The government will carry out special audit in every bank of the country to bring the loan defaulters under increased scrutiny, said Finance Minister AHM Mustafa Kamal.
"Each and every bank of the country will come under this special auditing," he said.
The minister disclosed this while speaking at the annual conference of Rupali Bank in the capital on Wednesday.
"The main purpose of this auditing is to help the banks get rid of bad loans," he said.
"We need to identify who are the genuine borrowers and who are the wilful defaulters. We need to monitor how the bank loans are being used," he said.
"We will soon engage three auditing firms to conduct this special auditing," the finance minister added.
Mr Kamal underlined the need for bringing necessary legal reforms to address the issue of rising nonperforming loans.
"In Malaysia, wilful defaulters get blacklisted by all the government agencies. They are not even allowed to leave the country," the finance minister said.
"We have to bring similar legal reforms in our country to mitigate the swelling of bad loans," he said.
The finance minister also termed the loan default a 'crime against the whole nation.'
"The loans that are becoming classified are actually the hard-earned money of the ordinary people of the country," he said. "Therefore, bank officials have to go tough on such wilful defaulters."
The finance minister also asked the bank officials to better understand their clients before issuing loans.
"You have to identify the stressed assets. You have to know your customers. No long term loan should be issued against short term deposits," he said.
Speaking at the conference, Bangladesh Bank governor Fazle Kabir called for strengthening the corporate governance culture within the banks.
"The mid-level management can play a strong role in ensuring better corporate governance," he said.
The central bank boss asked Rupali bank officials to look for ways to boost its operating profits.
As of November 15 of the last year, the operating profit of Rupali Bank stood at Tk. 910 million, while Sonali Bank's operating profit during the same period stood at Tk. 20 billion, the BB governor said.
Meanwhile, the Rupali bank officials, during the event, sought Finance Ministry's help in meeting the capital shortfall of the bank.
"While a new bank requires the minimum paid-up capital of Tk. 4.0 billion to be operational, we have only Tk. 3.72 billion", Rupali Bank CEO Ataur Rahman Prodhan said.
"Such a low amount of paid-up capital is a big barrier to us in doing business at the international level," he said.
The Rupali Bank CEO also asked for necessary approval for setting up a bank branch in Saudi Arabia.
"Currently, a large portion of Bangladeshi expatriates in Saudi Arabia are sending their remittance through illegal channels," Mr Prodhan said.
The expatriates will be able to send their money through the legal channel if Rupali sets up a branch in the Gulf country, he added.
Rupali Bank officials also asked for government greenlight for issuing right shares.
"This would help us to address the ongoing capital shortfall," Rupali Bank Chairman Monzur Hossain said.
Additional Secretary of the Banking Division Md. Fazlul Haque also spoke on the occasion.
mehdi.finexpress@gmail.com