Non-performing loan (NPL) buildup in Bangladesh's banking sector and liquidity stresses in the state-owned commercial banks came up for IMF scrutiny Sunday during a review of agreed reforms, officials said.
Meanwhile, until June-end this year, the NPL in six State-owned Commercial Banks (SoCBs) had ballooned to Tk 1.02 trillion or 32.77 per cent of total outstanding loans amounting Tk 3.13 trillion.
A visiting team of the International Monetary Fund at a meeting at the Financial Institutions Division (FID) discussed the issues that are packaged in the ongoing IMF lending programme,
During the stocktaking of the progresses Bangladesh has made so far under the IMF's US$4.7-billion credit package, the Fund delegation discussed in detail recent performance, risk management, planned reforms and recapitalisation needs of the public-sector banks, they added.
Apart from the FID officials, top officials from the central bank and the SoCBs also attended the meeting with the IMF team.
Meeting sources said the Fund officials took update about the non-performing loans in the banks that created liquidity stress in some of them.
They also emphasised lowering the volume of NPLs in the SoCBs as per the reform plan.
Also, the team discussed the ongoing and planned SoCB reforms in the context of the central bank's new financial-sector reform efforts, prospects for bringing SoCBs' supervision and governance in line with international best practices, and capital- restoration plans.
The implementation of central bank's roadmap to reduce NPLs and strengthening banks' legal departments and risk-management units also came for discussion at the meeting, sources said.
Furthermore, the lending target for SoCBs to support various business sectors, state-owned companies, purchases of government securities were discussed at the meeting.
"Also discussed was the implementation status of the five big acts and impacts of the amended Bank Company Act," said one of the sources.
Secretary of the FID Nazma Mobarek, who presided over the meeting, did not respond to phone calls to comment on the meeting outcome.
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