Finance Minister AHM Mustafa Kamal said on Tuesday they would bring necessary changes in the existing laws to prevent possible buildup of bad loans in the state-owned commercial banks (SoCBs).
He said they analysed the past records of non-performing loans (NPLs) in those banks and found that the state-owned lenders faced difficulties with settling the bad loans due to legal complexities.
"So, we have decided to bring required changes in the existing laws to rid the banks and financial institutions of the malaise," the minister told newsmen after a meeting with the high-ups of the state-operated four banks.
The meeting was held at the National Economic Council (NEC) conference hall in the capital with the topbrass from Sonali, Agrani, Rupali and Janata banks attending it.
The finance minister said the changes would ensure adequate collateral for loans either in the form of mortgage or in some other ways.
Apart from that, he said, directors and chairman of such an entity would need to give personal guarantee against each of the loans.
"So, we'll be able to take punitive measures against the responsible in the event of default on debt servicing. If we can ensure these, the volume of bad loans will never increase in the days to come," he said.
He said they would bring the people--bankers or borrowers concerned -- to book under the existing laws in the event of any bad loan contracted
"We will bring about legal reform in the areas that hinder legal actions against the wrongdoers. Once the changes are made, nobody will be able to shirk the responsibility," the minister said.
Mr Kamal said there are many branches of the SoCBs located in a particular area and they are pitted against each other in wooing customers.
"We're thinking of relocation of the branches. The SoCBs can compete with each other but should not get involved in any undercut by wooing clients of one by the other, which will create unhealthy competition that we don't want," he said.
In the meeting, the four SoCBs gave a work plan for effective functioning of the banks and targets for enhancing operational profits through reducing the expenses.
The finance minister also informed reporters that they would sit again after three months for evaluating performances of the banks.
By the end of June this year, the aggregate volume of defaulted loans of six SoCBs, including BDBL and BASIC banks, stood at Tk 537.44 billion or 31.58 per cent of their total loans disbursed.