Dhaka, Bangladesh (BBN) - Continuous increase in bad loans is very alarming not only for the banking sector but also for the entire economy, experts said.
“We have observed that the government has been providing recapitalization funds to the nationalized banks to meet capital adequacy ratio set by the Bangladesh Bank,” said ICC Bangladesh President Mahbubur Rahman at the workshop on Capital and Credit Risk Distribution in the capital Dhaka on Monday.
According to banking sector experts, banks do not have enough technical expertise to properly analyse the loan files.
Moreover, the defaulters were not being punished as the bankruptcy court is out of commission and this encouraged people to become debt dodgers, according to Mr. Rahman.
It may be mentioned that non-performing loans (NPLs) in Bangladesh’s banking sector, according to reports published by the Bangladesh bank, have surged over BDT 800-billion (about US$10 billion).
The figure would have been much higher if bad loans had not been written off, which is around BDT 450 billion.
As a result, the banks are having difficulties in providing credit to those who are good borrower for expansion of their business or to new entrepreneurs.
Besides, the situation is similar in the state-run specialized banks, the ICC Bangladesh chief added.
Muhammad A. (Rumee) Ali, ICC Bangladesh Banking Commission Chairman & CEO Bangladesh International Arbitration Centre in his address said Bangladesh is going forward to achieve middle income status by 2021 which created huge need for capital requirement in infrastructure sector. But because of bad loans banks are suffering from capital adequacy.
He told the participants (bankers) that to manage your capital is your utmost important duty. He also mentioned that alternative dispute resolution and mediation will be very much useful to reduce the bad debt of the commercial banks.
Anis A Khan, Chairman Association of Bankers Bangladesh and Managing Director & CEO Mutual Trust Bank Limited was the guest of honour at the workshop, organized by the ICC Bangladesh.
He said that the world trade is moving towards digitization and as such Bangladesh has to prepare itself to keep pace with the international trade.
“The bankers of our country must upgrade themselves through modern tools and rules. In order to become a good and efficient banker one should experience the trade finance in the banking carrier,” the senior banker explained.
He also said that the Association of Bankers Bangladesh has been actively working with the Bangladesh Bank to develop the banking sector and create a corporate culture in the sector.
The workshop was conducted by Capital and Credit Risk Manager (CCRM) Chairman Kah Chey Tan, CEO Ka-Kit Man, CEO and Vivek Gupta, Head of Product Management conducted the day-long workshop
A total of attended by 118 bankers and two insurance officials 120 participants attended the workshop.
BBN/SSR/AD