Finance Minister AHM Mustafa Kamal talking to media after a meeting with owners and chief executives of private banks at the Economic Relations Division in the city yesterday. -AA
Finance Minister AHM Mustafa Kamal has said that there would be no further increase in the amount of defaulted loans in Bangladesh. He has also said that the sum of defaulted loans would be gradually reduced.
AHM Mustafa Kamal made these remarks on Thursday afternoon while speaking to journalists after having a meeting with the owners and chief executives of the private banks. AHM Mustafa Kamal said to the bankers, "My one and only condition to bankers is that defaulted loans cannot be allowed to increase by a single taka from today onwards. It is your task to determine how you will carry it out."
Bankers have assured the Finance Minister that defaulted loans would not go up any further. Bangladesh Bank's latest information shows that the amount of defaulted loans reached 99, 370 crore taka in September 2018. The sum of written off loans has meanwhile amounted to 35, 000 crore taka. If the figure of written off loans is added then the amount of defaulted loans reaches 1 lakh 34 thousand crore taka.
Extensively rising sums of defaulted loans and financial scams one after another continued to hit the news headlines during last few years. Capital deficit, liquidity crisis and some more anomalies have gripped a number of banks due to alleged corruption and irregularities in the banking sector of Bangladesh. It should be noted that most of the allegations about banking and financial sectors are connected with defaulted loans.
Center for Policy Dialogue (CPD) stated a few days ago that 22, 502 crore taka has been plundered from Bangladesh's banking arena during last ten years.
Some unscrupulous loan defaulters grabbed huge sums of loans by using fake mortgage papers. Besides, enormous amounts of money have been illegally transferred from Bangladesh to overseas destinations during last several years by financial fraudsters. According to local and international
sources, nearly 6 lakh crore taka was laundered abroad during last ten years.
Most of the financial experts and economic scholars blamed former Finance Minister AMA Muhith for the haphazard plight of banks in the country. Some economists and politicians had also urged the government last year to dismiss AMA Muhith from Finance Ministry.
AMA Muhith once said that he would leave a report on banking and finance as a guideline for the new government but it is not yet confirmed whether he has done so or not.
AHM Mustafa Kamal said on Thursday that the point of defaulted loans is a major reason for worries for the country's economy. At present Bangladesh is suffering from 11% to 12% nonperforming loans. In other countries this percentage is even higher, AHM Mustafa Kamal added.
Loan interest rate will go down if defaulted loans can be curtailed, AHM Mustafa Kamal commented. He said that he is hopeful about rectifying banks as far as defaulted loans are concerned.
Thursday's meeting with the Finance Minister was held at Economic Relations Division (ERD) in the capital's Sher-E-Bangla Nagar. President of Bangladesh Association of Banks (BAB) and Exim Bank's Chairman Nazrul Islam Mazumder, IFIC Bank's Chairman Salman F Rahman, Premier Bank's Chairman HBM Iqbal and leaders of Association of Bankers Bangladesh (ABB) attended the meeting.
AHM Mustafa Kamal stated that businessmen are influential in all countries. It is nothing wrong, he said. He urged all businessmen to run their business enterprises without defaulting loans. AHM Mustafa Kamal further said that Bangladesh's economic growth would expand more and more in days to come.
Dr Zahid Hossain, Lead Economist, World Bank, Bangladesh Office said to The Asian Age, "Finance Minister's announcement deserves applause. It will be highly beneficial for Bangladesh and its people if defaulted loans can be reduced. It is important to further strengthen the Bank Company Act so that defaulters cannot escape through loopholes."
Bangladesh Bank's former deputy governor Dr Khondaker Ibrahim Khaled told The Asian Age, "The new Finance Minister will have to protect the banking sector from political influence and nepotism to safeguard banks from loan mishaps."
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