A policy will be framed soon on appointment of agents for realising default loans in the country’s banking sector. The Banks and Financial Institutions Division of the Finance Ministry are taking an initiative in this connection.
A decision to this effect was taken in the meeting on “Realisation and write-off of default loans in the banking sector” held at the finance division auditorium at the secretariat on Sunday.
Banks and Financial Institutions Division Secretary Dr M Aslam Alam presided over the meeting also attended by the managing directors and representatives of state-owned commercial and specialised banks and Bangladesh Bank.
M Aslam Alam told the Dhaka Tribune yesterday, “In the banking sector, especially in the state-owned banks, the volume of default loans has increased to a great extent and it keeps bulging. The volume of loans realised from them is very low and this is not satisfactory.”
“In the existing situation the banks are failing to realise the default loans,” he added.
“The existing ways of realising default loans include contact with the clients and giving them reminders, filing cases with the money loan courts and sale of mortgaged assets. It is no more possible to realise the default loans by applying the existing strategies for different reasons,” he also mentioned.
The secretary said: “So, a decision has been taken to realise the default loans by appointing agents or in any other alternative way. A legal framework or a policy will be put in place with that end in view.”
“Once the initiative was taken earlier for realising default loans through agents, but it failed. But we have discussed in the meeting why the initiative failed. The case history of some of them has also been reviewed,” he mentioned.
“That time the Bangladesh Bank told the banks that appointment of agents would be allowed only for realisation of default loans. But there had been no guideline and policy in this connection. The banks framed their respective policies on their own. As a result, there was some deficiency and for that reason it failed. But this time a policy will be framed for them.”
“Meetings will be held in this connection with the private banks also,” he disclosed.
According to the Bangladesh Bank, the volume of default loans in the country’s banking sector stood at Tk54,657 crore as of March last.
Of the amount, the four state-owned commercial banks – Sonali, Janata, Agrani and Rupali – accounted for Tk22,654 crore, 39 private commercial banks Tk22,747 crore, the state-owned specialised banks Tk7,417 crore and 11 foreign commercial banks Tk1,839 crore. As of March last, the volume of bad loans written off stood at Tk37,252 crore.