In a bid to implement government pledges to bring reforms to the banking sector, Bangladesh Bank is going to hold a meeting with legal experts and the managing directors of scheduled banks on February 6, to devise ways for the next course of action.
"We are now working on recommendations for amending relevant laws and regulations to help cut non-performing loans (NPLs) in the country’s banking sector," a senior official of the central bank told the Dhaka Tribune. "On February 6, Bangladesh Bank will sit with the law commission and the managing directors of scheduled banks in this regard."
The most-anticipated agenda of this meeting will be to discuss how to reduce non-performing loans (NPLs) in the sector, as well as recommendations to amend several laws, including the Bank Company Act, Bankruptcy Act, Negotiable Instruments Act, and the mergers and acquisitions (M&A) regulation.
“We proposed to the central bank to arrange this meeting, in hopes of reducing NPLs together," said MA Halim Chowdhury, managing director and CEO of Pubali Bank Ltd.
He also said that the relevant laws should be amended to help reduce NPLs. "The long drawn-out process for resolving court cases with the Artha Rin Adalat (in terms of recovering loans), for example, is a significant obstacle to cutting down NPLs."
The number of money loan courts must increase, he added.
Talking to the Dhaka Tribune, AB Mirza Azizul Islam, a former advisor to the caretaker government said: “This is a good initiative. I welcome this, but ensuring amendment cannot solve the crisis alone. Rather, ensuring implementation of the law is more crucial.”
Thousands of cases are still pending with the Artha Rin Adalat, and defaulters can get out simply by a writ petition with the High Court. This must be stopped, he added.
Recently, the government asked the central bank to undertake banking sector reforms for implementing election pledges of the Awami League, which includes reducing non-performing loans in the country’s banking sector.
The directives seek implementation of the13-point election manifesto pledges of Awami League for reforming the ailing sector.
The Financial Institution Division under the Ministry of Finance (MoF) on January 3 directed Bangladesh Bank in this regard, to restore financial discipline in the economy, as well as to strengthen the sector.
According to recent Bangladesh Bank data, the amount of NPLs stood at Tk99,370 crore, or 11.45% of disbursed loans as of September, 2018.