Assets management cos to be hired: finance minister

Shakhawat Hossain | Published: 00:36, Mar 15,2019


Finance minister AHM Mustafa Kamal on Thursday said that the government would hire assets management companies to recover bad loans.
After a pre-budget meeting with parliamentary standing committees at the planning commission, he also told reporters that they were planning to fix three VAT rates — 5 per cent, 7 per cent and 10 per cent — from July 1.
At least 50,000 electronic fiscal devices would be installed at the shops and restaurants in the next financial year to bolster VAT collection, he said.
He said that plans were underway to bring new education institutes under the monthly payment order in phases following demands from lawmakers.
Besides, there will some new components in the next budget like introducing crop insurance and making health insurance universal, he added.
Replying to a query, the minister said that anyone from the private sector could establish an asset management company and the bank management would hire them for recovering bad loans.
He, however, did not give details of the concept.
Former Bangladesh Institute of Bank Management director general Toufiq Ahmed told New Age on Wednesday that assets management companies in many western and Asian countries purchased bad loans.
The companies can either recover the loans or sell it to another party, he said.
No such company exists in Bangladesh, he added.
He termed the move as a welcome step for recovering bad loans that increased by Tk 19,608.4 crore to Tk 93,911.4 crore on December 31, 2018 from Tk 74,303 crore on December 31, 2017.
In 2018, bad loans in the state-owned banks increased by 29.81 per cent or Tk 11,369.87 crorre to Tk 48,695.87 crore from Tk 37,326 crore on December 31, 2017.
The state-owned commercial banks have a 51.85 per cent share in the lotal bad loans in Bangladesh.
In the private commercial banks, classified loans increased by 29.74 per cent or Tk 8,743 crore to Tk 38,139.85 crore in 2018 (40.61 per cent of the total defaulted loans) from Tk 37,326 crore in 2017.
Toufiq Ahmed said that the then Bangladesh Bank governor Farashuddin Ahmed took an initiative to hire asset management companies to recover bad loans in late 1990s.
The initiative, however, could not advance following the change of government in 2002, he said.
Centre for Policy Dialogue distinguished fellow Mustafizur Rahman said that hiring asset management companies might be an option.
‘But that does not mean you would not review the reasons for the growing bad loan,’ he said.
He noted that the government should examine the high growth of defaulted loans to make its steps for recovering bad loan meaningful.
Earlier, Mustafa Kamal said that thrust would be given to youth development, job employment, export diversification and revenue generation in the next budget.
He said that they would examine whether they would reduce the corporate tax rare that, according to him, was high.
Standing committee on public accounts member Salman Fazlur Rahman at the meeting said that bringing back the country’s current account
balance on positive territory was a major challenge for the government, according to officials attending the meeting.
Emphasising on export diversification, he said higher inflow of remittance should be ensured by providing incentive.
The current account balance has remained negative since 2016-17.

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