Dhaka, Bangladesh (BBN)- The central bank of Bangladesh has asked the commercial banks to gear up their recovery drive to ensure collection of instalments of rescheduled loans properly.

The instruction was issued at a meeting of bankers, held in the Bangladesh Bank (BB) on Tuesday with its Governor Atiur Rahman in the chair.

“We’ve asked the banks to ensure monitoring and supervision of rescheduled loans using their own ways for sustaining the existing default loan situation in the country’s banking sector,” BB Deputy S K Sur Chowdhury told reporters after the meeting.

The BB’s instruction came against the backdrop of declining trend of classified loans recently following relaxation of the loan rescheduling policy.

The amount of classified loans decreased by more than 5.0 percent to BDT 405.83 billion in December 2013 from BDT 427.25 billion a year ago, according to the BB statistics.

On December 23, the central bank relaxed the loan rescheduling policy for the next six months to facilitate financing for the businesses, affected by political unrest.

“We’ll also send our inspection team to the banks for looking into different aspects of the rescheduled loans, if necessary,” the deputy governor said.
Mr. Sur also said the banks have been instructed for taking effective measures so that the amount of classified loans does not increase further.

At the meeting, the banks were asked for taking necessary measures to bring down their overall capital market investment within 25 percent of total capital by July 21, 2016 to minimise risks in investment portfolios.

“We’ve advised the bankers to adjust their capital market exposures gradually without hindering the activities of the market,” the deputy governor explained.
The meeting also discussed different issues including implementation of real time gross settlement (RTGS), submission of annual audited financial statement, settlement of acceptance bills and implantation of the second pillar of Basel-II.

The central bank chief in the meeting asked the top officials of the banks to increase their provision against regular and classified loans avoiding showing the higher net profit.

He said the banks would face difficulty in keeping provision in accordance with the regulations in the months to come if they did not secure the provision right now.

The BB will consider taking strict measures against the banks which would count the interest suspense and charged unrealized interest as profit after rescheduling the defaulted loans.

“The central bank has recently received a number of allegations that some banks have not settled their bank guarantee timely. Against the backdrop, the clients concerned face financial loss due to the cause. The BB will take punitive measures against the banks which will not settle their bank guarantee accurately,” the BB governor noted.

BBN/SSR/AD-19Feb14-9:40 am (BST)