Businesses and experts on Sunday said that continuous increase in bad loans was alarming for the entire economy as the banks have been faced with capital deficit in providing credit to the good borrowers and new entrepreneurs.
The defaulters were not being punished as the bankruptcy courts are out of commission and this encouraged people to become debt dodgers, International Chamber of Commerce, Bangladesh president Mahbubur Rahman said at a workshop on Capital and Credit Risk Distribution, organised by the chamber.
‘We have observed that the government has been providing recapitalisation funds to the nationalised banks to meet their capital adequacy ratio set by the Bangladesh Bank,’ Mahbub said.
According to the Bangladesh Bank report, non-performing loans have surged over Tk 800 billion but the figure would have been much higher if bad loans had not been written off, which is around Tk 45,000 crore, he said.
Mahbub said that banks do not have enough technical expertise to properly analyse the loan files.
Muhammad A (Rumee) Ali, ICC Bangladesh Banking Commission chairman said Bangladesh was going forward to achieve middle income status by 2021 which created huge need for capital to develop infrastructure sector but banks were suffering from capital inadequacy due to bad loans.
He emphasised on alternative dispute resolution and mediation to reduce the bad debts of the commercial banks.
Anis A Khan, chairman of the Association of Bankers Bangladesh, said
that bankers of the country should have upgraded themselves through modern tools and rules to keep pace with the international trade as the world trade is moving towards digitization.
Kah Chey Tan, immediate past chairman of ICC Banking Commission, said that securing stable cheap funding is a challenge for banks.
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