IMF urges finance ministry to finalise bank, deposit ordinances to recover bad loans, merge weak banks

The International Monetary Fund (IMF) has urged the Financial Institutions Division (FID) to quickly finalise the Bank Resolution Ordinance and the Deposit Protection Ordinance to address the issue of recovering non-performing loans and the consolidation of weak banks.

During a meeting with officials from the FID today (8 April), including its Secretary Nazma Mubarak, the IMF also expressed concern over the high levels of non-performing loans in the banking sector.

Several officials present at the meeting told The Business Standard that the IMF delegation emphasised timely and effective actions to reduce bad loans and restore discipline in the banking sector.

At the meeting, the FID presented the progress of its ongoing activities in this regard and informed the IMF that a separate entity will be formed under the Bank Resolution Ordinance.

They also explained that the irregularities in the financial sector were linked to the use of Bangladesh Bank, and therefore, the government is considering the implementation of this law through a new, independent entity, rather than continuing to control it through the central bank.