FE Report
The government is working out new rules for a resurrected Grameen Bank (GB) to run in a new style, abolishing weekly loan-repayment system, said Muhith.
"I have already commissioned some people to look into how to make new rules for the bank," the finance minister told reporters Sunday at his secretariat office on the eve of the New Year 2017.
"We did not do anything on GB long time. Now we have decided not to let it go this way. GB is becoming irrelevant. It needs to be given a good shape," Mr AMA Muhith said.
The finance minister said: "Despite various barriers created by Dr Muhammad Yunus, we have taken a move for revival of the bank in new style."
He lauded GB as the pioneer in micro-credit. "The bank should be relevant and we have the same desire."
Mr Muhith said the bank needs to be recast and that work is going on to do so.
He said the need for weekly payment system in GB is now over. "It was necessary to create habit among people that money has to be given back if taken. The habit is already developed."
The minister noted that the formation of GB had two goals: making credit available to the poor as their right, and regularising the habit of repayment. The two are already established. Now there are so many programmes like what GB is doing.
He said the habit of mandatory repayment of bank loan has developed not only in GB but also in other banks. "You look at the overall performance of the banking system. What's the non-performing loan (NPL) rate? It has drastically been reduced. The default loan is around 10 per cent or less," he said about the measures taken to solve the problems.
The amount of classified loans in the country's banking sector spiralled by nearly 28 per cent or Tk 143.60 billion to Tk 657.31 billion as on September 30 last from Tk 513.71 billion on December 2015, according to central bank data.
Mr Muhith said the size of default loan was 40 per cent plus in 1982 which is now at around 10 per cent. "It needs to be lowered further, but it is reasonable."
The minister identified investment as a challenge for the country's economy in the days to come.
"Challenge is still investment. Investment is still weak. It needs to be strong," he said, replying to a query on challenges he sees in the new year that just began.
The minister said 2016 was a good year and he was hopeful that 2017 would be equally good.
"If it becomes equally good, we shall go ahead. I think the calculation we made in the sixth five-year plan, we will be able to go far away for that," the minister noted.
In the past Mr Muhith was also worried as private-sector investment was not up to the mark.
The size of public-sector investment has increased significantly in the recent years, but the private investment didn't rise apace. The private-sector investment remained pegged around 22 per cent of the gross domestic product (GDP).
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