Bangladesh's interim government hopes to get a US$500-million bailout package from the ADB for the banking sector as some banks seemed in disarray following past forged lending and NPL buildups.
The government has already completed negotiations with the Asian Development Bank (ADB) for the policy-support loan and it is expecting the financial support at the first go next month, Economic Relations Division (ERD) officials said Friday.
"We have completed discussion with the ADB. The lender is convinced for Bangladesh's ongoing reforms in the financial and relevant sectors. Now it has decided to provide the funds for facilitating further reforms in the banking sector," a senior ERD official told the FE correspondent.
"We are expecting that the budgetary-support proposal will be cleared at the ADB board meeting in April and then a loan agreement would be signed immediately," he added.
Bangladesh's financial sector has been destroyed by the ousted Sheikh Hasina government and her associates through violating the banking regulations, looting hundreds of billions of takas and laundering billions of dollars, the officials deplored.
The banking-sector non-performing loans (NPLs) are rated to be on the highest level in the history of Bangladesh.
The ratio of NPLs had reached 20.20 per cent of the total outstanding loans in the banking sector till December last year, central bank's data showed.
Some corporates, seen as lackeys of the past Hasina government, borrowed huge money from banks but did not pay back the loans, which weakened the financial institutions and their operations.
"At least a dozen commercial banks appear in the red category for their vulnerability with their huge NPLs, deposit shortfalls and scams in operations," said the official.
Another ERD official says the proposed $500 million will be under the subprogramme-1 of the "Banking-sector reform-policy-based lending" by the ADB.
Another $500 million (Subprogramme-2) is likely to be processed after the success of this sub-programme, he added.
The Manila-based lender has already provided some reform proposals to the Bangladesh government regarding the financial sector and relevant others for getting the budgetary support, the ERD official said.
Meanwhile, on December 18 last year, the ADB confirmed $600 million worth of budget support titled 'Strengthening Economic Management and Governance Programme, Subprogramme 1' to support Bangladesh's preparation for graduation from the least-developed country (LDC) status.
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