Experts call for reducing soaring NPLs

Experts urged the relevant authorities to keep the banks’ non-performing loans (NPLs) at a tolerable level as bad loans are a significant concern for the financial sector.

They expressed their views at the ‘Financial services: Ensuring sustained growth’ session on Monday, the final day of the International Investment Summit 2021.

The two-day summit was held in Dhaka to brand Bangladesh among the investors of the world. The Bangladesh Investment Development Authority (BIDA) organised it.

Planning Minister MA Mannan was the chief guest at the session, where Bangladesh Bank Governor Fazle Kabir was the keynote speaker.

NPLs cannot be allowed to soar, Mannan said, adding that the central bank and the Finance Ministry would have to take steps in this regard.

He said people consider NPLs as stolen money and this perception will have to be changed by reducing the high amount of bad loans. The minister said Bangladesh was a safe investment place, urging foreign investors to come here.

As of September this year, NPLs stood at over Tk 1,01,150 crore, accounting for 8.18 per cent of the total outstanding loans, according to Bangladesh Bank.

BB Governor Kabir said that the rate of NPLs fell in the September quarter and 100 per cent provision was kept against the bad loans.

Planning Minister Mannan said that the provision had a cost, which reduced the profitability of banks.

The Association of Bankers, Bangladesh (ABB) president Ali Reza Iftekhar said that it is very difficult for bankers to recover the money once a loan goes bad.

“NPL is like cancer,” he said, noting that strong risk management in banks is needed to reduce the NPLs. “The risk management should be allowed to go independently and they must be certified. Otherwise there will be a disaster in the banking sector.”

Iftekhar said that in many developed countries, NPLs are very low due to their strong risk management.

BB Governor Kabir said that the government-announced incentive packages helped revive the economy hit-hard by the pandemic. He said the vaccination programme and ongoing infrastructure development also helped the economy to reopen.

He said the Bangladesh Bank is working with local and foreign investors to facilitate all kinds of business-related external transactions.

He said that foreign investors are welcome to invest in all other sectors except for a few reserved sectors.

Bangladesh Bank introduced online submission of export declaration replacing paper documents and banking services open 24/7 at all seaports, land ports, and airports, as per the governor keynote paper.

Standard Chartered Bank, Bangladesh, Chief Executive Officer Naser Ezaz Bijoy moderated the session, while finance division Senior Secretary Abdur Rouf Talukder, Insurance Development and Regulatory Authority (IDRA) Chairman Mosharraf Hossain, HSBC, Bangladesh Managing Director Kevin Green and IFC (South Asia, regional advisory services) Manager Selma Rasavac were presented at the session.