The Bangladesh Bank has planned to minimize irregularities and non-performing loans while implementing reforms in the banking sector, said spokesperson and executive director Md Mezbaul Haque on Wednesday.
He made these remarks following a meeting of bankers at the central bank headquarters in Dhaka, chaired by central bank governor Abdur Rouf Talukder.
The Prompt Corrective Action (PCA) framework is scheduled for implementation from March 2025, based on performance and financial indicators as of December 2024, Mezbaul said.
The governor cautioned the bank’s top management about potential consequences if they fail to meet the financial health indicators outlined in the PCA before the deadline, he said.
Furthermore, there is a directive to increase the utilization of the alternative dispute resolution (ADR) method to reduce defaulted loans, subsequently leading to a decrease in pending cases.
To manage these cases effectively, the recruitment of qualified legal experts has been advised.
The monetary policy will remain contractionary until inflation is brought under control. This policy will further tighten the liquidity situation, prompting banks to exercise vigilance.
Corporate governance issues in the banking sector were discussed, with legal procedures being followed for any merger of fundamentally weak banks.
The Bangladesh Bank will take action on these matters in the future.
An action plan is being developed, focusing on reducing defaulted loans and enhancing governance, Mezbaul added.
