The Bangladesh Bank will form three task forces to tackle non-performing loans, and further strengthen the regulatory and legal frameworks. The decision came at the quarterly bankers’ meeting at the central bank on Wednesday, chaired by Governor Ahsan H Mansur.
Briefing reporters after the meeting, the Association of Bankers, Bangladesh (ABB) Chairman and BRAC bank Managing Director Selim RF Hussain said, “The government is worried about the large volume of defaulted loans in the banking sector.
“The governor told us that he will form a taskforce to tackle such loans. Regarding the non-performing loans, we think that a major change is needed in the legal framework. We need more specialised courts and judges properly trained on financial issues.”
The amount of defaulted loans reached a staggering Tk 2,11,391 crore until June 2024, compared to only Tk 22,481 crore in 2009 when the Hasina regime took power after an election led by the army-backed caretaker government.
Hussain further said, “The interest rate has been discussed with the governor. The governor believes in a market-based interest rate, mentioning that the central bank will continue to hike the policy rate until inflation comes down.
“Besides, the governor has requested the banks not to go for unusual lending rates.”
Regarding the exchange rate, the ABB Chairman said, “We are now doing business within Tk 120 USD rate. Kerb market rate is Tk 121 to Tk 122, so the bank rate is not too high. The governor said there are no problems in opening the letters of credit (LCs) for imports.
“However, due to a reduction in demand, the opening of LCs has slowed down. We are opening LCs only when required. There is no shortage of USD in the money market. But one key challenge is that four state-owned banks have $1.5 billion due payment against imports. We are optimistic the sum will be repaid in the next five to six months. Then the stress on the banking sector will go down.”
