Sep 19
Rising NPL threatens banking sector: analysts PDF Print E-mail

The growing nonperforming loans have become a major threat for the banking industry as many lenders, particularly those owned by the government, are facing huge capital shortfall because of bad debt, analysts said yesterday.

“The banking sector would be in great trouble if we fail to address the concern,” said Toufic Ahmad Choudhury, director-general of the Bangladesh Institute of Bank Management (BIBM), at a workshop at his office in Dhaka.

He urged the bankers to concentrate more on loan recovery.

The comments came at the workshop on treasury operations of banks organised by the BIBM.

The NPL stood at 8.93 percent in 2013 and soared to 9.23 percent in a space of three years. It went up to 10.53 percent in the first quarter of 2017.

Speakers said the large loan restructuring policy of the central bank has fuelled the NPL.

The rising NPL is not only rattling the banking sector but also depriving the people of loans at lower rates, they said.

Mehmood Husain, managing director of NRB Bank, urged bankers to be cautious about treasury management. Frequent policy changes by the government also affect the banking industry, he said.

Md Nehal Ahmed, an associate professor of the institute, presented a paper, while Faruq Moinuddin, additional managing director of City Bank, also spoke.

(Source - The Daily Star)