The visiting International Monetary Fund (IMF) team on Sunday was concerned with the rising figures of non-performing loans (NPLs) at state-owned banks.
During a meeting with the Financial Institutions Division (FID) at the Bangladesh Secretariat, the IMF team expressed concern over the rising NPL figures, sources said.
Through a presentation, the FID officials informed the IMF officials about the measures taken to lower NPLs and the achievements made so far.
They highlighted the recent scenario of the banking sector, liquidity stress in banks, foreign-currency-reserve situation and the measures taken for enacting banking sector-related laws.
The IMF team was led by Rahul Anand, IMF's mission chief for Bangladesh, while FID Secretary Sheikh Mohammad Salim Ullah led his team.
The IMF team has been on a visit to Bangladesh since last week to review the progress in meeting the conditions the agency set while granting a $4.7-billion loan to Bangladesh this year.
The agency had set two conditions for the FID to meet by September for the first review.
One is to report banks' rescheduled loans alongside non-performing loans in the annual financial stability report, while the other is to submit to the parliament the Bank Companies (Amendment) Act and the Finance Companies Act by September 2023.
Central bank data shows that till June this year, the volume of total NPLs in the banking sector stood at Tk156,000 crore, which is 10.11% of total loans.
The NPLs in the state-run commercial banks reached 25.01% and in private commercial banks 6.46%.
Sources also said that the FID officials informed the IMF team that measures have been taken to lessen NPLs in the public sector banks as they bear most of the NPLs.
When granting a loan to Bangladesh earlier this year, the IMF had set conditions to lower overall NPLs in the banking sector to below 10%.
Later, the IMF team met with two deputy governors of the central bank for an assessment of banking sector performance, NPLs, credit supply and demand, profitability, forex shortages and liquidity.
They also discussed the performance of commercial banks, bank subsidiaries, and equity markets, NPL classification procedures, write-off policies, financial incentives and digital banking.
The team also had meetings with the managing directors of four state-owned banks on the day, focusing on the reduction of NPLs.