Banking sector to play key role in revival of economy

The country's economy is already under immense pressure from the worldwide closure and the government is trying to find way outs to tackle the situation.

Finance Minister AHM Mustafa Kamal, Governor of Bangladesh Bank Fazle Kabir, Chairman of Bangladesh Association of Banks (BAB) Nazrul Islam Mazumder, and Chairman of Association of Banks, Bangladesh (ABB) Ali Reza Iftekhar on Tuesday attended a meeting through videoconferencing in this regard. They discussed on ways to bring the economy back on track and how the stimulus packages announced by the government can be injected into the economy.

Chairmen of BAB and ABB praised government stimulus packages worth over Tk 98,619cr to overcome economic impacts of coronovirus. The overall size of the package stands at 3.5 per cent of the country’s gross domestic product or GDP.

ABB chairman lauded Bangladesh Bank's (BB) initiatives and policy supports to inject necessary funds to various sectors. BB already slashed cash reserve requirement or CRR by 150 basis points to 4.0 per cent from 5.50 per cent to facilitate the banks in implementing the government announced financial stimulus packages.

ABB chairman also appreciated central bank’s move to cut repo rate by 75 basis points to 5.25 per cent from 6.00 per cent. Central Bank’s latest moves have helped the banks to manage their funds efficiently despite higher withdrawal pressure on cash even as deposits shrink in the aftermath of coronavirus outbreak, he said.

Finance Minister AHM Mustafa Kamal has advised leaders in the sector to keep Non Performing Loans (NPL) in control as the road ahead of economic recovery would be challenging. He also emphasized on putting a lid on banks’ operating costs and reduce cost income ratio.

The finance minister sought input from all to develop a bond market for alternate financing of Bangladesh economy.

ABB chairman requested the authorities for considering establishment of Credit Risk Guarantee Scheme for banks to protect the loans and advances given under the recent stimulus packages.

Finance Minister AHM Mustafa Kamal said that banking sector is the lifeline of the economy and reassured that the government will do everything in its capacity to support it to put the economy on track. 

BAB Chairman assured the finance minister of implementing all the suggestions and advices given by him.  

BB Governor Fazle Kabir at the meeting enlightened the finance minister on implementation of various stimulus packages.

ABB Chairman Ali Reza Iftekhar said that the financial health of most of the banks is now most crucial to the recovery of the economy and there is no alternative to supporting and injecting money to the economy.