The Financial Express

Banks, financial institutions asked to lower NPLs, ramp up stimulus delivery

| Updated: November 19, 2021 19:59:23

- Picture used for illustrative purpose - Picture used for illustrative purpose

Government's finance authority asks the state-owned banks (SoBs) and financial institutions (FIs) to expedite implementation of stimulus packages by ramping up fund disbursement and recovery, and lowering the loads of non-performing loans (NPLs).

The prod comes from the Financial Institutions Division (FID) of the Ministry of Finance in meetings with the top brass of SoBs and FIs that discussed the modalities of enhancing their lending operations in order to give a much-needed shot in the arm of the economy now on a turnaround from pandemic shocks.

FID Secretary Sheikh Mohammad Salim Ullah in two separate meetings with the chief executive officers (CEOs) of the banks and financial institutions last week gave the directives, officials said.

After discussing the overall conditions of the state-run banks and the FIs, the meetings asked the managing directors to let the ministry know their action plan for lowering the NPLs.

Presently, the rate of NPLs in the state-owned banks is over 20 per cent, the meetings noted, and stressed the need to cut it down drastically to make the banks vibrant.

However, bankers at the meetings while defending high NPL ratios of SoBs said the rate of NPLs in the state banks during a span of last five years remained below 5.0 per cent. But the banks being very old ones have to bear the burden of long-pending unpaid loans and thus the rate of NPLs is higher.

The FID secretary asked the bank chief executives to bring down the rate of NPLs at a reasonable level, officials added. The CEOs have also been asked to be more prudent in the distribution of stimulus packages to help the industry and the economy make a quick recovery from the impacts of pandemic-linked disruptions.

The meeting also discussed that the small and medium enterprise (SME) sector did not get a fair share in getting loans from the stimulus packages the government announced for them.

So, the bank bosses have been asked to give importance to the distribution of funds from stimulus packages to SME-sector entrepreneurs.

Agrani Bank managing director Mohammad Shams-Ul Islam told the FE the newly appointed secretary of the financial institutions division reviewed the overall performance of the banks and financial institutions.

He said the issues discussed in the meetings are related to the annual performance agreements the banks sign every year with the ministry. "The ministry from now on will further closely monitor the performance of the banks and financial institutions," he said, referring to the meeting discussions.

Contacted Sunday, the FID secretary said the bankers have more scope to give better services to the customers.

"At the same time they need to improve the overall performance of the banks," he said, adding that the CEOs have been asked to lower the NPLs to a rational level.

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