NPLs ease to 30.34% after policy-backed rescheduling: Bankers

The non-performing loan (NPL) ratio in the banking sector fell to 30.34% at the end of December last year from nearly 36% in September, following large-scale loan rescheduling and write-offs under existing policy measures. 

Excluding the NPLs of five merged Islamic banks, the overall default loan ratio falls further to 24.53%.

The information was shared at a bankers' meeting held yesterday at Bangladesh Bank, chaired by Governor Ahsan H Mansur, with four deputy governors and managing directors of all private commercial banks in attendance.

The governor advised bankers to reschedule loans under the policy framework for institutions that have the potential to return to normal business operations.

At the meeting, the Bangladesh Bank governor also issued a set of directives to maintain stability in the banking sector and raise public awareness ahead of the upcoming referendum, including instructions to display two 'Yes' vote banners at every bank branch.

According to multiple sources present at the meeting, the banner instruction was aimed at helping people better understand the referendum and encouraging them to vote "Yes." The directive has already been issued from the Chief Adviser's Office, the sources said.

Bangladesh Bank also advised that if non-governmental organisations undertake awareness programmes centred on the referendum, banks may support such initiatives using their corporate social responsibility (CSR) funds.

The governor further instructed bank managing directors to ensure advance risk management when expanding micro-loan and digital nano-loan programmes, so that such loans do not go to high-risk borrowers and do not create new risks in the future.

The meeting also decided to further strengthen school banking activities. Under the decision, branch managers of all banks have been instructed to conduct at least two school visits each year to highlight the importance of opening bank accounts among students.

Bangladesh Bank said the country's foreign exchange reserves are currently on an upward trend and expressed optimism that remittance inflows will increase further ahead of Ramadan and Eid-ul-Azha. To maintain economic momentum, special emphasis is being placed on foreign trade.

Efforts are also under way to expedite approvals for foreign investors interested in investing in Bangladesh. At the same time, initiatives will be taken to simplify approval procedures for opening overseas offices. Work on reforming the Foreign Exchange Regulation Act is also ongoing, bankers familiar with the matter said.

However, the central bank said there is no scope to reduce interest rates at this moment as inflation remains high, although efforts are being made to identify ways to lower rates in the near future.

Speaking to reporters after the meeting, Mashrur Arefin, managing director of City Bank, said, "Ahead of the referendum, stability and public confidence in the banking sector are most important. Bangladesh Bank has given very clear guidance to ensure that no new risks are created. We will all work to implement those instructions."