'Closer BB scrutiny to arrest growing non-performing loans'

‘Closer BB scrutiny to arrest growing non-performing loans’


Dhaka: Bangladesh Bank governor Fazle Kabir on Sunday said banks’ risk management and corporate governance have been brought under closer supervisory scrutiny to arrest the increasing incidence of non-performing loans (NPLs).
He made the remarks while speaking at the inauguration of a 2-day “International Conference for Bankers and Academics (ICBA), 2016″ organised by Bangladesh Institute of Bank Management (BIBM) in its auditorium in the city’s Mirpur area. UNB News Agency Reported.
With BIBM director general Dr. Toufiq Ahmed Choudhury, the function was also addressed by former governor of Bangladesh Bank Professor Dr. Mohammed Farashuddin.
The central bank governor’s comment on NPLs came against the backdrop of the growing concern in the economy that such bad loans of the banks are increasing at an alarming rate.
According to Bangladesh Bank’s “Financial Stability Report 2015″ published in August this year, the NPLs in the banking system stood at 8.8 percent in 2015 and more than four-fifths of gross NPLs (84.6 per cent), amounting to TK 434.9 billion, were bad/loss loans, which is Tk 44.9 billion is higher than that of the previous year. The NPLs under the sub-standard and doubtful categories constituted 8.9 per cent and 6.5 per cent respectively of gross NPLs in calendar year 2015.
Fazle Kabir said Bangladesh Bank, as the regulator of the country’s banking system, has instituted wide-ranging reforms of methods and procedures to exercise heightened surveillance over the banks and financial institutions. “Stress testing exercises are now routine practices in Bangladesh as diagnostic and supervisory tools.”
He said banking is not limited within the boundaries of a country. Besides, banking industry of a country is highly responsive to the sociopolitical as well as economic situations of other countries.
“Sharing of knowledge and experience of others will certainly help us a lot in ensuring financial stability,” he said.
He mentioned Bangladesh Bank believes that the financial sector of the country has been demonstrating a satisfactory level of stability in recent years: “Our country has been able to maintain a higher growth rate compared to a number of emerging and developing economies of the world, thanks to prudent policy stances of the government, Bangladesh Bank and other financial sector regulators and actors”.
Delivering his keynote speech titled: “The Economic Meltdown 2007-09 : The Successful Bangladesh Response”, former governor of Bangladesh Bank Dr. Mohammed Farashuddin said the country’s expanding banking sector, despite having some problems, like a growing default culture, inadequate accountability system, non-optimal transparency, has served the economy rather well.
“If and when the appropriate reforms including a boldly implemented regulatory system is put in place, the greater use of the technology will add definite strength to the productivity and growth of the Bangladesh economy,” he added.


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