PMO\'s note to frame law, policies on NPL recovery

Rezaul Karim | Published: August 13, 2016 00:00:00 | Updated: February 01, 2018 00:00:00

The Prime Minister's Office (PMO) has asked the finance ministry to take necessary steps for framing a law and policies on recovery of default loans in the country's banking sector, officials said.
As part of the move, an unofficial note signed by Dr Mashiur Rahman, Economic Affairs Adviser to the Prime Minister (PM), was sent to the finance ministry, they added.
The finance ministry will inform the PM about it after working on its, they also said.
"We have recently received a letter, signed by the Economic Affairs Adviser to the PM, on formation of the act and policies on non-performing loans. But no initiative has yet been taken in this regard," a senior official at the finance division said.
In September last year a meeting organised by the Bank and Financial Institutions Division (BFID) under the finance ministry took a decision to appoint private agents to recover bad loans. But the authority did not proceed further with the decision for reasons unknown, sources concerned said.
The People's Development Services Corporation Ltd (PDSCL) has sought cooperation from the PM to frame a law, namely private agent company act-2015, on recovery of non-performing loans (NPLs).
A source at PDSCL told the FE on Friday, "We put in all our efforts, workforce and investments to recover bad and long-stuck loans of the state-owned commercial banks (SoCBs).
It is urgently needed to formulate an act or policy in this regard. Besides, some banks don't pay the due commission after collection of default loans, he added.
"We have requested the authority concerned to formulate rules and regulations for the loan recovery agency, but we have got no reply yet," he also said.
Finance Minister AMA Muhith on June 7, 2016 admitted in the parliament that there were some irregularities in the banking sector and these were on a massive scale at times.
The volume of default loans in the banking sector rose to Tk 594.11 billion during the January-March period of this calendar year from Tk 513.71 billion in the preceding quarter, according to the central bank's latest statistics.
The share of NPLs in the lending operations of banks increased to 9.92 per cent during the period under review from 8.79 per cent three months back.
During the January-March 2016 period, the total amount of NPLs with six SoCBs rose to Tk 272.89 billion from Tk 237.45 billion in the previous quarter.
On the other hand, the volume of classified loans with 39 private commercial banks (PCBs) reached Tk 253.31 billion in the first quarter of the current calendar year from Tk 207.60 billion three months ago.
NPLs with nine foreign commercial banks (FCBs) came down to Tk 18.22 billion during the period under review from Tk 18.97 billion of the previous quarter.
Classified loans with two development-finance institutions (DFIs) remained unchanged at Tk 49.69 billion in the Q1 of the current calendar year, the BB data showed.
Â Â Â rezamumu@gmail.com