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Finance minister’s parley with banking bosses: Troubled loans to top agenda

REZAUL KARIM AND FHM HUMAYAN KABIR | Published: December 01, 2019 10:01:10 | Updated: December 01, 2019 13:06:06


Picture used for illustrative purpose only

Finance minister will sit with chiefs of private and public sector banks to discuss the issues of non-performing loans and banking sector volatility, officials said.

Officials said finance minister AHM Kamal has called the chairmen and managing directors (MDs) of all private sector and state-owned commercial banks for an emergency meeting today (Sunday) in Dhaka.

The minister will mainly discuss the soaring soured loans, interest rates and merger of some troubled banks, the officials said.

They said since the classified loans in the banks are rising and some banks are facing troubles in their operations, the minister will try to find out the solutions to the problems.

Additional secretary of the financial institutions division Arijit Chowdhury told the FE that the minister would review the overall situation in the country's banking sector.

In January, after a meeting with the Bangladesh Association of Banks, or BAB, the finance minister said the troubled loans would not increase from that day.

Besides, the government offered special facilities for the payment of defaulted credit aimed at reducing the amount of bad loans.

In May this year, the central bank offered a special facility to the defaulters allowing them to reschedule loans by paying a 2.0 per cent down-payment on their arrears.

Under the facility, the defaulters can repay their loans at 9.0 per cent for a maximum 10 years.

The volume of troubled loans has hit a record high of Tk 1.16 trillion until September this year, which has resulted in the vulnerability of banking operations in the country.

Such loans have swelled by some 24 per cent to Tk 1.16 trillion until the first quarter of the current fiscal year 2020, from Tk 939.11 billion a quarter ago, the Bangladesh Bank statistics showed.

The amount of classified loans was Tk 993.71 billion a year ago, the BB said.

Besides, the government has failed to bring down interest rates of the banks to the single-digit band,

although the finance minister's announcement in August.

After a meeting with MDs and chief executives of banks in August, Mr Kamal said the single-digit interest rates - a flat 9.0 per cent for lending and 6.0 per cent for deposits - will be implemented in all 59 banks from October.

The average lending rate in October this year for all banks was 9.58 per cent and that of deposits was 5.66 per cent, the BB data showed.

The finance minister had earlier announced that the government would suggest the merger of problem banks after a proper audit of their financial health.

Another finance official said since the banking sector is passing a bad time, the minister may give some directions to the financial sector executives.

BRAC Bank MD Selim R. F. Hussain said the finance minister has invited them for attending the meeting to discuss the banking sector.

"But I don't know the details of the agenda of tomorrow's meeting," Mr Hussain told the FE.

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