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The Bangladesh Bank (BB) has decided to submit a set of recommendations to the Ministry of Finance (MoF) for amending three relevant laws and regulations to help reduce the volume of classified loans in the country's banking system.
The BB will suggest amending Banking Companies Act, Bankruptcy Act and Negotiable Instrument Act along with Merger and Acquisition (M&A) regulation.
"We're now working on the appropriate recommendations," a senior official of the central bank told the FE.
He also said bringing necessary amendments to the acts and regulations is highly needed to reduce the amount of non-performing loans (NPLs).
"The relevant laws and the regulations should be amended, considering the latest scenario of banking business. It will also help ensure good governance in the country's banking sector," he added.
Talking to the FE, another BB official said a high-level meeting is scheduled to be held at the central bank headquarters in Dhaka tomorrow (Sunday) to review overall progress of the BB's latest moves (taken in this regard).
He also said at least four departments of the central bank are now involved in preparing the recommendations.
On the other hand, the Financial Institutions Division (FID) under MoF is also working to place recommendations for reducing the volume of default loans in the banking system.
The FID earlier formed a three-member committee to prepare the recommendations on the basis of discussions with the senior officials of the BB and four leading state-owned commercial banks (SoCBs).
The body is set to meet senior officials of the Sonali Bank Limited tomorrow (Sunday), a senior official of FID told the FE.
"We may also meet senior members of the Association of Bankers, Bangladesh (ABB) on the same ground."
He further said the committee is working to bring necessary amendments to the Artha Rin Adalat (money loan courts) Act too for settling the cases within the shortest possible timeframe.
Besides, the FID committee is preparing suggestions to reduce the amount of default loans in the banking system without hampering the country's overall business activities, another official added.
The team has already exchanged views with senior officials of the central bank and three of SoCBs in this connection.
The government body has been formed in line with the decisions, taken at a meeting at MoF on January 10 with the newly-appointed Finance Minister A H M Mustafa Kamal in the chair.
After the meeting, the minister had said the government would amend Banking Companies Act to recover the default loans.
The regulators' latest moves came against the backdrop of rising trend in default loans in the country's banking system in the recent months.
The volume of NPLs jumped by nearly 34 per cent or Tk 250.67 billion to Tk 993.70 billion as on September 30, 2018, from Tk 743.03 billion as on December 31, 2017, according to BB data.
The share of classified loans also rose to 11.45 per cent of the total outstanding loans in September 2018 from 9.31 per cent in December 2017.
The default loans include substandard, doubtful and bad/loss of total outstanding credits, which stood at Tk 8,680.07 billion as on September 30, 2018, from Tk 7,981.96 billion as on December 31, 2017.