The government has agreed to form a banking commission to review the health of the sector and take necessary reform measures, finally heeding to a long demand of various quarters, think-tanks and experts, said Finance Minister AHM Mustafa Kamal yesterday.
“We will form a commission within a short time under the leadership of the Bangladesh Bank,” he told reporters in response to a query, after a meeting of the cabinet committee on purchase at the secretariat.
The minister also admitted that the banking, stock market and revenue sectors require massive reforms.
On the loan rescheduling facility, Kamal said the government did not want to send the defaulters to jail, so it has given a chance to them to have their loans rescheduled by paying 2 percent down payment.
“Alongside, the government is trying to recover bad loans and reduce non-performing loans.”
The government is also going to amend the Bank Company Act in a bid to facilitate merger and reconstruction of weak banks, the minister said, without elaborating.
Bangladesh’s banking sector has been deteriorating for the last several years owing to higher NPLs and corruption. NPL averaged 10.69 percent of the total outstanding loans although it is more than 25 percent in case of state-run banks.
The actual size of bad loans is, however, more than double the officially recognised figure, according to a recent report of the International Monetary Fund -- a damning evidence of the fragile state of the banking.