Non-Performing Loans in the Asian Clearing Union (ACU) countries are growing and all the countries addressed almost similar causes behind this.
The observation came at a special discussion on non-performing loan management of the ACU member countries during the board meeting held yesterday in the capital.
Representatives from the central banks of seven countries including Bangladesh, India, Iran, Myanmar, Nepal, Pakistan and Sri Lanka took part in the discussion with presenting data over the NPL of the respective countries.
Lack of corporate governance and political influence are mostly the factors for rising NPL, the bankers addressed the meeting.
“NPL problem is the common phenomenon in the Asian region,” said Bangladesh Bank Governor Atiur Rahman while chairing the discussion meeting.
He said corporate governance must need to manage NPL.
Foreign banks hardly have NPL due to having corporate governance. Private banks have NPL, but not much more than public banks.
“Political influence is one of the most disturbances for controlling the NPL in the emerging countries,” he observed.
He suggested bankers to create ground for good borrowers to come out from NPL during the political crisis and to take stance of no mercy for bad borrowers.
He also advised to give the loan to the best ones and get back the loan.
Banks’ poor management is responsible for the excessive NPLs in Bangladesh, said Bangladesh Bank Deputy Governor SK Sur Chowdhury while giving a presentation on the country’s banking sector.
Influence by external forces to provide risky and marginal loans, inadequate internal monitoring system, high interest rates are also the factors behind the rise of NPL.
He said corporate governance in the banks is still to be improved to stop extending risky and marginal loans.
Policy liberalisation in different times due to political crisis and unavailable circumstances has been criticised because it is argued that the facilities are exploited by the habitual defaulters, he said.
Daw Tenzin, governor of Royal Monetary Authority of Bhutan, addressed the political influence as the major cause behind the NPL rising in his country. He said housing sector in Bhutan is over supplied by loans and most defaulters are the government contractors.
The representative from Nepal central bank addressed the poor risk management practices, weak credit risk assessment process, poor credit administration, inadequate management information system, insider lending as the factors for rising the NPL in Nepal.
