Bankers back more resolute measures to reduce NPL

Dhaka,  Mon,  25 September 2017
Published : 05 Aug 2017, 22:07:45
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Bankers back more resolute measures to reduce NPL

A section of the bankers are in favour of taking more resolute measures to manage the huge amount of non-performing loan (NPL) for maintaining pace of investment flow, reports BSS.

NPL, according to the sources concerned, is increasingly becoming a matter of concern for the banking sector.

"We should take effective steps soon to bring down the NPL to a tolerable level," Managing Director of Southeast Bank Limited (SEBL) M Kamal Hossain told the news agency.

He said ensuring asset quality should be the first things to consider for sanctioning of loans.

According to Bangladesh Bank's (BB) latest data, the amount of NPL soared to Taka 734.09 billion during the January-March period from Taka 621.72 billion in the preceding quarter.

M Kamal Hossain said bankers should enhance monitoring of their customers and provide them with advices on business, if necessary, so that they can make profit through investments.

"If any customer faces losses, banks should give the customer favourable scopes for overcoming the losses so that they can repay the loan," he added.

He also underscored the need for developing a healthy banking system by analysing customer status properly while processing loan.

Terming NPL a serious problem for the financial sector, managing director of Mutual Trust Bank Anis A Khan suggested the authorities concerned to set up asset reconstruction companies (ARCs), as practiced in India, for recovery of such loans.

An ARC manages underperforming assets and makes the assets, which have already become classified as NPL, profitable.

Mr Khan, also the Chairman of the Association of Bankers, Bangladesh (ABB), said there are various reasons, including undeveloped infrastructure, for turning a loan bad.

Seeking cooperation from the borrowers to bring the NPL down to a tolerable level, he said long-term investment is better than the short-term investment for protecting a loan from being classified.

Referring to the activities of the bank in reducing NPL, Mr Khan said they hold meeting with customers, monitor them and also minimise the interest rates according to their request so that they can come out of crises and pay back the loan.

The BB has already asked the banks to maintain a certain level of cautiousness during loan processing to avoid any kinds of unacceptable situation in future, said BB Chief Spokesperson Subhankar Saha.

"When a classified loan is identified, the BB holds meeting with the bank concerned to discuss the matter as it affects the bank's capital and CAMELS (Assets quality, Management, Earning, Liquidity, and Sensitivity) rating," he added.

Mr Saha said the central bank also has relaxed the loan reschedule policy for the banks concerned and appointed observers to these banks to help them improve their situation.
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