman, Association of Bankers Bangladesh and Managing Director and CEO of Mutual Trust Bank Limited Anis A Khan said the world trade is moving towards digitisation and as such Bangladesh has to prepare itself to keep pace with the international trade. The bankers of our country must upgrade themselves through modern tools and rules. To become a good and efficient banker, one should experience the trade finance in the banking carrier.

He also said the Association of Bankers Bangladesh has been actively working with the Bangladesh Bank to develop the banking sector and create a corporate culture in the sector.