Although Bangladesh Bank has achieved a commendable success in financial inclusion, the country's banking sector is yet to get rid of high non -performing loans (NPLs) and interest spread, excess liquidity and high proportion of classified loans.
A study paper, prepared by an international expert, expressed the view highlighting the urgency for strengthening the financial structure through enhanced risk-management culture, mechanism for debt-restructuring and debt resolution.
To overcome the problem, the expert, a former Director and External Expert of International Labour Organisation (ILO), Dr. Muhammed Muqtada stressed the need for reducing political influences on financial discipline, widening the net of financial inclusion and further integration of financial sector segments.
Bangladesh Bank Deputy Governor SK Sur Chowdhury, however, pointed out that the situation has improved a lot in recent days. The amount of NPLs, the deputy governor said, has come down to 9.69 per cent as against 41 per cent in 2001 and the spread of bank interest has also come down to 4.87 per cent recently.
He, however, admitted that high classified loans are still a problem for the banking sector and the central bank has taken a number of measures including strengthening the monitoring and supervision system in the banking sector to rein in the rising loan. Bangladesh Bank and International Labour Organisation (ILO) jointly organised the international seminar based on the study report titled "Challenges of Price Stability, Growth and employment in Bangladesh: Role of Bangladesh Bank" at the bank's Jahangir Alam Conference Hall on Thursday.
Governor Dr. Atiur Rahman, who attended the programme as the chief guest, said that Bangladesh Bank has deliberately shunned the minimalist orthodoxy of inflation targeting as the sole legitimate objective of central baking. The BB and a number of central banks of developing economies have instead been trying to address the risk of instabilities and imbalances at sources, by promoting social responsible inclusive and environmentally sustainable institutional ethos in financing, said the governor.
"The BB sustained motivation, enablement and policy support efforts in promoting inclusive, green financing are now paying off well for the Bangladesh economy," said the governor.
The inclusive quality of Bangladesh's stable, steady growth is evidenced by rapid poverty decline with buoyant, vibrant employment growth in the rural economy supported by inclusive MSME financing of farm and off farm output activities. The wages of day labourers in rural areas also increased by 3-4 folds, he added. Being victim of climate change, we are promoting green financing to face the environmental challenges, said the BB governor.
The meeting was addressed, among others, by BB Change Management Advisor Allah Malik Kazemi, Employment and Labour Market Policies Branch Chief, ILO, Geneva, Iyanatul Islam, ILO country director, Dhaka, Srinivas Reddy, Policy Research Institute (PRI) Chairman Dr. Zaidi Sattar, ILO senior Development Economists Dr. Noman Majid, BB Chief Economist Dr. Biru Paksha Paul, DSE (Dhaka Stock Exchange) CEO Dr. Swapan Kumar Bala, Pubali Jute Mills Limited MD Kamran T. Rahman and Asian Development Bank economist Shamsur Rahman.
The programme was attended by a large number audience including businessmen, entrepreneurs, economists, researchers, traders and representatives from various government and non-government organisations.
PRI Chairman Dr. Zaidi Sattar in his speech praised the central bank for its green banking as well as financial inclusions including the mobile banking which he termed "Revolution with a revolution...". The PRI chairperson also stressed the need for fiscal and monetary policy coordination.
DSE CEO Swapan Kumar Bala highlighted the urgency for developing secondary bond market. He also called for developing Treasury bond market as well as security bond market.
Kamran T Chowdhury urged the government to convert the ailing jute mills, reeling under serious financial crisis, into textile mills under the green financing projects. He lamented that despite massive campaign, the government has failed to implement the mandatory use of jute packaging act.
ILO country director Reddy said that ILO is helping Bangladesh RMG sector to overcome the crisis especially after the Rana Plaza disaster in meeting the compliance issues, workers safety, work place environment and labour rights. "There have been a lot of improvements but still there remains a lot to do," said the ILO country chief.
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