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Dhaka Tribune

NPL major obstacle to cut lending rate

Update : 17 May 2014, 07:27 PM

Increasing Non-Performing Loan (NPL) in the banking sector has been identified as a major obstacle to reduce the lending rate to a single digit as the banks are incurring losses from the classified loans. However, all the banks are to pay tax on the classified loans.

Reduction of the lending rate largely depends on loan recovery, classified loan management and the overall market scenario, said Golam Hafiz Ahmed, CEO and Managing Director of National Credit and Commerce Bank, while addressing a press conference held yesterday at its headquarters in the capital to mark its 21st founding anniversary.

“As a huge amount of liquidity get stuck as classified loans, from which banks are not getting any return, while they are to pay the interest committed to the depositors, banks are unable to manage their expenditures, and consequently the banks are to maintain the high lending rates,” he said.

Golam Hafiz stressed the need for early disposal of the pending suits on classified loans, so the loan recovery will also be improved, which would be able to support the banks to reduce the lending rates.

Bangladesh Bank is now allowing short-term foreign loans for the busnessmen just to put pressure on the local banks to cut their lending rates. Though the banks were rigid to reduce their interest rates, the banks are now lending at 13% interest rate from earlier 15% to 16% rate, changing their earlier stance, he added. 

Banks got release from the huge NPL burden in the last year, thanks to the relax loan rescheduling offered by Bangladesh Bank.

Among others, the ceremoney was attended by NCC Bank Chairman Nurun Newaz Salim, Vice Chairman Mainuddin Monem, Cairman, Audit Committee of the Board Amirul Islam, Director M.A. Awal and Khairul Alam Chaklader.

Nurun Newaz Salim said, if the government reduces corporate tax, it would contribute to reducing the lending rates of the banks.

“All the banks have to reach a consensus and move together to cut the lending rates,” he said.

The NCC bank is now operating across the country with 101 branches, the bank announced 5% cash and 6% stock dividend in the year 2013 despite the dull business, said Golam Hafiz.

“Capital Adequacy Ratio of the bank remained above satisfactory level, which is now 12%, credit growth was 13% and import growth was 15%,” he said. 

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