It is essential to take necessary steps to reform the legal framework to reduce the non-performing loan (NPL) as it is increasingly becoming a matter of concern for the banking sector, observed experts.
“There are some borrowers who become defaulters intentionally. They try to take advantage through the weakness of the law. Bangladesh’s ‘Artha Rin Adalat Ain’ needs to be reviewed so that defaulters cannot take advantage,” Research Director of the Centre for Policy Dialogue (CPD) Dr Khondaker Golam Moazzem told BSS here today.
He said the slow pace of legal actions encourages the borrower to be a defaulter as they can take time to back their credit.
“If a bank takes legal actions against any defaulter, he or she goes to court and files a writ petition against the bank. The defaulter can also make the process lengthy through filing an appeal against the judgment. In this way, that person kills time,” he added.
Talking on the issue, World Bank (WB) Lead Economist Zahid Hussain urged the authorities concerned to reform the existing laws and said banks should disburse credit after assessing the value of the relevant assets to reduce the risk of bad loan.
“Banks should take more resolute measures to recovery the huge amount of NPL for maintaining the pace of investment flow. Bankers should consider the financial condition of the borrowers at the time of giving credit,” he added.
He called for taking necessary actions against the big debt defaulters so that any big loan does not turn into a bad loan in future.
According to Bangladesh Bank’s (BB) latest data, the amount of classified loan soared to Taka 74,148 crore during the April to June period from Taka 73,409 crore billion in the preceding quarter.
National Credit and Commerce (NCC) Bank Chairman M Nurun Newaz said bankers should provide more efforts to bring down the NPL at a tolerable level.
“One of the major jobs of a banker is to give credit and recover it. He or she should provide all sorts of efforts to recovery the credit,” he added.
He urged the bankers to develop a healthy banking system by analysing the customer’s status properly while processing a loan.
Mutual Trust Bank (MTB) Additional Managing Director and Chief Operating Officer (COO) M Hashem Chowdhury said bankers should increase their concentration on the retail and Small and Medium Entrepreneurs (SMEs) credits as the rate of recovery in the sector is better than the corporate credit.
He also sought cooperation from the borrowers to bring the NPL down to a tolerable level.