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The Dhaka Chamber of Commerce and Industry (DCCI) has urged the government to prioritise the reduction of non-performing loans (NPLs) in the country’s banking sector, by introducing more asset management companies (AMCs) and strengthening good governance.
This organisation, which leads CMSMEs, also recommended firm implementation of The Arbitration Act, boosting forex reserves through export diversification, export factoring, inter-bank foreign currency exchange and more incentivising the remittance inflow.
The DCCI spoke in favour of ensuring a better business environment and automated taxation to boost private investments. These steps will help to mitigate the challenges of post LDC graduation.
DCCI President Ashraf Ahmed made these remarks on Saturday at a press conference in its Motijheel office. He is optimistic that Bangladesh has the ability to overcome ongoing economic headwinds.
Ashraf Ahmed also emphasised on forex crunch, rising fuel prices, persistent inflation, shrinking credit facilities and rising interest rate. Addressing the private sector, he pointed out that it needs to play a pivotal role in bringing back the trend of growth stability.
He said, “I am optimistic that we will be able to achieve the goal if we prioritise key economic agenda such as the financial sector, taxation, energy and power, capital market, private investment and FDI, economic diplomacy, skills development surrounding LDC graduation and beyond.
“My perspective is that our growth capacity is higher than any other country in the world. But growth needs capital, and we are not getting the required FDI. The SMEs would likely be affected through it.”
Ashraf hailed The Bangladesh Bank for extending support to CMSMEs through pre-financing and refinancing schemes, which should contribute towards nurturing growth sectors.
“Inflation affects not only Bangladesh but also the world affected by it. I think our inflation is lower than the rest of the world. The new monetary policy statement (MPS) is here and I am optimistic that the Bangladesh Bank has the capacity to tame inflation.”
According to the central bank, the public sector credit growth was 18 per cent in July-Dec of FY24 and credit flow was 10.02 per cent in the same period.
In the new MPS, private sector credit growth has been set by the government at 10 per cent for January-June of FY24, which was realised 10.2 per cent against the target of 10.9 per cent in July-December FY24.
Ashraf pointed out, “Access to finance should be incorporated for SMEs and the central bank took good initiative to provide narrow loans for CMSMEs as they are not getting what they need to deliver in the economy.
“Our debt to GDP ratio is only 13 per cent which indicates that we are taking only 1/3 of our borrowing capacity. We have many opportunities to take foreign loans. I believe that will not create any major pressure in the economy.”
He added, “Current banking sector's condition is not good. In the last 15 years in the banking sector, assets have increased by 5 times but NPLs have increased by 4.5 times. That means NPL cannot be said to have increased much.
“Our NPL soared to Tk 1.54 trillion which is 10.11 per cent of total outstanding loan and 66 per cent NPL are concentrated in some 10-12 banks and the remaining 80 per cent banks are in good condition. I think the loan tenure should be increased and state intervention is necessary.”
