Asset management of banks

The country's banking sector has faced a series of crises that have left their marks on the entire banking system. The scams involving Hallmark, Crescent Group and AnonTex Group and the Bangladesh Bank cyber heist not only affected asset management but also put banks in a difficult situation. Non-performing loan (NPL) is another major issue that has plagued the banking system in recent times. As we know, lack of good governance, political interference into banking procedures, money laundering and malpractices by a section of bankers are making good policies of the banks useless.

According to the Basel Committee on Banking Supervision, there are 25 core principles for effective banking supervision, out of which seven are designed to address relevant issues of the banks' asset quality or credit risk management (Basel, 1997). It implies the importance of keeping quality under control.

Problems in asset management are also caused by lack of proper information since some individual customers and companies do not provide authentic information while taking loans. Once this kind of loan recipients fail to repay, the banks face serious trouble. Some of the defaulters are also wilful defaulters. To address the situation, the Bangladesh Bank is supposed to strengthen regulations. Liquidity situation of the banks and financial capacity of people and companies which take loans should be carefully monitored. Employees of banks should be provided with necessary training on credit rating and other procedures. The Bangladesh Institute of Bank Management (BIBM), the Institute of Bankers, Bangladesh (IBB) and the Bangladesh Bank Training Academy (BBTA) can play a collective role in bringing improvement in the health of banks. They can arrange workshop and make it mandatory for banks to participate there. Though banks in Bangladesh are increasing in number, they have to go a long way to ensure what is called proper services.

Afroza Ahmed

Deptt of Business Administration

East West University