Bangladesh Bank (BB) has formed a six-member taskforce to suggest reforms and ensure stability in the country's banking sector that is passing through a tough time due mainly to a lack of corporate governance.
Governor Dr Ahsan H. Mansur will coordinate overall activities of the troubleshooting squad to address the prevailing challenges affecting the banking operations, says a central bank press release issued on Wednesday.
The members of the special body are: chief adviser's special envoy on international affairs Lutfey Siddiqi, former BB deputy governor Muhammad A. (Rumee) Ali, BRAC Bank Chairman Meheriar M Hasan, former lead economist of the World Bank's Dhaka Office Dr Zahid Hussain, vice chancellor of ZNRF University of Management Science Professor Dr M. Zubaidur Rahman, and Partner of Hoda Vasi Chowdhury & Co. Sabbir Ahmed, FCA.
The taskforce will mainly examine the current financial situation of the banking sector, conduct assessment on distressed assets and major risks, financial indicators of weak banks, actual credit status, provision shortfall, liquidity situation, net capital, actual value of assets, and separation of bad assets of the troubled banks.
At the same time, it will work on development of the regulatory framework under the risk-management strengthening process and help banks achieve resilience during the crisis period.
The special body will also act on limiting political and corporate influence in the decision making process of the banks, placing reform-related proposals in bank ownership, making guidelines, resolution framework and recovery for the problem banks.
Simultaneously, it will place proposals on reforms and modernisation of the financial sector-related existing laws like Bank Company Act, Bangladesh Bank Order, Asset Management Company Act, Bank Acquisition and Amalgamation Act.
The taskforce will also take steps to disclose White Papers in the banking sector.
As a matter of fact, the banks' asset quality keeps weakening with the record rise in the volume of non-performing loans (NPLs) that becomes a matter of serious concern for the money market analysts.
According to BB data, the outstanding classified loans reached a record-high of over Tk 2.11 trillion as of June last.
At the end of June this year, the total disbursed loans stood at Tk 16.83 trillion, of which Tk 2.11 trillion became defaulted - highest in the history of Bangladesh.
With this latest surge, the overall ratio of NPLs or classified loans stood at 12.56 per cent - 1.45-percentage-point higher than the March figure of Tk 1.82 trillion.
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